The document discusses tax evasion and tax avoidance, highlighting the illegal practices individuals or corporations engage in to reduce tax liabilities. It asserts that while tax avoidance may be legal, it poses ethical concerns such as compromising government revenue and social obligations. The Philippines reportedly loses approximately P360 billion per year due to tax avoidance.

1. Tax Evasion and
Tax Avoidance
Fabrero | Far

2. T A X E V A S I O N
A n i l l e g a l p r a c t i c e o f a
p e r s o n o r c o r p o r a t i o n
t h a t i n t e n t i o n a l l y a v o i d s
p a y i n g h i s t r u e t a x .
T A X A V O I D A N C E
L e g a l r e a r r a n g e m e n t o f
a b u s i n e s s ’ f i n a n c i a l
a c t i v i t i e s i n o r d e r t o
l o we r t h e t a x l i a b i l i t y .
I l l e g a l a n d u n e t h i c a l L e g a l - e t h i c a l o r u n e t h i c a l

3. T A X E V A S I O N T A X A V O I D A N C E
A c c o u n t a n t s
L a w y e r s
F i n a n c i a l m a n a g e r s
U n s c r u p u l o u s
g o v e r n m e n t o f f i c i a l s

4. T A X E V A S I O N T A X A V O I D A N C E
● U n d e r s t a t e m e n t o f
I n c o m e
● O v e r s t a t e m e n t o f
E xp e n s e
● F a l s e o r f i c t i t i o u s
e n t r i e s i n b o o k s
● M o v i n g c a p i t a l o r
l a b o r t o a r e a s o r
c o u n t r i e s wi t h l o we r
t a x r a t e s
● M a n i p u l a t i n g t h e t a x
p a r a m e t e r s t h r o u g h
l e g a l m e a n s .

5. Computing the tax
Income
Expenses (xx)
xx
Net Income xx
Taxable Income >
Allowable tax deductions >
Income subject to tax >
Taxable Income
Non-taxable Income
Net Sales
Interest Income
Rent Income
Business Income
Gifts and inheritances
Life insurance proceeds
United Arab Emirates – 55%
Uzbekistan – 7.5 %
Philippines – 30%
CORPORATE TAX RATES

6. D i s o b e y i n g t h e
g o v e r n m e n t
C o m p r o m i s i n g
t h e p u r p o s e o f t a x a t i o n
Why is Tax Evasion ethically wrong?
• peace
• security
• Just
distribution
of wealth
• Disobeying Laws
• Disobeying Leaders

7. U N E T H I C A LE T H I C A L
T A X A V O I D A N C E
“Tax avoidance may therefore have been
essential for economic wellbeing”
“loss of government revenue,
increase in taxpayer’s after-tax
income, perverse effects on the equity
and effeciency goals of the tax
system.”
M i l t o n F r i e d m a n
a d m i t t e d t h a t t a x
a v o i d a n c e i s
a d v a n t a g e o u s i n t h e
l o n g r u n .
R o s a r i o M a n a s a n
s a i d t h a t t a x
a v o i d a n c e i s
s i m i l a r t o t a x
e v a s i o n .

8. U N E T H I C A L
T A X A V O I D A N C E
Av o i d i n g t a x i s
a v o i d i n g a s o c i a l
o b l i g a t i o n i t i s
u r g e d .
Av o i d i n g t a x
h a v e c o s t e d t h e
P h i l i p p i n e s –
P 3 6 0 b i l l i o n / y e a r