Tax Avoidance And Tax Taxation Essay

1744 WordsNov 23, 20167 Pages
Part B Manipulating tax loopholes to avoid paying taxes is acceptable business practice. 1.0 Introduction “Tax avoidance is the act of taking advantage of legally available tax-planning opportunities in order to minimize one‘s tax liability.” - Blacks Legal Dictionary “Tax loophole is an unintentional omission in the law that allows the reduction of tax liability.” -The Oxford Dictionary Tax avoidance is considered as a misuse of the law, and an abuse of the soul of the tax legislation. It misuses the loopholes in the laws that were not expected by the law makers, regardless of the legitimate conduct of the avoiders. The revenue losses from tax avoidance and tax evasion are difficult to calculate, but studies show that the annual cost of offshore tax abuses can be around $100 billion per year. 2.0 Loopholes in tax system Tax avoidance done by taking advantage of the system is not only acceptable, but legitimate. Tax advisors have designed very complex tax avoidance scheme to exploit loopholes in the tax system which results in loss of tax revenue. Estimates of revenue losses which are caused because of profit shifting ranges from $10 billion to $90 billion. Governments of several nations have made genuine endeavors against the use of these lacunas in the laws. Like, in 2012 the government invested £29 million in Her Majesty’s Revenue and Customs (HMRC) to ensure that

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