Tax Evasion And Tax Taxation

Tax avoidance has become a massive topic of discussion over the past few years, given the current global economic conditions and the cuts to the public sector by the government as a result. This led to increased anger from the public who perceive avoidance by many of the country’s wealthiest people in a time of austerity as greed. Perhaps the most notable demonstration of this anger can be seen in the actions of the group UK Uncut, who for the past year have been organising protests at shops owned by retail tycoon Philip Green who, as the poster boy for tax avoidance, paid a £1.2 billion dividend to his Monaco-resident wife.

Through this survey, they hoped to “rank the main arguments that have been used to justify tax evasion on ethical grounds over the last 500 years” meaning that they hoped to find which arguments carried to the most influence to prove that in that instance it is ethical (pg. 1). While collecting data to ultimately rank these arguments, Nickerson et al. (2009) clumped data together in accordance to the country of the participants. They took the mean scores from the survey, based on a scale of 1 being always ethical and 7 being never ethical, and compared them based on country. They found that the United Kingdom has the lowest mean average from the survey at 4.15, suggesting a low resistance to tax evasion, while United States participants average a 5.62, suggesting a high tax compliance. These findings are a result of a combination of the community perceptions, the countries tax penalties, and the perceptions of the government. This proves that all three factors that lead to poor ethics in an individual play an extremely large role in whether or not an individual will commit tax evasion. If economic reasons where the root of whether or not an individual would commit tax evasion or not, then the graph would be arranged differently and have different mean averages that only correlated to the risk of

An income tax is not only costly in the amount of time and money it takes to file the paperwork correctly but, it also stunts economic growth as “income taxes are levied on work, savings, and investments. In essence, the government grows by taking money from what makes the economy grow” (Bedard 2010). A consumption tax on spending for goods and services that does not unduly burden the poor nor penalize savings and investments would be a sensible upgrade for the tax policy currently in place. Initially, this essay will discuss issues within the current income and corporate tax codes. The essay will then shift to reforms of the

President Barack Obama’s international tax reform proposal aims at preventing American multinational companies from using current international tax loopholes to avoid being taxed on offshore profits. It also eliminates purported tax incentives for companies perceived to have moved jobs overseas. But more importantly, Obama’s reform attempts to rectify a longstanding tax issue in America, prevalent since the Kennedy Administration and its enactment of the Subpart F regime. The Subpart F section of the Internal Revenue Code was the result of a compromise between an Administration that desired to implement a worldwide taxation system to curb further erosion of the US tax base and a Republican-led Congress that sought to encourage U.S. foreign investment. Although Subpart F has succeeded in increasing the international income stream subject to U.S. taxation, savvy multinational corporations have not only found loopholes in Subpart F but have also avoided the code section altogether by simply filing an election to opt out of corporate status and into disregarded status by way of the check-the-box regulatory regime. This independent study starts by detailing the many methods used by multinationals to avoid the highest corporate tax rate in the world. Then, this document examines the Subpart F regime and other relevant law in an effort to understand the statutory language that allows for corporate tax avoidance. This study then takes a look at two American

Are you aware that taxes have been around since the Ancient Egyptian, Roman, and Mesopotamian times as early as 3000 B.C.? (“Taxes in the Ancient World” U. Penn Almanac). Taxes are a crucial part of society’s economic functions as a whole. Taxes help us generate money to help build new roads, provide us with protection through services such as law enforcement, and help improve public education institutions. In other words, taxes help the United States create value for its citizens. As we all are aware, no system is perfect and there are times when our economy isn’t doing so well and also times when it’s really booming. The main subjects of discussion are: tax morale, wealth distribution and taxes, tax loopholes, off shore tax evasion, and possible reformations. What this paper analyzes and discusses is current economic issues that involve taxes and possible reformations to correct them.

In today’s financial world, preparation and reporting of income taxes has become one among the other main reasons why individuals and businesses are keeping and maintain their financial records. However, there has been some controversy between tax laws and accounting under the General Accepted Accounting Principles (GAAP). Simply because IRS is not always agrees with GAAP’s principles and thus creates its own tax laws. This paper will discuss the objectives of modern income tax statutes, compare and contrast the GAAS and tax accounting, and differentiate between tax avoidance and tax evasion.

Corporate and personal income tax fraud is not a new phenomenon; it is a part of day to day business in the global economy. Where there is worship of money there seems to be fraud in one form or another. China is no different than any other country on this planet; it has honest corporations and dishonest ones also. China is listed as number 8 on the top 10 countries for tax fraud (Berr, 2011). United States is still listed as number one and Canada not even in the top 20. Hong Kong is listed as four as “The ten Biggest Tax Havens within the World” (Said, 2013).

• Def 3: "What ... identifies an area as a tax haven is the existence of a composite tax structure established deliberately to take advantage of, and exploit, a worldwide demand for opportunities to engage in tax avoidance." (The Economist - description by Geoffrey Colin Powell )

This report has been written to advise Rosy and James that whether the arrangement set between them is acceptable or void as against the Commissioner of Inland Revenue (CIR). The aims of this report are to find out whether there is a tax avoidance arrangement and if so, what are its effects. This report will also investigate the tax avoidance by applying the relevant sections of the Income Tax Act 2007 (ITA 2007), especially the tax avoidance test under section BG 1, and also any rules or principles from relevant cases and legislation.

The issue of tax evasion a has received a big attention from researchers and institutions such as International

For multinationals, tax planning can be a complex but a vital aspect of its operations. The primary objective of these corporations is to minimize their worldwide tax burden. With globalization expanding, opportunities for corporate tax avoidance expanded with it. Technological advances made it easier for taxpayers to hold offshore investments, increasing the opportunity for them to evade their domestic tax obligations. Tax avoidance can be done in a number of ways. Loopholes such as using dividend or capital gains to avoid taxation are only a few examples. Across the European Union and as of Jan. 28, the European Commission proposed a scheme to tackle some of the most common tax avoidance measures used by multinationals to reduce their tax bills. The Globe and Mail published an article highlighting the Commission’s proposal and a few possible methods corporations use to evade paying taxes across Europe.

The multinational enterprise is a company that have headquartered in one country but has operations in more than one countries (me, year). Also, it controls and manages production establishments with operations (IB book, year). Moreover, according to me (year), the MNE’s are the large corporations which both produces and sells goods and services in various countries. Consequently, the multinational enterprises seek to gain access to overseas markets, establishes the distribution network and increases global sales. For example, the largest global 500 MNE’s account for over 90% of the world’s stock of foreign direct investment and nearly half of the global trade (Rugman and Verbeke, 2013). Therefore, the international tax systems give opportunities to shift their profits between countries and subsidiaries, reduce tax bills and decrease liabilities using the legal tax avoidance and tax minimisation strategies (me, year). In addition, it enables enterprises to decrease business costs and increase overall business profitability. However, it damages the state economy and undermines trust in the tax system.

The standard economic framework by Allingham and Sandmo (1972) and the expected utility theory suggest that higher audit probabilities and higher tax fines discourage cheating of taxes (Adreoni, Erard & Feinstein, 1998; Kleven et al., 2011; Maciejovsky, Schwarzenberger, & Kirchler, 2012). People normally evaluate the costs and the benefits of a certain course of action before making a decision. In an attempt to minimize the tax burdens, taxpayers weigh the utility benefits of avoiding or evading taxes successfully and the utility costs associated with the risk of probable detection and punishment (Maciejovsky, Schwarzenberger, & Kirchler, 2012). Thus, taxpayers are becoming wary in their tax compliance for every business activity as the government is shifting its focus on recovering its lost revenues from the evaders.

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.

Tax compliance has been a topic of great interest to Revenue authorities especially in the developed countries. Hostility towards tax compliance is an age old problem. “Taxes are considered a problem by everyone. Not surprising, taxation problems date back to the earliest recorded history” (Taxworld Organization, 1999).