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0310 B415F Anti-tax avoidance I

0310 B415F Anti-tax avoidance I - B415F Anti-tax avoidance...

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ø * 1 1 B415F Anti-tax avoidance I
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Tax Avoidance Law 2 2 Tax avoidance/ Tax evasion Ramsay Principle IRO: S61/ 61A: general anti-avoidance sections S61B: Loss companies S39E: Leasing S22B: Limited partnership loss relief
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3 3 Tax avoidance use of legal methods to modify an individual’s financial situation in order to minimize the amount of income tax payable. Forms of tax avoidance generally accomplished by claiming permissible deductions and credits or eliminating certain taxable income.
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4 4 Some common forms are: creation of a separate legal entity; often a company or a trust. Assets are transferred to the new entity so that gains may be realized, or income earned, within this legal entity rather than earned by the original owner, personal taxation can be avoided, to avoid corporate taxation if incorporated in an offshore jurisdiction.
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5 5 Changing one's tax residence to a tax haven, such as Monaco or Switzerland, or by becoming a perpetual traveler. some countries, such as the U.S., tax their citizens, permanent residents, and companies on all their worldwide income. Most countries have entered into bilateral double taxation treaties with many other countries to avoid taxing nonresidents twice
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Impact of tax avoidance 6 6 considered to be the escaping of one's duties to society, or at the other extreme, the right of every citizen vary from approval through neutrality to hostility. Attitudes vary depending on steps taken in the avoidance scheme, or the perceived unfairness of tax. Avoidance reduces government revenue brings the tax system to loses its good reputation, because it is connected with activities that people do not approve of, so governments need to keep it within limits. to frame tax rules so that there is no scope for avoidance. In practice not proved achievable and ongoing battle between governments amending legislation and tax advisors
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Tax evasion 7 7 evade taxes by illegal means includes deliberately misrepresenting or concealing true state of business affairs to the tax authorities involves dishonest tax reporting, declaring less income, profits or gains than were actually earned; overstating deductions. generally subject to criminal charges and substantial penalties. level of evasion depends on financial return, the efficiency of the tax administration, removal of the human
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Anti-avoidance Legislation 8 8 Hong Kong simple tax system operates under simplicity. contains little strict anti-avoidance legislation as this would be detailed, complicated and difficult to administer in the last 20 years, significant growth in sophisticated tax planning practices posed a threat to revenue collection.
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