Tax avoidance means neglecting to pay taxes that are owed. It is commonly practiced by multinational companies using tax havens to hide profits. While some tax avoidance has existed since the 1920s, it has grown significantly in recent decades, costing governments $50-200 billion in lost revenue annually. Poor countries have struggled to raise sufficient tax revenue due to tax competition between governments and trade liberalization policies that shift more of the tax burden onto poor individuals through consumption taxes. Tax havens undermine market competition and capital investment by allowing wealthy individuals and companies to escape taxation, and enable political corruption through secret bank accounts.

1. TAX AVOIDANCE

2. MEANING AND INTRODUCTION
OF TAX
Tax is a fee charged by a government on a product ,
income or an activity.
As we all know that, India is a democratic country
& so , it is important to pay taxes.But if we avoid
paying taxes then it will create a problem for
providing public services properly.

3. •In simple terms, Tax avoidance means to neglect
paying taxes.
Generally, Many multinational companies
practice tax avoidance to exploit havens (safety)
& to hide profits by avoiding it.
Recently , Delhi is facing the problem of tax
avoidance .

4. When did tax avoidance came into
existence ?
The whole idea of tax avoidance probably started with
the US & the British Empire in the year 1920.
Main players of tax avoidance are:-
Accountant
Banks
Tax Avoiders

5. SCALE OF TAX AVOIDANCE
The estimates of tax avoidance ranges from $50
billion to $200billion of revenue losses.
In 2005, the total estimated dirty money flowing in
global banking system is $1 trillion which is
broken down as follows:

6. Developing
Countries
$50 billion
MNC’s $200 billion
Individuals &
Criminals
$250 billion
Lost through
Corruption
$50 billion

7. Tax avoidance undermines
Capitalism
The ability of MNC’s to take advantage of tax havens
(safety) and to avoid tax , destroys market.
Even in rich countries , MNC’S avoid paying taxes.
Recent Research recommended that at least 75% of
companies in UK do not pay tax at the national rate of
30%.

8. Why didn't poor countries raise
sufficient tax revenue?
Poor countries have not been able to increase the amount
of revenue they raise through taxation .
There are 2 main reason:-
1. Tax competition
2. Trade liberalisation
As taxes on profit of business & trade have
diminished VAT ( value added tax) has increased.
This shifts more burden of taxation on to the shoulders
of poor people.

9. According to IMF (International Monetary
Fund),
In low income countries for every $1 US
lost in trade taxes , only 30 US cents is
recovered that is why poor countries are
lagging behind compared to other countries

10. What are the impacts of tax havens
on poor countries ?
Secret Bank A/c encourage wealthy individuals and
companies to escape paying taxes.
Banking secrecy provided by global financial
institution provide a secure cover for fraud , political
corruption etc.