Tax evasion and tax avoidance costs the UK government £34 billion a year.” In the light of the above statement, explain the terms tax evasion and tax avoidance?
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“Tax evasion and tax avoidance costs the UK government £34 billion a year.” In the light of the above statement, explain the terms tax evasion and tax avoidance?
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- "Tax evasion and tax avoidance costs in UK government £34 billion a year" a) In the light of the above statement, explain the terms tax evasion and tax avoidance? b) Discuss the measures that the UK government are taking to migrate tax avoidance and tax evasion?Internet giant Zoidle, a U.S. company, generated sales of £2.5 billion in the United Kingdom in 2013 (approximately $4 billion in U.S. dollars). Its net profits before taxes on these sales were £200 million, and it paid £6 million in corporate tax, resulting in a tax rate of 3 percent. The corporate tax rate in the United Kingdom is between 20 percent and 24 percent. The CEO of Zoidle held a press conference stating that he was proud of his company for taking advantage of tax loopholes and for sheltering profits in other nations to avoid paying taxes. He called this practice “capitalism at its finest.” He further stated that it would be unethical for Zoidle not to take advantage of loopholes and that it would be verging on illegal to tell shareholders that the company paid more taxes than it had to pay because it felt that it should. Zoidle receives significant benefits for doing business in the United Kingdom, including tremendous sales tax exemptions and some property tax…The current market rate of interest is 8 percent. At that rate of interest, businesses borrow $500 billion per year for investment and consumers borrow $100 billion per year to finance purchases. The government is currently borrowing $100 billion per year to cover its budget deficit. a. Derive the market demand for loanable funds, and show how investors and consumers will be affected if the budget deficit increases to $200 billion per year. b. Show the impact on the market rate of interest, assuming that taxpayers do not anticipate any future tax increases. c. How would your conclusion differ if taxpayers fully anticipate future tax increases?
- Assume the government introduces a lump-sum tax on each firm within a perfectly competitive industry. Which of the following will be true after the introduction of this tax? a. Consumer prices will increase b. There will be no change in any firm’s level of profits c. A deadweight efficiency loss will occur d. There will be no change in the market quantity of outputIf the Fed sold $6 billion in government securities and the public deposited $3billion in their bank account, by how much would the monetary base change?Suppose the Australian government has announced tax cuts for the business sector. Using the loanable funds model, explain how this will impact the supply of and demand for loanable funds and the interest rate in Australia.
- Assuming that taxes are to be raised, which tax increase would be least detrimental to long term economic growth, a GST/HST increase or an increase in income tax? Assume that either of the increases would be revenue neutral, i.e., the federal government would take in the same amount of revenue with either tax that is raised.Suppose a firm's tax rate is 25%. a. What effect would a$9.85 million operating expense have on this year's earnings? What effect would it have on next year's earnings? b. What effect would an $8.95million capital expense have on this year's earnings if the capital is depreciated at a rate of $1.79 million per year for five years? What effect would it have on next year's earnings?1) Suppose your firm earns $9 million in taxable income.What is the firm's tax liability?What is the average tax rate?What is the marginal tax rate? 50,000 15%50,001 - 75,000 25%75,001- 100,000. 34%100,001-335,000 39%335,001-10,000,000 34%10,000,001-15,000,000. 35%15,000,001-18,333,333 38%18,333,334- 34% ....................................... 2) Entity X earns 6 $ per share. If the discount rate or equity cost to be applied by the company is 20% and the investment profitability is 16%;a) According to the Walter formula, what would the price of shares be in $ if the business had distributed 50% profit? b) According to Walter, is this the optimum rate of dividend distribution? Explain
- Why is the standard flotation cost for an IPO equal to 7%? A) Because investment banking is a commodity business, and this fee is subsidized by the Securities and Exchange Commission (SEC) to ensure that banks continue to provide this necessary service to help maintain efficient capital flows B) None of the other answers are correct. C) This is required by the Securities and Exchange Commission (SEC) D) Because the standard fee has been defined as one-third of the top US corporate tax rate, which currently is 21%A corporation has $50 billion of Earnings Before Interest and Taxes (EBIT) and $20 billion in interest expenses this year. How much interest expense can the company deduct from its EBIT in the current year? What happens if the company can’t deduct all of its interest expenses in the current year?Suppose a parent company wishes to determine the expected after-tax dollar cost of Rs.600 million local debt (at 16 per cent) raised by its subsidiary company S. Assuming a tax rate of 40 per cent, anticipated average annual devaluation of 3 per cent of the Indian rupee in relation to the US dollar and tax deduction of foreign, exchange losses, compute the cost of the debt.
