This may make undue weight on strategy creators to take measures went for expanding work, for example, expansionary financial and fiscal policies. Other effect of tax evasion is that it reduces the tax collections from the tax payers that would result to the reduction of the public services the individuals receive. Another is resource misallocation. This happens when people started to cheat on their taxes, such as choosing their own occupation to enter, choice of working hours, and undertaking their chosen investments. Dishonesty of paying taxes would also force the government to expand their resources to detect, measure and penalize offenses and this would require the government to use more funds.
engage in activities that are legal but run counter to the pur pose of the tax law. Usually, tax avoidance encompasses special activities with the sole purpose to reduce tax liabilities. An example for tax avoidance is strategic tax planning where financial affairs are arranged such in order to minimize tax liabilities by e.g. using tax deductions and taking advantage of tax credits. The taxpayer is not obliged to follow the spirit or the underlying purpose of the tax code but only the letter of the law.
If there the purchasing power tends to be excessive during inflation, it is curbed through increasing of taxes. They are progressive Direct taxes help reduce the gap that there is in the inequalities of people’s income. It therefore helps bring social equality. DEMERITS OF DIRECT TAXES Encourages tax evasion Direct taxes make a person to evade paying tax because of high tax rates and poor tax administration. Tax payers evade taxes by manipulating accounts to give incorrect information about their incomes It causes inconvenience Direct taxes tend to be inconvenient as they involve some procedures in the filing in of the returns.
The two basic Financial Theories, the Normative and the Positive account for most of the performance measurement strategies employed by firms to analyze their financial positions and performance. What are these theories and how do they influence the basic measurement systems if the financial world. I have in this report tried to gauge the two basic systems of performance measurement and how they diversify the strategies of measurement. With reference to several scholarly articles I have presented the main differences and uses of these systems and how it can be determined which system to use. Different corporations have different goals and their performance is based on these goals, other influences on their performances are the
Other than internal control, effective external control is of great importance to curb agency problem, particularly with the external auditor’s involvement. In this context, the external auditor would periodically examine the authenticity and objectivity of the company’s financial reports(Boshkoska,2014). Precise financial reporting is critical to ensure the truthfulness of the results and management has not manipulated results for personal gain(Larcker and Tayan, 2011). By employing appropriate accounting policies, the external auditor could help facilitate a position whereby aggressive accounting practices and exaggeration of figures are discouraged(Ojo,2009). Penalties could be imposed on managers and directors who intentionally inflate or manipulate reporting figures.
Regulations that the government implement, licensing for example, increases the barrier of entry into the market and decreases ways for the traders to gratify consumer demand. This case is prevalent in the monopoly market. The market is sometimes best to decide how much and what to produce since it has better information and knowledge of the consumers compared to the government. Economic decisions may also not be competent when the government is motivated by political power rather than economic imperatives. Sometimes, economic policies are designed to retain power rather than to ensure maximum efficiency in the economy.
WHAT IS CORPORATE TAX RATE? A levy placed on the profit of a firm, with different rates used for different levels of profits. Corporate taxes are taxes against profits earned by businesses during a given taxable period; they are generally applied to companies ' operating earnings, after expenses such as COGS, SG&A and depreciation have been deducted from revenues. Corporate taxes are usually levied by all levels of government (i.e., State and Country). Corporate tax rates and laws vary greatly around the world, as different governments and countries view corporate taxation in different ways.
The Inland Revenue Authority of Singapore (IRAS), the statutory board responsible for tax collection, defines tax evasion as knowingly misrepresenting assessable income and misusing tax reliefs. Though the number of evaders are small, their arrears amount to $387 million in tax and penalties. I will argue that compliance, or lack thereof, can be best explained by the powerful effect of socialisation by the nature of the state although there are other possible explanations.
Taxation The convergence of IFRS in India will not only affect the Financial Statements but also the tax liabilities would also get changed. Present scenario, Indian Tax laws do not recognize the Accounting Standards. To entertain immediate change in the Indian Tax Law is the major challenge faced by the Indian Law makers. 6. Fair Value Measurement IFRS uses fair value to measure majority of transaction in financial statements.
CHAPTER TWO LITERATURE REVIEW 2.1 The Meaning and Concept of Tax Compliance Conceptually, tax compliance is a terminology that lacks universal acceptance in definition as it is shrouded in varied views and interpretations backed by un-precise tax laws making it complex and difficult term to accurately define. Roth et. al. (1989) defined tax compliance as filing all required tax returns at the proper time and that the returns accurately report tax liability in accordance with the tax code, regulations and court decisions applicable at the time the return is filed. This definition is central to the definitions provided by other researchers (see, Long and Swingen, 1991; Alm, 1991; Hasseldine and Li, 1999; James, 1999; James and Alley, 2004; and Devos, 2009) and a key point to note in all these definitions is the extent to which tax payers submit themselves to the dictates of the tax law.