Anti-tax evasion measures

by | Jun 27, 2024 | Definition | 0 comments

Anti-tax evasion measures

In a globalized economy, the fight against tax evasion has become a major challenge for governments seeking to secure their tax revenues. Anti-avoidance measures aim to prevent the illicit transfer of capital across national borders in order to avoid taxation.

What is tax evasion?

Tax evasion occurs when individuals or companies move their assets or income to low-tax jurisdictions in order to reduce their tax burden. In response to this practice, governments, supported by international bodies such as the OECD, have introduced a range of measures to combat tax evasion.

Key measures to combat tax evasion

Automatic exchange of information

The automatic exchange of information is of vital importance, enabling tax authorities to receive data from their foreign counterparts. This transparency reduces the space where capital can be hidden.

BEPS (Base Erosion and Profit Shifting) legislation

BEPS actions, designed by the OECD, aim to combat the strategies of certain companies to shift their profits to subsidiaries located in countries or territories with reduced taxation. A regulation that tends towards international tax harmonization.

Bilateral and multilateral tax treaties

Tax agreements between countries enable double taxation to be avoided and cooperation on tax evasion to be defined. The OECD Model Tax Convention is the benchmark.

Lists of non-cooperative states

States can draw up lists of jurisdictions considered uncooperative in tax matters. They are then subject to various sanctions, which have the effect of encouraging them to cooperate more.

Unilateral measures

Some countries have their own provisions, such as the law against tax havens or the CFC (Controlled Foreign Corporation) rules.

Impact of anti-tax evasion measures

On the global economy

By limiting tax evasion, governments can recover billions of euros in revenue. This reinvests in the economy and reduces financial inequalities between countries.

Company practices

Anti-avoidance measures are leading companies to rethink their tax optimization strategies, placing greater emphasis on transparency and the need for tax justice.

Frequently asked questions

Here is a list of frequently asked questions about tax avoidance measures.

What is the EU’s approach to tax evasion?

The EU is seeking a harmonized continent-wide approach, with measures such as the ATAD (Anti-Tax Avoidance Directive) to prevent tax evasion and ensure fair taxation.

What is the BEPS project?

The OECD’s BEPS project comprises 15 actions to combat tax base erosion and the transfer of profits to low-tax jurisdictions.

What tools are available to governments to combat tax evasion?

States have a number of tools at their disposal, such as information exchange agreements, the application of CFC laws, the implementation of anti-abuse legislation and the development of rigorous tax policies.

What role do citizens play in combating tax evasion?

Citizens can play a role by promoting ethical practices, supporting tax justice policies, and staying informed about legal tax exemption schemes.

How do anti-avoidance measures affect tax havens?

They encourage tax havens to adopt international standards of transparency and tax cooperation, on pain of sanctions and exclusion from global financial markets.

This article provides an overview of tax avoidance measures, a complex and constantly evolving subject. Staying informed is essential, especially for finance and tax professionals, to understand the impact of these measures on business practices and tax obligations worldwide.

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