Gains or profits from business
Gains or profits from employment
Dividend, interest or discount
Rent, royalties, or premium
Pension, annuities or other periodical payment
Tax Evasion and Tax Avoidance
Tax evasion is the process whereby a person, through commission of fraud, unlawfully pays less tax than the law mandates. There are a few forms of tax evasion that we can identify, first, the unreported income from self-employment like wages or salaries due to unreported work or jobs regardless whether it is legal or illegal. The second form of tax evasion is lying about dependants. Next, is in the form of underreporting state value. Tax evasion can also be in the form of corporates overestimating the property which has been donated to charity. The most common form of tax evasion is lying about the income. This usually happens in order to reduce the amount of tax paid.
Whereas for tax avoidance, tax avoidance is the process whereby an individual plans his or her finances so as to apply all exemptions and deductions provided by tax laws or reduce taxable income [2] . Therefore, to avoid being taxed, an individual will take advantage of all legal opportunities to minimize as much as possible his or her state or federal income tax, gift tax or estate tax. For example, an individual may avoid federal income tax by investing a large sum of money in municipal bonds because he knows that the interest charged for such bond is not considered taxable income on which federal tax is due. Interest on the same amount of money placed in savings account must be included as taxable income.
In conclusion, tax evasion is not similar as to tax avoidance. Tax evasion is a crime but tax avoidance is not.
On September 2012, at Bukit Mertajam, it was out in the paper saying that a tobacco company called a Global Tobacco Manufacturers (International) Sdn Bhd was charged with three counts of evading taxes totalling more than RM950000 in a magistrate’s court [3] . The company was jointly charged with two other individuals of invading tax with a total up to RM280324 because of failing in printing the ‘MY’ safety mark on 60940 packets of cigarettes as required under Section 20 of the Excise Act 1967. They are alleged to have committed the offence on Sept 22, last year at the company’s store. They were also charged with evading taxes amounting to RM588800 due to the fact that they did not print the safety stamp on 128000 cigarette packets found in a lorry at the premises on that same day. Global Tobacco
