Question

u regard to international issues in taxation, explain the nature of: 1) Tax avoidance hy multinationals corporations h) Tax evasion by inclividuals c) Tax harmonization among nations and international lax planning.

help and please explain everything

Answer 1

A) Tax avoidance by multinational corporations Tax avoidance by multinational's corporation is a term that is used to describe a situation where multinational firms avoid paying taxes in countries where they make vast revenues. In different countries the tax structure is different some are taxed on the basis of economic activity whereas some are taxed on the basis of profits or losses occurring. Multinational companies do understand these legal loopholes and set up their operations in such a way that the place where the maximum revenue is occurring is the place where the tax rate is the least. In this way they are able to avoid paying a significant amount of tax to the local government. B) Tax evasions by Individuals: Tax evasion is illegal in nature. One way in which many people evade taxes are by misreporting the sources and amount of income. People do not report their complete income while filing returns and even if they do sometimes, they do not report the complete amount or clear source of income. Tax evasion is the amount of income that should be reported to the tax authorities and the reported income. Tax harmonization among nations and international tax planning: Tax harmonization is a term that is used where different government authorities come together to prepare a tax structure where the income of corporations when occurring in more than one country are not being taxed again and again. This is done to give boost to the industry to increase employment. There are many countries across the where they entered into tax agreement to avoid double taxation of the same income.