Therefore, this facilitates individuals and corporations to commit tax fraud.
Accountants.
When an individual or corporation commits tax fraud, often the accountant illegally adjusts the numbers within the financials to provide evidence of sufficient taxes paid. Financial evidence is an important instrument when auditing. Therefore, it is important to ensure the financials are in accordance with the taxes that are or are not paid.
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Tax Havens.
As previously mentioned, tax havens help provide an unfair advantage. Tax havens allow individual and corporations to avoid paying taxes in their own country. See page 4 for more tax haven details.
Tax Fraud Impact.
Tax fraud impacts both rich and poor nations. Tax fraud has several effects on a variety of factors within a country. Tax fraud prevents countries from surviving recessions, create a loss of public service budget, create a loss of infrastructure, impact citizens and undermine both democracy and capitalism. Outlined below are the detailed effects of tax fraud.
Recession.
A recession is a business cycle collapse, which results in a slowdown in the economy. During a recession, demand for goods and services start to fall, and private investors restrict their investments. Factories and firms usually end up reducing production and unfortunately some workers are laid-off. As more businesses continue to let go more employees, more people will have less money to spend since they have no jobs to generate an income. The recession will cause the economy to lead to higher unemployment, bankruptcies, and homelessness (Hubpages, 2013).
A reality of today is that we live in a society that is ruled by an elite of bankers who consider themselves to be above the law just because they earn more money than the rest of us. The government is collecting less and less taxes as businesses struggle to grow during a recession (Real Business, 2012).
In recent times of financial recession, tax evasion is another financial crisis that has to be dealt with, with high priority.