Tax Aviodance and Tax Evasion

Abstract

Our research is based on the effect of tax avoidance and evasion and reason for tax avoidance and how we stop the tax avoidance and evasion. Firstly we know about tax avoidance and tax evasion. As is obvious, the focus is on tax losses due to tax evasion and tax avoidance. There is no attempt at theoretical or methodological evaluation, nor any attempt to make fresh estimates, but only to make use of the existing state of knowledge and information to arrive at a cohesive statement that wouldenhance the public awareness of the problem and help civil-society advocacy and mobilization against various forms of tax evasion and tax avoidance.Tax avoidance refers to an attempt to reduce tax payments by legal means, for instance by exploiting tax-loopholes, whereas tax evasion refers to an illegal reduction of tax payments, for instance by underreporting income or by stating higher deduction-rates. Tax flight refers to the relocation of businesses, only in order to save taxes, for instance by making use of offshore tax havens. Tax avoidance which is technically legal (in that it is not evasion which is illegal) but may represent tax planning with the sheer objective of obtaining a tax benefit without any supporting justification in terms of commercial, economic or business purpose. The determination of this separation of objectives comprises a crucial challenge in modern global practices in designing complex corporate structures with good or bad motive.