E-Book Overview
Tax avoidance and evasion have an important effect on the economic development of every economy. Developing economies are particularly vulnerable to tax avoidance and evasion due to inadequacies in their institutional framework and the lack of sufficient expertise and resources to monitor the intricacies of this issue. Given the far-reaching effect of revenue losses due to tax noncompliance, many developing countries have undertaken tax reforms to improve their tax administration and implemented various anti-avoidance measures to combat tax evasion. This book provides an overview of recent tax reforms and institutional frameworks of four major developing economies, China, India, Brazil, and Mexico, with a focus on China.
Most important, this book investigates the tax avoidance behaviors as well as their anti-avoidance legislation. In particular, this book includes an in-depth empirical study on tax noncompliance behaviors of foreign investors detected by the Chinese tax authorities. The empirical evidence on how tax policy and other corporate factors affect tax avoidance behavior helps public policy makers improve tax compliance through designing legislative and administrative measures. Though the findings pertain to China, the largest developing economy, the results should be a useful reference for other developing countries.
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Tax Avoidance and Anti-Avoidance Measures in Major Developing Economies This page intentionally left blank Tax Avoidance and Anti-Avoidance Measures in Major Developing Economies PHYLLIS LAI LAN M O FOREWORD BY TANG YUNWEI PRAEGER Wes port Con ' - ES Library of Congress Cataloging-in-Publication Data Mo, Phyllis Lai Lan, 1959Tax avoidance and anti-avoidance measures in major developing economies / Phyllis Lan Mo ; foreword by Tang Yunwei. p. cm. Includes bibliographical references and index. ISBN 1-56720-577-1 (alk. paper) 1. Tax administration and procedure—Developing countries. 2. Tax evasion— Developing countries. 3. Taxation—Developing countries. I. Title. HJ2351.7.M6 2003 336.2'06'091724—dc22 2003057993 British Library Cataloguing in Publication Data is available. Copyright © 2003 by Phyllis Lai Lan Mo All rights reserved. No portion of this book may be reproduced, by any process or technique, without the express written consent of the publisher. Library of Congress Catalog Card Number: 2003057993 ISBN: 0-56720-577-1 First published in 2003 Praeger Publishers, 88 Post Road West, Westport, CT 06881 An imprint of Greenwood Publishing Group, Inc. www.praeger.com Printed in the United States of America The paper used in this book complies with the Permanent Paper Standard issued by the National Information Standards Organization (Z39.48-1984). 10 9 8 7 6 5 4 3 2 1 Contents Tables vii Foreword by Tang Yunwei ix Preface xi 1 2 3 The Nature and Emerging Significance of Tax Avoidance in Developing Economies 1 Chapter Overview General Concepts on Tax Avoidance and Evasion The World Economy The Level of Damages Arising from Tax Avoidance by Foreign Investors in Developing Economies Environmental Problems for Tax Avoidance in Developing Economies 1 2 4 6 12 Tax Systems in Major Developing Economies 15 Chapter Overview Tax System in China: Implications for Foreign Investors Tax System in India: Implications for Foreign Investors Tax System in Brazil: Implications for Foreign Investors Tax System in Mexico: Implications for Foreign Investors Summary Comparisons 15 19 37 48 60 71 Tax Avoidance and Anti-Avoidance Measures 77 Chapter Overview Tax Avoidance and Anti-Avoidance Measures in China 77 78 CONTENTS