Taxation 3rd Discussion

Tax avoidance and evasion

Tax Avoidance
-

A device thats is legally or neglect by the commissioners or appoint by law

Tax avoidance is a scheme where in a tax payer uses legally permissible scheme or alternative
method ceasing taxable property or income in order to reduce tax liability.
Though tax avoidance is allow by law, tax avoidance must be used by tax payer in good faith.
Using tax avoidance in flagrant, tax avoidance is tax avoidance in bad faith and has criminal
liability.

Tax Evasion
-

Is illegal and criminal liability

Result of absence of tax payment.

Tax Exemption
-

Grant of immunity by the state whether express or implied.

o Express
Those are written in the law
o Implied

Personal
a. It cannot be transferred to other.
b. It is personal in nature, it covers only the grantee.
Must not presumed
a. If it involves public property, tax free must presumed
Tax exempt is strictly construed against tax payer.
a. The tax payer must prove that he is tax free by setting a law, that prove that you are tax
free.

Kind of Tax Exemptions

A. Basis
a. Constitutional tax exemption
Immunity from taxation originate from the constitution.
Churches
Sects
Religious organization
b. Statutory
Emanates from legislature or congress.
c. Contractual
Emanates from contract.
Executive agreement entered by the president

 Treaty agreement
B. Form
a. Express written in constitution, statutory and contractual.
b. Implied that income is outside of taxing power.
C. Extent
a. Partial
One income is taxable and the other income is exempt.
DWU
b. Total
Exempted from all from of taxes
D. Object
a. Personal
Granted directly to person
b. Impersonal
Granted to a class
Principles Govern Tax exemption
1.
2.
3.
4.

Highly Dis-favoured by law

Tax exemption is not transferable
Tax exemption must be prove
Statutory grant of tax immunity is revocable.

Grants immunity effect of tax exemption

1.
2.
3.
4.

Tax amnesty
Coadunation
Refunds
credits