Different countries have different legal definitions of tax evasion and tax avoidance. The following are the legal definitions of some countries.
1. Japan
Japan has different concepts of tax evasion and tax avoidance. Tax evasion refers to the behavior of taxpayers deliberately violating tax law provisions to reduce tax obligations, such as not declaring income or intentionally concealing tax obligations. Tax avoidance covers a wider range. It is to minimize tax obligations under the premise of legality, but it is not tax evasion. Tax avoidance also includes “tax saving” behaviors that are acceptable to the public.
2. Brazil
Regarding the concept of “tax avoidance”, Brazilian tax theory and courts both believe that as long as they do not violate the law, taxpayers have the right to adopt business methods that make them pay less tax. In order to reduce or not bear tax obligations, taxpayers will take corresponding actions or methods, but only before the legal facts of tax obligations occur, otherwise they are not considered legal.
3. Denmark
Danish law considers it legal for taxpayers to use “tax saving” methods to minimize tax burden; however, if taxpayers deliberately and directly violate tax provisions, or do not actively declare income or conceal the fact of tax obligations, it is illegal and should be punished.
4. Finland
Finland pays great attention to the distinction between tax avoidance and tax evasion. Before the tax obligation is established, if the taxpayer organizes his actions in a certain way from the beginning, so that the established tax laws and regulations cannot be applied, it is a tax avoidance behavior. If the tax obligation has been established, the taxpayer reduces the tax obligation by concealing facts or providing false information, it is a tax evasion behavior.
5. Netherlands
The Dutch Parliament and courts recognize that taxpayers have the freedom to “save taxes” through normal channels by using “acceptable methods”. Its characteristic is to reduce tax obligations by legal strategies.
6. Sweden
Sweden has different expressions for tax evasion, tax avoidance and tax planning. Tax evasion refers to the taxpayer’s failure to provide all the detailed information of the business intentionally or due to obvious negligence; tax avoidance refers to the taxpayer taking measures that are completely in line with civil law, but making full use of various tax laws and regulations, in this way to obtain tax benefits that are not originally expected by the legislator. If the tax benefits are what the legislator expects, or at least acceptable to the legislator, it is called tax planning, not tax avoidance.
From the above, it can be seen that the definition of the concept of “tax evasion” in various countries around the world is basically the same, but the definition of tax avoidance is very different. Some countries propose to oppose tax avoidance, some do not oppose it, and some subdivide tax avoidance into legitimate tax avoidance and illegitimate tax avoidance. Among them, legitimate tax avoidance is called “tax planning” or “tax saving”, which is not opposed in law.