Comparative Analysis And Management Of Tax Avoidance And Tax Evasion

Since the new round of tax reform in 2002, China's tax system had been basically in line with the demands of economic development. However, the loss of revenue was still more serious. In recent years, the upward of state's tax evasion criminal acts in the whole economy had already disturbed the order of the market economy seriously. Not only caused the loss of the country, but also constrained the efficacy of the existing system. Therefore, it has the important practical significance to improve the tax collection regulations further more and to strength the tax collection and management.The avoidance and evasion of the tax are the two ways which can bring economic benefits to the taxpayers. But the natures of these two methods are different. It is very necessary for every taxpayer to understand the two meanings and learn how to use legal means to protect and increase their legitimate economic interests.China's "Tax Collection Law" Article 63 states: The behaviors that the taxpayers forged, altered, and conceal unauthorized destruction of books, documents and accounts, list more expenditure and less income in books, the notice by tax authorities for false declaration or refusing to declare the tax returns, non-payment or pay less tax, which all belong to the tax evasion. The taxes and delinquencies which are stole by the taxpayers should be collected by the tax authorities. Non-payment or saving taxpayers will be required to pay a fine of five times of more than 50 percent of his taxes; If constitute a crime, they should be made accountable for their criminal responsibility.Compared with the concept of tax evasion, the determined-nature of tax avoidance is not so obvious. Take the definition prescribed by the International Financial Documentation Office for example: "tax avoidance derogatorily means applying the legal measures to reduce the tax, namely, the tax payer exploits the flaw and default of the tax laws to pursue the tax benefits by personal or company's flexible arrangement." The definition of tax avoidance is not prescribed in written currently in our Tax Levy and Management Ordinance. However, tax avoidance is frequently occurred in the policy documents during recent years. Above all, there seems to be such an consensus that tax avoidance is supposed to be an legal act to decrease the tax, which is not encouraged by the government for it is achieved by exploiting the flaws and defaults of tax laws and against the moral requirements.The distinction between the avoiance and evasion of the tax is theoretiaclly to make yet practically difficult to master.By virue of the comparative analysis of the properties of the channels in which tax is lost such as avoidance and evasion, this article expounds the cause, economic influence and corresponding measures to be taken regarding the avoidance and evasion of the tax, followed by comparatice study of them.The first part tells us the problems of avoidance and tax evasion in a macroscopic way. It points out that though both of them are methods trying to avoid taxes or pay less taxes for main body of tax-taxpayer, they have essential differences.②The problem of tax evasion is not only an immoral action, but it's also an action of violating the tax law or even the criminal law. The spreading of tax evasion endangers the rational allocation of resources, leads to reduced state revenues, and it also has a very bad effect on our society and influences the realization of the tax law. Therefore, according to the law, the tax authorities demand the payment of the tax dodge and late fee of the tax payers who evade paying taxes and punish 50 percent to five times of the tax dodge. Those who have committed crime are to be investigated the criminal responsibility. ?The difference between tax avoidance and tax evading lies in the legality in form and lawbreaking in nature. The subjective reason for the action of tax avoidance is motivated by the interest, while the objective reason is that there exist loopholes and defects in tax law. The harm of the tax avoidance is obvious for the society. But for the legal judgments of such acts should follow the "All non-prohibited by law is allowed" principle. In the case of no legal evaluation for the tax avoidance, we can only consider the tax avoidance behavior as the legitimate affairs.The second part of the article analyzes the relation between tax-evasion and tax-avoidance behavior in reality. The subjective causes, purposes and results of them are same. That is to take measures to reduce or exempt the burden on taxpayers, ensure tax payers receive more benefits, and reduce the country's fiscal revenue, which damage the financial function of revenue and undermine the principle of fairness in taxation. However, through the analysis of two examples, the author points out that tax-evasion and tax-avoidance have essential distinction in the use of tax, taxable time and legal quality. It is precisely for this reason that our tax section varies in the process of executing laws and disposing results. The measure taken by the "punishment" of tax-avoidance is elusion improving the existing tax laws and strengthening specialized anti-avoidance legislation. And the penalties for tax-evasion are carried out from both administrative and criminal aspects. The third part is the core of this paper.It mainly deals with the case of tax avoidance and evasion through the analysis of real cases. The differences of causes, economic effects, results and control measures of tax avoidance and tax evasion are expounded through analysis of the case of tax evasion on transfer of Land-Use Rights in our province as well as a case of the tax avoidance on the income of Real estate companies.In the last part, the problem of tax avoidance and tax dodging in law enforcement and its solution are introduced, and relevant regulations of tax avoidance and tax evasion in China's existing laws are also put forward. In the enforcement of tax avoidance and tax dodging, due to the increased enforcement of China's tax and law system, taxpayers' illegal tax avoidance becomes more hidden. As a result of the weak treatment of the cases that reported by the mass, the unsatisfactory implementation of the awards system and the poor security work, the enthusiasm of the masses to report cases of illegal tax avoidance is severely influenced. Ineffective punishment of tax evasion directly or indirectly leads to "a fine instead of late fee," "to fill instead of fines," "a fine instead of punishment", hence it can not frighten the crime of tax evasion effectively. It will affect the atmosphere of building a glorious rate-paying society if we overestimate the possibility of tax dodging on the basis of the dishonesty of the taxpayers. After the tax authorities collect the taxes, there still exists the ignorance of the taxpayers' tax-changing problems. When conducting inspections, tax inspectors take the chance of their power to ask for and take bribes, abuse their power, even intentionally baffling the taxpayers, which seriously infringed upon the legitimate rights and interests of taxpayers.In the tax administration regulations in effect in China, evading paying taxes is to be strictly levied the taxation and anyone who evades tax should be grueling. On the other hand, to point against the tax avoidance phenomenon, we should strengthen the anti-avoidance legislation and establish a strong anti-avoidance operation mechanism.