UNRAVELLING STRATEGIES, ENFORCING COUNTERMEASURES, AND PROMOTING FISCAL INTEGRITY: TAX AVOIDANCE AND EVASION

AUTHOR – SUPRANA CHAKRABORTY, STUDENT AT NATIONAL FORENSIC SCIENCES UNIVERSITY , DELHI CAMPUS

BEST CITATION – SUPRANA CHAKRABORTY, UNRAVELLING STRATEGIES, ENFORCING COUNTERMEASURES, AND PROMOTING FISCAL INTEGRITY: TAX AVOIDANCE AND EVASION, ILE WEEKLY REVIEW (ILE WR), 1 (8) OF 2023, PG. 28-35, APIS – 3920 – 0037 | ISBN – 978-81-964391-3-2.

I. Abstract

Tax evasion and avoidance are serious problems that affect governments, economies, and society all over the world. This research study addresses the methods and tactics used in tax avoidance and evasion as well as the countermeasures put in place to effectively counteract these behaviours.  The paper begins by defining tax avoidance and tax evasion and highlighting the legal distinctions between the two. Tax evasion refers to intentional acts of illegal non-compliance with the intent to evade taxes, whereas tax avoidance refers to strategic planning conducted to minimise tax responsibilities within the bounds of the law.

In exploring tax avoidance, the paper examines various legal methods and strategies employed, including income shifting, transfer pricing, offshore tax havens, shell companies, tax incentives, exemptions, and corporate structuring. These strategies highlight the complexity and diversity of tax avoidance practices and their potential impacts on revenue collection and societal equity.

The section on tax evasion delves into illegal techniques and practices used to evade taxes, such as underreporting income, hiding assets, falsifying records and documents, offshore banking, money laundering, and smurfing. Understanding these practices sheds light on the illicit methods employed by individuals and corporations to circumvent their tax obligations and the consequential loss of revenue for governments.

Governments and tax agencies have put in place procedures and tactics to effectively combat tax avoidance and evasion. These include enforcing stricter tax laws and regulations, increasing the severity of tax penalties and information sharing across nations, and raising public awareness of and education on tax compliance. The use of audits and investigation methods, risk assessment, predictive analytics, and whistleblower programmes are other significant contributions made by tax authorities.

II. Keywords – Tax avoidance, tax evasion, strategies, techniques, countermeasures, legal methods, illegal practices, income shifting, transfer pricing.