Posted: Apr 14, 2012 6:19 pm
mrjonno wrote:What counts as tax evasion does however vary between countries.
As far as I'm concerned if there is a difference in rate between income tax and corporation tax then you have legal tax evasion.
Well the two are defined differently. Evasion being the hiding of income through illegal means such as not reporting it to avoid taxes. These are things big businesses can't really get away with.
Avoidance is minimizing your tax bill through legal use of the tax code. Pretty much everyone does the latter. It can be problematic as well obviously and they can both be considered forms of non-compliance.
For instance there is a professor at my uni who has a blog. The professor bought a new car and put a bumper sticker on it with the site address, then claimed the car was a business expense(advertising) on the tax form. Trying to separate what is an illegitimate expense and what is a stupid investment can be difficult. For smaller businesses you can away with that kind of stuff more easily.