Tax evasion (What is it, types of evasion and consequences)

The tax evasion It is also known as fiscal fraud and it is a crime penalized by the laws of each country. It occurs when a person or company hides, modifies or uses any means to hide assets or profits that can make you pay more taxes.

A tax evader must have some fundamental elements that we will define below along with the concepts that can help in the definition of this concept related to many scandals of companies, celebrities, politicians and institutions.

What is tax avoidance?

The tax evasion It is a very different practice from tax avoidance where actions are carried out through legal means aimed at paying less taxes. In the case of evasion, and as we have already mentioned, it is a crime defined by tax experts as a legal entity that does not voluntarily pay a specific tax.

Ways in which taxes are evaded

East type of tax fraud that costs millions of money to the treasury annually are based basically on hiding facts that may be taxable, for this they use different modalities, among which the following stand out:

1. Black work: It is also known as informal work, It is a type of work difficult to pay taxes in which there may be inaccuracies in prices, income or in terms of registration dates which helps tax evasion and many companies and organizations take advantage of this to have cheap labor that can benefit the company without having to pay what is owed by them from the point of view of insurance or other benefits that may be stipulated in the laws.
2. Invoices without VAT value added tax: This is another common way in which many companies evade or incur tax crimes. Despite implementing mechanisms such as electronic invoices, it is still a widely practiced way of avoiding taxes.
3. The third way is even simpler and consists of deliberately concealing actual earnings of a person or company and that is why these practices are considered a crime since they can be used to falsify invoices or increase the real prices of production, so that this affects the amount of taxes that they must pay, often including expenses to the company that are unrelated to the same

Ways taxpayers evade taxes

Simulated operations over the internet by fictitious services is one of the most common ways in which that nowadays taxes are evaded, this comes to involve purchases and sales that did not reach be done.

As for individuals, it is also common for people to ask family members to bill for them in order to show that their expenses are higher than the real ones. This is also linked to another common modality which consists of receiving payments through accounts in a bank and not subsequently declaring them as income.

What is fiscal resistance?

Also known in the tax world as tax objection, it is resist or refuse to pay some type of tax, for this there must be a disagreement with the nature of the tax or with the institution, this occurs at often at the social level when people refuse to pay taxes whose ultimate purpose is the creation or increase of war forces or invasive. This is known as pacifist reasons.

Another reason that fiscal resistance is considered is when these taxes are used for the environmental exploitation or in any other way that damages the environment or for reasons related to religion.

What is black money?

It is known in many ways such as gray money or dirty money. It is the money that has not been declared to the competent authorities such as the Ministry of Finance or according to each country.

This money can come from different illicit activities, including drug trafficking or the sale of illegal weapons, many times this money can also be come from licit activities such as the sale of goods or other activities but which, since it is not declared, does not pay tax and is defined by many experts as gray money.

Consequences of tax evasion

One of the main consequences of evading taxes, is that, if they are detected, they may carry penalties that can go from fines, which would be defined as economic consequences and that can end with jail time depending on the severity of the same.

Tax regulation is something that developed countries take very seriously and that aim to avoid diverting capital to countries with low taxes, this can be observed in the reforms that the European Parliament seeks to implement to make multinationals declare fiscal and financial data separately wherever these companies operate.

Consequences for society

In countries where tax evasion is very high, the social consequences are evident in economic stability of the same and is reflected in sectors such as education and transport, which in turn involves the most vulnerable.

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