The Presidential Commission on Revenue Mobilization has indicated that tax evasion activities of some companies deny the state of its required revenue for development.
Required:
Explain what tax evasion is and identify THREE ways by which companies evade tax. (5 marks)
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Unlawful attempt to minimize tax liability through fraudulent techniques to circumvent or frustrate tax laws, such as deliberate under-statement of taxable income or wilful non-payment of due taxes. Tax evasion schemes are plentiful, but all involve the misrepresentation of an individual’s or business’ income and/or assets when reporting to the Ghana Revenue Authority (GRA), in order to reduce the amount of taxes they owe. (2 marks)
Ways by which companies evade tax include:
- Underreporting income
- Inflating deductions or expenses
- Hiding money
- Hiding interest in offshore accounts (Any 3 points for 3 marks)