Being informed on the various types of tax fraud is the best protection against this type of crime. Tax fraud comes in many different forms and has serious legal consequences. We will begin by defining the various types of tax fraud as well as the facilitators. The impact of tax fraud varies, therefore we will discuss its impact it on a variety of nations. Given that tax evasion is still a problem faced today, we will conclude by introducing three recommended solutions to help eliminate this crime as a global problem. .
Tax Fraud as a Global Problem.
Tax fraud is a global problem. It occurs with individuals, national corporations and multinational corporations. Although corporations have the largest impact on tax fraud, all types of tax fraud activities harm both rich and poor nations. Tax fraud can be an individual or corporation failing to report income made, claiming credits or exemptions they are not entitled to, hiding money in offshore accounts, etcetera. Individual tax fraud is the smallest contributor to the net tax gap within a country. Although it still affects a nation, it contributes the least for several reasons. Firstly, individuals in most cases are unable to afford lawyers and accountants to commit tax fraud. Secondly, if an individual commits tax fraud, in most cases their overall taxes to be paid would not be as large as a Multinational Corporation.
National and Multinational corporation tax fraud is larger than individual tax fraud. The HMRC Corporate Communications estimates that ¾ of the tax gap ``can be attributed to small, medium and large businesses``. National and Multinational corporations may have the ability to afford lawyers and accountants to allow them to commit tax fraud. They are often able to commit tax fraud without penalties. In addition, many small service businesses provide services and do not report it. Therefore, if a business provides a service and the customer pays cash, the business may choose to omit these profits and avoid paying the taxes owed.