ethical issues in tax evasion. In business, theres always a situation where one has to choose one of the 2 things: 1) ethics 2) profits one has to decide whether profits are more important than ethics

1. ETHICAL MANAGEMENT
- TAX EVASION

2. Tax Evasion:
• Most of the people do not pay their taxes. They try to avoid this by some illegal
means or by taking the benefit of some loopholes in the Indian tax system. Tax
evasion is the term for the efforts by individuals, corporate, trusts and other
entities to evade taxes by illegal means.
• It is the deliberate arrangement of non disclosure of true state of their affairs to
the tax authorities to reduce their tax liability or to avoid the tax liability by
declaring less incomes, profits or gains than actually what they earned or
overstating their expenses

3. Tax Evasion Activities:
Some of the Tax evasion activities include:
 Underreporting income
 Inflating deductions or expenses
 Hiding interest in offshore accounts
 Hiding money
 Shell companies
 Tax havens
 Equity swaps
 Avoid capital gain tax
 Avoid real estate tax

4. Ethical Reaches in Tax Evasion:
 Unjust to salaried class
 Unfair advantage to small business
 Social responsibility of a citizen

5. Parties Responsible for Tax Evasion:
 Income Tax Officers?
 Government?
 MNC’s?

6. Companies Cook Up Their Books:
Short-Term
Thinking
The Carrot
and the
Stick

7. Companies Cook Up Their Books:

8. The Satyam Scam

9. CULTURE AND ATTITUDE
OF COMPANIES:
 India’s tax officers are as smart as any anywhere in the world, and western
companies who bank on their being unsophisticated tend to make a big mistake
 Tax policy in India is geared so that a tax officer in the field is supreme. There
are thousands of them, and each interprets the law in the way he sees fit. And
it’s this which leads to the perception of anarchy and chaos
 Some executives argue that tax avoidance is a mere symptom the real disease
being the high corporate tax rates and complex rules imposed by government.
Others point out that they are big employers and contribute a lot in payroll taxes
 Eric Schmidt, Google’s chairman, has said he is very proud of his company’s
tax-avoidance structures, which are based on the incentives that the
government has offered them to operate. Accountancy firms have long
supported such strategies, though they are becoming more concerned about
reputation risk.

10. ELEMENTS THAT PROMOTE TAX EVASION:
 Different Rates of Excise Duty (Example – Textiles)
 Inflation
 Agricultural Income not in the realm
of Income Tax (Black to White)
 Quotas
(Over Invoicing for Import Benefits)
 Real Estate Transactions
(Capital Gain Tax & Stamp Duty)

11. LEGAL AND MORAL PRINCIPLES VIOLATED DUE
TO TAX EVASION:
Obeying the law
Fair and transparency
Integrity
Responsibility towards the
nation
Leadership

12. Measures to Control Tax Evasion:
 Reduce Movement of Black Money
 Audit Program
 Promote Banking System
 The Black Money Bill
 Tax Efforts

13. Conclusion:
 While tax planning is seen as compliant behaviour, tax evasion is more of a
grey issue. Evasion is fundamentally illegal
 Paying a ‘fair’ amount of tax in the countries in which they operate is seen
as a responsible thing for a company to do for the social good; providing
the funds for public services such as healthcare, education and for public
investment in infrastructure, be it in the developed or developing world.
Such behaviour can leave a company vulnerable to accusations of greed
and selfishness, damaging their reputation and destroying the public’s trust
in them

14. THANK YOU 