Taxation project

Tax Research Paper
Introduction:
The use of legal strategies to adjust the financial circumstances of a person to reduce the amount of tax owed to that person by that State implies corporate tax evasion. Claiming available credits and deductions would gain corporate tax. Corporate tax avoidance is frequently mistaken for tax evasion. But although the two sentences that sound the same, tax avoidance uses illegal tactics, such as under reporting the income of a individual to keep him or her from paying taxes.
“According to Sikka (2010) in his article, SMOKE AND MIRRORS: CORPORATE SOCIAL RESPONSIBILITY AND TAX AVOIDANCE, tax avoidance strategy is an ‘organized hypocrisy.”
I agree with the Sikka Word that tax avoidance is a deception orchestrated. In fact, companies are able to think about social responsibility by making ways to stop paying taxes concurrently. The prevalence of tax avoidance is an incentive for bureaucratic hypocrisy which can be seen as gaps between corporate dialogue, decisions and practice (Brunsson, 1989, 2003). Corporate tax avoidance is also systematic hypocrisy. Indeed, in 2002, WorldCom was knocked down by charges of fraud as a US telecoms company. In order to boost accounting profits, the company had used tax avoidance strategies for example. A formal Code of Ethics was disdained by the senior management of WorldCom. However, according to Werther and Candler (2005), the company appeared to encourage ethical business behaviour. In fact, the policy alleged that fraud and dishonesty would not be tolerated. The New York Southern District Institutes Court for Bankruptcy suggested that the report by the insolvency investigator focussed on internal judgments on tax avoidance profit raising (2004). The public keeps these decisions and actions secret in the normal method.
The second reason I agree with Sikka's statement of organized hypocrisy in corporate tax evasion is therefore the case of KPMG hired in 1997 at an initial fee of $3 million, which also paid a $500 thousand charge for its feasibility report. In total, the organization received incentive incentives of $2.5 million each. As stated by the United States Bankruptcy Tribunal Southern District of New York in 2004, KPMG's services were integrated into the company's tax-minimisation techniques, primarily related to the use of price-transfer to transfer revenues to low tax jurisdicctions and minimize taxes and raise accounting income.
Another important component of the programs developed by KPMG was to create the foresight of top management as an immaterial asset, accepted in return for royalty charges by parents. The 1998-2001 revenues surpassed WorldCom's total net sales by over $20 billion during the time. Royalty charges were often an overwhelming proportion of those firms' net income – often up to 80 to 90%. Unfortunately, in 2000, the WorldCom Tax Division experimented with royalty schemes such as paper transactions without receiving consumer consent and thus raised the royalty costs (p.13).
Main Cost:
Unless the members of low-income countries are excluded from the tax evasion solution the tax avoidance system would continue to have costly implications for millions of people. Indeed, in July 2014 in Los Angeles College, President Obama strongly declared that deserters who renounced citizenship as income shields were using creative strategies to ensure that their taxes were reduced to minimal. Gaertner (2014) reports that corporate tax avoidance techniques by individuals are expensive. Five forms of costs are being actively avoided by businesses and individuals. The tax authorities are first of all seeking to combat innovative tax avoidance activities and are generating new opinions and legislation that will be added to the tax code in effect. While it is...