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Differentiate between "Tax Evasion" and "Tax Avoidance" ? Is any one of them legal ?

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Question added by Deleted user
Date Posted: 2014/09/24
VENKITARAMAN KRISHNA MOORTHY VRINDAVAN
by VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.

Tax avoidance is an attempt to reduce the amount of tax that a taxpayer is required to pay while staying within the limits defined by law, and by fully disclosing the material information to concerned tax authorities. According to Canada Revenue Agency (CRA), when actions are taken to minimize tax without breaching law, but such actions contravene the spirit of the law, it is called tax avoidance.

Tax evasion, on the other hand, is opposite to tax avoidance. It is an evasion of tax through illegal means. Tax evasion usually involves the deliberate misrepresentation or concealment of the true nature of the affairs to reduce the overall tax liability. Individuals and corporations misrepresent their income to the tax authorities and this misrepresentation may be done by hiding money along with the interest earned on it in offshore accounts, or by underreporting the actual income earned.

mohamed abou bakr galal
by mohamed abou bakr galal , group financial manager , americana

tax avoidance on the other hand is perfectly legal within the ambit of the law and is the legal use of the tax system to reduce taxes.

This can take many many different forms.

Malik Khalid Mahmood
by Malik Khalid Mahmood , Regional Finance Manager , Leosons International FZ LLC

Tax Avoidance

Its a legal term means, in which some countries enters into agreement like Free Trade Agreement called FTA and with this rule, an organization can reduce the amount of taxes and duties levied on the import and export of goods, like in China, Pakistan, India and some other countries FTA is applicable. For Example, if you are in Pakistan and you want import Pharmaceuticals raw material from China, the Exporter in China will issue you FTA Certificate, on basis of this FTA, the amount of duties or tax will be reduced as per prevailing rates.

Tax Evasion

Tax Evasion is the hiding of tax, booking of expenses that are not admissible, sale and purchase of goods without the levying of tax on the goods.  Expenses which are not admissible as per Tax Laws like personal nature of directors.

 

mohamed Hakim CMA CPA Candidate
by mohamed Hakim CMA CPA Candidate , Accounting Manager , Andersen saudi arabia

Nice to see good questions like that 

Agree with all 

 

Deleted user
by Deleted user

agreed with gentlemen

Mohamed Salim
by Mohamed Salim , Surveyor and Designer; , Xiap &Xule Construction Co. and East Africa Modern Engineering Company and Shamo Plastic & Aluminum.

Tax Evasion is the reduction or minimization of tax liability by illegal methods and  Tax Avoidance it the reduction or minimization of tax liability by lawful methods so the right answer is that the Tax Avoidance is legal.

Khalid Noor
by Khalid Noor , Accounting Manager , FedEx

Agreed with the answer of VENKITARAMAN KRISHNA MOORTHY VRINDAVAN  and Malik Khalid Mahmood 

Khaled Abdelrehim ACCA DipIFR CMA
by Khaled Abdelrehim ACCA DipIFR CMA , Financial Analysis Assistant General Manager , Khalda Petroleum Company

Tax evasion is to neglect paying tax although you are subject to, by tax avoidance is to avoid being subject to tax like the expansion in rent expense instead of purchasing assets.

FITAH MOHAMED
by FITAH MOHAMED , Financial Manager , FUEL AND ENERGY CO for transportion petroleum materials

agree with mr venkitaraman 

Khaled Mohee Eldeen Abbas Mahmoud
by Khaled Mohee Eldeen Abbas Mahmoud , Chartered Accountant # 10465 , Self-employed

I agree with answers provided

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