abhishreshthaa
Abhijeet S
INDIA TAX PLANNING SCENARIO
Aggressive tax planning that takes advantage of an unintended legal or administrative loophole. Examples include captive insurance companies, investment companies, some service and construction businesses being conducted through tax haven entities, and pricing of transactions.
One instance of this might be the establishment of a service business in a tax haven to provide services for another branch of the same business located in a third country. A further example might be the use by a multinational corporation of artificially high transfer pricing to shift income into a tax haven.
Often, the parties are aware that if the transaction were thoroughly audited, a significant adjustment would probably be made. They rely on the difficulties involved in overseas information gathering and on the complexity of the transactions to avoid payment of the taxes.
Tax evasion is an action by which the taxpayer tries to escape legal obligations by fraudulent means. This might involve simply failing to report income or trying to create excess deductions.
This category can also be broken down into two subcategories:
(A) Evasion of tax on income that is legally earned; and,
(B) Evasion of tax on income that arises from an illegal activity such as trafficking in narcotics.
An example of tax fraud would be the formation of sales companies that appear to deal only with unrelated parties, but in fact deal with related parties, hiding the fact that one owns a particular tax haven corporation. These tax haven corporations are also used to hide corporate receipts or slush funds
Aggressive tax planning that takes advantage of an unintended legal or administrative loophole. Examples include captive insurance companies, investment companies, some service and construction businesses being conducted through tax haven entities, and pricing of transactions.
One instance of this might be the establishment of a service business in a tax haven to provide services for another branch of the same business located in a third country. A further example might be the use by a multinational corporation of artificially high transfer pricing to shift income into a tax haven.
Often, the parties are aware that if the transaction were thoroughly audited, a significant adjustment would probably be made. They rely on the difficulties involved in overseas information gathering and on the complexity of the transactions to avoid payment of the taxes.
Tax evasion is an action by which the taxpayer tries to escape legal obligations by fraudulent means. This might involve simply failing to report income or trying to create excess deductions.
This category can also be broken down into two subcategories:
(A) Evasion of tax on income that is legally earned; and,
(B) Evasion of tax on income that arises from an illegal activity such as trafficking in narcotics.
An example of tax fraud would be the formation of sales companies that appear to deal only with unrelated parties, but in fact deal with related parties, hiding the fact that one owns a particular tax haven corporation. These tax haven corporations are also used to hide corporate receipts or slush funds