Definitions and differences of tax saving, tax evasion and tax avoidance from an international perspective

Definition of European and American countries

Australia

Although tax avoidance and tax evasion are often mentioned in the same breath in Australia, they are completely different in nature. Tax avoidance refers to taxpayers arranging their affairs through legal means to avoid paying tax obligations, while tax evasion involves illegal behavior, such as evading tax payments through fraud or trickery. Under Australian Taxation Law, it is illegal to avoid paying tax through bad faith, non-compliance or neglect of a tax obligation, fraud or subterfuge.

Italy

Italy’s legal definition of tax avoidance and tax evasion is relatively clear. Tax avoidance usually refers to taking advantage of imperfections in tax laws to reduce tax burdens; tax evasion refers to violating laws to conceal taxable facts or submitting false returns. In addition, “tax bankruptcy” is also considered a form of tax evasion, and whether tax avoidance is legal is still controversial.

United States

In the United States, tax evasion refers to the act of maliciously violating the law to avoid paying taxes, while tax avoidance is explained as a technique to minimize taxes in addition to tax evasion. The United States has enacted many anti-tax avoidance provisions aimed at curbing artificial tax avoidance techniques that are not driven by economic or business development needs.

UK

Although British law does not clearly define tax evasion and tax avoidance, it is generally believed that tax evasion involves dishonest behavior of taxpayers, while tax avoidance is legal and should be protected even within the scope of the law.

Canada

The Canadian Income Tax Act defines tax evasion as deceiving the tax authorities through fraud and other methods to reduce tax obligations. For tax avoidance, the Canadian tax authorities divide it into two categories: legitimate and improper, and re-determine tax liability for the latter.

Japan

Japan has different concepts of tax evasion and tax avoidance. Tax evasion refers to intentional violations of tax law provisions, such as failing to declare income or intentionally concealing tax obligations. Tax avoidance is a behavior that minimizes tax liability under legal premise, including “tax-saving” behavior that is acceptable to the public.

Brazil

Brazilian tax theory and courts believe that as long as it does not violate the law, taxpayers have the right to adopt business methods that make them pay less tax.

Denmark

Danish law considers it legal to use “tax-saving” methods to minimize tax burdens; intentional violation of tax provisions is considered illegal.

Finland

Finland distinguishes between the time when tax obligations are realized and the nature of the behavior, and considers reasonable planning before tax obligations are established to be tax avoidance; concealing or providing false information after the obligations have been established is tax evasion.

Netherlands

The Netherlands recognizes the freedom of taxpayers to reduce their tax liability through legal strategies.

Sweden

Sweden has different expressions on tax evasion, tax avoidance and tax planning. Tax evasion refers to the failure to provide business details intentionally or due to obvious negligence; tax avoidance refers to the use of means consistent with civil law to obtain unexpected tax benefits; and what is expected or accepted by legislators is called tax planning.

The difference between tax saving, tax evasion and tax avoidance

Although the three concepts of tax saving, tax evasion and tax avoidance are related, there are also differences. Tax saving refers to choosing behavior that can reduce the amount of tax paid under the premise of complying with laws and regulations, and the behavior is legal; tax avoidance refers to avoiding or reducing tax obligations by exploiting loopholes in tax laws. Although it does not violate the express provisions of the law, it violates The spirit of the tax law; tax evasion is the act of evading tax burdens through illegal means.

From a legal perspective, tax saving is a legal act, tax evasion is an illegal act, and tax avoidance is somewhere between legal and illegal. From the content of the behavioral process, tax evasion is the direct evasion of taxable obligations, tax avoidance is the artificial arrangement of economic behaviors between taxable and non-taxable, and tax saving is the avoidance of taxable behaviors or the replacement of heavy taxes with light tax behaviors. Behavior.

From the perspective of the relationship between behavioral consequences and national tax revenue, tax evasion and tax avoidance will lead to a reduction in the government’s current budget revenue, which is not conducive to the long-term growth of national fiscal revenue; while tax savings will contribute to the stable growth of national fiscal revenue.