Gaar Uk (General Anti-Avoidance Rule)

People do not enjoy talking about taxes because they are too political, confusing, and depressing. It is no secret that the American tax code is a mess and something many economists describe as too broken to fix. Despite this, politicians have never stopped from trying to “fix” the code, yet they have had very little success. The U.S. Government’s tax code currently comprises “more than 67,000 pages of complexities” (Boortz, Linder, & Woodall 14). The Americans for Fair Taxation (AFFT) was founded in 1995 with one goal: create the simplest and best tax reform plan that would work in the modern market and economy. The AFFT’s best solution was a bill which they promptly called the FairTax.

This scenario demonstrates the motive to purchase personal expenses and hide small revenues and this ultimately results in a higher expense value, gaining a favourable tax return. Examples within the scenario were buying a sports car, or paying for a trip to Hawaii which are clear violations of the Business Entity Concept. This principles states that a business must be considered a separate entity from the person, and all of its financial matters should be recorded separately from one’s own. This act is seen as an unacceptable behaviour since the business is cheating the government, and keeping the money that could have been used to better the community in addition to violating common accounting standards.

On top of that, he also used the company’s monies to pay his personal expenses, particularly associated with his home renovations which were then claimed as a business deduction of the company, which results in paying less tax of the company. Carl William and the company also have two bank accounts in the United Kingdom as a tax haven to cover both of their income to the ATO. Global expert state that the United Kingdom is “…by the far the biggest tax haven in the Europe…” (RT, 2015) Further research that this situation is still relevant in this period comes from the years 2012 to 2015 cases of significant accountants and tax practitioners; John Wayne, Lauren Jane, Lynette Kathleen and Carol Clara involving in fraudulent business activities highlighted in the CDPP Australia’s Federal Prosecution Service

We live in a time of uncertainty. One of which is financial uncertainty, which affects all Americans regardless of social economic status. According to the Congressional Budgeting Office the US national debt is on track to being equal 78% of the gross domestic product by the year 2024 (Trumbull). Social Security pay outs have neared a level that will soon be unsustainable without a significant increase in taxes. Corporate taxes are now close to 40%, and considered to be one of the highest tax rates in the world (Stone). Former U.S. representative John E. Linder stated that the corporate tax rate has forced many of our good paying manufacturing jobs to be relocated outside the country in order to stay competitive. Making it difficult for low wage earners to transition up in income and support their families like previous generations. The problem for the American job market could be resolved if it were not for the 15 trillion dollars remaining in off shore financial centers because of the high cost due to taxes when the money is repatriated. In addition to the corporate costs, taxes have driven 2 to 3 trillion dollars into an underground economy where no taxes are paid at all (Linder). Jonathon Gruber wrote in his book Public Finance and Public Policy, that tax evasion is estimated to be $280 billion dollars a year! For those who do pay, the estimated costs for filling out the forms in order to pay the taxes is over $350 billion dollars a year. This is quickly becoming a

IFRS is the internationally accepted accounting principle. Thus, international investors appreciate to invest in companies report under IFRS. As forecasted, Gabias Industries will have an increased sale in Africa, Europe and Pacific areas, where IFRS are the main accounting standard (AICPA, 2013). Similar to American domestic investors, international investors have more confidence on financial reports that are familiar to them. Therefore, reporting financial statement under IFRS will attract international investors to invest in Gabias Industries.

It is with out a doubt that in our country the United States of America the lower and middle class have the common perception that the government and the “super rich” have some kind of unknown agreement to maintain extremely lower tax rates on the “super rich”. What do the “super rich” do with all the saved money coming from the tax cut is another unknown, perhaps some luxurious new home, car, or maybe put it to work and continue getting richer. While all this may be true to some degree, one of the “super rich” elite members has stepped fourth not only once but a few time but none compare to his current attempt to make change.

Taxation surrounds us in the world. Individuals fear tax, and a majority of the items we use and need are taxed. Even on topics such as Celebrities and the Olympics, taxation manages to find its way to still come up.

In order to keep businesses out of the shadow economy, urgent measures are needed to reduce the taxation pressure and replace at least a portion of multiple taxes with a unified business tax.

Distinct benefits exist in convergence of GAAP in different jurisdictions. Comparability between companies that operate in, or are listed in, different countries, will be significantly improved. Greater comparability leads to better information for investors, more efficient capital

As of Q1 2015, the UK national debt has an estimated value of around £1.5 trillion(National debt clock, 2015). A value that has vastly increased since 2006 when the UK had a national debt of around £500 billion (UK Public Spending, 2014). Fundamentally this increase is fuelled by government spending greater than the value of governmental income, such as taxes. The shortfall between spending and income is filled by borrowing. This increases debt. Clearly, as will nearly all finance, the borrowing, or debt, is not free. The interest payable on the debt only serves to fuel further spending, increasing the potential for the requirement of further borrowing.

The offshore tax evasion is a problem that most countries face mainly because there are many structures that help sophisticated investors to avoid the payment of those taxes. Its been estimated that the worldwide value of the offshore accounts is somewhere around $11.5 trillion. After the 2008 global financial crisis, the United States was going through one of the most severe recession, the tax evasion crisis and the growing budget deficit at it highest point , in 2009 President Obama stated during an interview "I did not run for office to be helping out a bunch of, you know, fat-cat bankers on Wall

It is important to note, from the onset, that income tax remains the government’s largest revenue source – effectively raking in an average of 30 percent of the total tax collected. In essence, every individual has what is referred to as personal allowance on income tax, whereby every tax year, all incomes that do not exceed the set allowance are not taxed. All other income is subject to the various tax rates captured in several bands. In the year 2009 budget, it was announced that beginning April 2010, individuals raking in incomes exceeding £150,000 would be subject to a new 50% tax rate (HM Revenue & Customs, 2014). The previous rate, prior to the introduction of the top rate by the Labor government had been 45p. However, the incoming government reduced the top rate to 45p – a change that took effect from 2013 April. It is important to note that all incomes that do not exceed £32,000 are, at the moment, subject to a basic tax rate of 20%. For those raking in more than £32,011 (with a ceiling of £150,000), a higher rate applies. According to the proposal to restore the 50% additional rate of income tax, 50% of incomes exceeding £150,000 (which are at present taxed at the rate of 45%) ought to be handed over to Her Majesty’s Revenue and Customs (HMRC) as tax. The person fronting the said proposal is Ed Balls, a Labor Party politician.

According to the definition of tax avoidance from subpart YA 1 of the Income Tax Act 2007, the meaning of tax avoidance has three aspects which are directly or indirectly change the scope of the income tax, the liability of the income tax which a person should pay in this year or the future years is directly or indirectly reduced, directly or indirectly avoiding, delaying, or reducing any liability to income tax or any potential or prospective liability to future income tax.

This research looked into the immediate effects of the Organisation for Economic and Co-operation Development’s (OECD) Base Erosion and Profit Shifting (BEPS) project with international companies and governments beginning in 2016. OECD is an organization comprised of 35 countries, including the United States and United Kingdom, founded in 1961 to assist governments in promotion and regulation of worldwide economic development. After years of speculation of international companies finding loopholes within the current tax laws to avoid taxes through various schemes, OECD released a document titled ‘Addressing Base Erosion and Profit Shifting’ in February 2013, outlining a project they had begun working on. This project stemmed from numerous discrepancies worldwide, the largest being political, countries wondered if these international corporations pay their part of taxes on profit. The estimated ‘gap’ by OECD is between 4-10% of global corporate income tax revenues (OECD 2016). BEPS, by definition, refers to the strategies that international corporations use to avoid taxes across the world. This is not to be confused with tax evasion, BEPS refers to the legal ways which are being taken advantage of. BEPS can be achieved through exploitation of loopholes in tax laws that allow for companies to move profits to low tax areas using various tax instruments. Since the BEPS project was unveiled G-20 has joined OECD to back the entirety of the project. With G-20 sponsoring

The British Virgin Islands has 400000 corporations and requires no financial or personal records to be kept so this makes it very easy to make larger transfers of money into Tax Havens undetected (Tax Fairness, 2015). At the same time, laundering criminal proceeds can be easily done through tax haven by finding a bank in a country that accepts your deposit without asking questions and sends to whoever you wish to receive it. So is evading taxes-disguise income or assets through that country and fail to report to your home country’s authority (Global Financial Integrity, 2015). For example, 53.3 billion Canadian dollars have been sent to Barbados in 2011; 80 billions dollars estimated revenue lost to tax avoidance in Canada and 24% of Canadian’s foreign investments directed into Tax Havens (Tax Fairness, 2015). This shows how tax evasion is becoming popular as people try to find loopholes in the system and hide their assets with the help of lawyers and banks.