Tax Evasion And Tax Taxation

Good Essays
“Nothing is certain but death and taxes.” Taxes are an important element of a developed society, where people concern about them, grumble about them, and even attempt to stay away from them by different means. Not only individuals, companies and firms also adopt different strategies to avoid paying taxes, these include tax avoidance and tax evasion. Tax avoidance is generally defined as a more ‘legal’ means with the taxpayer lowering his/her tax liability by making use of the loopholes and vagueness of the tax policies to reduce the amount of tax paid in different areas, whereas tax evasion refers to purposely understate his/her taxable amount in order to lower his/her tax liability (Jain, 1987). Tax evasion is therefore strictly against…show more content…
In the second section, the essay will then evaluate which taxes are more vulnerable to tax avoidance and tax evasion. The paper will suggest some particular tax bases that can be continued to use whereas the tax bases that should not be used or should be refined. In the last section, the paper concludes by concentrating on recommending different methods to tackle the problem of tax avoidance and tax evasion.

To start with, people have exploited the freedom to build complex business structures to take advantage of the loopholes in tax rules. Tax Justice Network (TJN), an independent international network launched in 2003 that aims to arouse attention and discuss issues related to tax and financial globalization, have been constantly stressed the need for different countries to adopt adequate methods of corporate transparency for tax administration purposes, for example, business ownerships registration, a popular type of tax avoidance (Corporate Reform Collective, 2014). Areas of authority such as the British Virgin Islands are renowned for forming offshore companies to avoid paying business taxes. Tax evasion creates social problems as well. If taxpayers successfully evade their tax payments, the hidden income eventually becomes their own wealth. As mentioned before, tax evaders are an important element of the black market
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