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The Global Problem of Tax Evasion

Individuals or corporations who commit tax evasion often use tax havens to hide their money to avoid paying taxes within their own country. Tax havens are jurisdictions that have either no taxes or low tax rates (CRA, 2013). Tax havens create an unfair advantage over other countries that have higher taxes.
             Net Tax Gap.
             The net tax gap of a country refers to the difference between the amount of taxes that are supposed to be paid and the amount of taxes that are paid (IRS, 2013). Amongst a variety of other factors, tax fraud contributes to the net tax gap. Tax fraud is the largest contributor of the net tax gap See appendix A.  The net tax gap is an estimate as it is difficult to determine the actual amount of taxes that should be paid. All countries have a net tax gap however some countries choose not to publicly announce it. Many countries choose to not publicly announce their net tax gap. Many countries also under report their net tax gap. The disclosure and false reporting of the net tax gap in a country is because countries do not want to appear as an "easy target" for tax fraud.
             Tax Fraud Facilitators.
             Tax fraud in many cases is not easily done. The larger the tax fraud, in most cases, the more the transactions become complicating. There are several facilitators of tax fraud.
             Lawyers                      .
             Lawyers help facilitate tax fraud in two ways. Firstly, if an individual or corporation commits tax fraud and is accused, lawyers help defend the criminal act. A lawyer can help reduce the amount of taxes that should be paid back or defending the client, proving not guilty, thus resulting in no repayment of taxes. Secondly, lawyers help individuals and corporations avoid paying taxes by assisting them in aggressive tax planning. Lawyers have the ability to find gaps in the legal system to avoid or reduce paying taxes. In some cases, lawyers have facilitated writing the laws and therefore have a strong ability to find the gaps.


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