The Growing Problem On Tax Evasion

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The Growing Problem on Tax Evasion Background Each and every countries deal its own classic nightmares from the wicked tax evaders. Milos (2013) defined “The legal tax evasion is the action of the taxable subject to go around the law, finding various means to exploit the insufficient legislation, and intentionally avoiding, in a legal manner, the tax provisions”(p.166). Milos study of tax evasion is focus and represent Romania, as tax evasion is a “well spread phenomenon” faced largely by this country, although tax evasion has been a hot topic worldwide, in fact, Milos mentioned Bulgaria, Bahamas, Bermuda, Macao, Cyprus, Cayman Islands, Switzerland and more others, as the “tax heavens”, meaning these countries has favorable legal…show more content…
The research questions are: 1. What are the common traits of tax evaders? 2. What are the motivation, opportunity, and problem of tax evasion? 3. What are the potential causes and solution to the growing global problem of tax evasion? Review of Literature Tax Evasion in Romania Milos (2013) research shows an increased on income tax evasion, social insurance and value-added tax evasion from 7.3% in 2004 to 10.3% in 2010, of which Bulgaria came first 32.3%, while Romania came second 29.6%, then Lithuania 29%, and Estonia 28.8% are the top four countries with highest tax evasion (pp.167-168). Milos econometric studies of the economic growth and tax evasion level identified no relation and invalidated the perception according to the increase in economic growth, as well as the increase in tax evasion, where in reality, a reduction of tax evasion would have result to positive economic growth (p.168). Milos explained that this is more likely due to the fact that taxation is not the primary element in the determination of economic growth (p.168). Common Tax Evasion Schemes in Romania Milos (2013) identified tax evasion harmfully encountered by Romania was caused by the incorrect application of the issued tax laws of harsher punishment, which supposed to mitigates tax evasion and maximize government budgetary income (p.167). Milos recognized entities engage in forging external invoice by calculating the excise tax on lower price invoice and not on the actual or
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