Tax evasion is a crime is just about every developed country around the world. Anyone guilty of tax evasion is subject to fines or imprisonment. In China, for instance, the punishment of tax evasion is as severe as the death penalty. In Switzerland, on the other hand, acts that equal criminal tax evasion in other countries are considered civil matters.
Anyone who dishonestly misreports income in a tax return, it is not necessarily considered a crime. These acts are addressed in the Swiss tax courts, rather than the criminal courts. Even in Switzerland, however, fraudulent tax conduct is regarded as criminal. The deliberate falsification of records is one example of fraudulent tax conduct. However, civil tax transgressions result in penalties. The difference between Switzerland and other countries, though, while it is considered to be significant, is quite limited.
Tax evasion is punished according to the extent of evasion. That is, the severity of the punishment depends on the severity of the evasion. Usually, the higher the evaded amount, the more severe the punishment.
Strategies for Tax Evasion
There are various strategies for minimizing tax evasion, however. One of these is the privatization of tax enforcement. This strategy is designed to overcoming the limitations of government tax administration in controlling tax evasion. A number of governments have resorted to privatization of tax enforcement as a means of enhancing the overall efficiency of their tax systems. The basic premise is that the leakage of revenue can be lowered if there is a privatized regime. In Bangladesh, for example, a portion of the Customs administration was privatized in as early as 1991.
Tax Farming and Tax Evasion
Tax farming is another means of reducing tax evasion. It is also a well established means of collecting revenue even in the face of difficult determining how much actually needs to be collected. Government leases out the collection system to a private entity for a set figure. They ten set about collecting the revenue and absorbing the risk of attempts at evasion by the tax-payers. For developing countries, tax farming is considered to be a potentially viable solution for solving the problem of tax evasion once and for all.
Finally, the pre-shipment agencies, such as SGS and Cotecna, are hired to prevent the evasion of evasion of customs duty. The PSA systems specifically work to prevent the evasion of customs duties achieved by under-invoicing and misdeclaration.
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