Criteria for Defining Tax Evasion as Tax Terrorism

Abstract

There are significant losses in tax revenues across the European Union (EU). National governments lose billions of euros in the revenues from non-paid taxes and other illegal activities. The fight against aggressive tax planning, tax fraud and illegal activities is on the agenda of the EU, OECD and all the national governments. However, due to the size of tax losses it should not be treated just as tax evasion, but rather as tax terrorism! Therefore, the author has set criteria when tax evasion should be named as “tax terrorism” as well as designed the principles for tackling tax terrorism and other ways of non-payment of taxes. The tax evasion could be treated as “tax terrorism” in case of international evasion from taxes by organized groups of persons for criminal purposes as well as when it creates significant losses in government revenues. The term “tax terrorism” would have impact to communication and cause response of society and politics, therefore it would have more social and political consequences.

Limning India’s tax terrorism saga

“…It has been argued that high tax compliance costs caused by cumbersome regulations and harassments by the taxmen have hindered investments, encouraged tax evasions resulting least economic growth (Jerbashian and Kochanova, 2016). Notwithstanding, the term "terrorism" has no universally accepted definition, but, it has been frequently used in the political spectrum (Popa, 2013;Grozdanova, 2014;Juruss, 2017). The governments have referred it to explain the activities, which have adopted illegal procedures and methods, i.e.…”

“…On the other hand, tax terrorism has referred as putting illegal pressure on the taxpayers by the authority for collecting additional revenues or to create bottlenecks in their ways by enforcing the different provisions of the harsh laws inasmuch the non-payment of taxes likely can take the form of tax non-compliance or tax evasion (Blaufus et al, 2016). Moreover, as it has an impact on communication and causes response of society and politics; therefore, it would likely have more social and political consequences as well (Blackburn et al, 2012;Juruss, 2017).…”

Possible options for ensuring of tax compliance

“…In practice the approach to prevent tax debt growth could be similar, as it used to be in the case of tax evasion or avoidance. The tax administrations approach to debt recovery may be the same as the one witch was designed as the approach for fighting against tax terrorism: a mitigation of the consequences or a prevention of the causes (Jurušs, 2017).…”

“…One of the solutions could also be to extend the scope of a reverse charge mechanism of VAT, although it should be noted that this could only temporarily limit VAT fraud as fraudsters would target other industries (Jurušs, 2017).…”