Tax evasion is an illegal activity that consists of hiding assets or income in order to pay less taxes.
In tax evasion, the taxpayer consciously and voluntarily tries to pay less taxes than his due. This illegal activity can have serious consequences for the offender, such as fines, the inability to carry out certain activities or jail time.
Elements that constitute tax evasion
For the figure of evasion to be constituted, the existence of three fundamental elements must be verified:
- A person obliged to pay a certain amount of taxes on his income, wages, property, etc.
- Confirm that the person has carried out activities designed to pay less taxes.
- Activities carried out to pay less taxes are illegal and involve breaking any law or regulation.
It is worth mentioning that people can look for loopholes to pay less taxes but, as long as these activities are legal, it is not considered that there is evasion.
Examples of tax evasion behavior
Here are some examples of avoidance behaviors.
- Income concealment: For example, declaring a lower salary than one actually earns.
- Concealment of assets: It consists of not declaring that one owns houses, land, etc.
- Illicit increase in deductible expenses: For example, include personal expenses (meals in restaurants or clothes) as expenses of the activity.
- Acquisition of unjustified grants: That is, obtaining grants without meeting the requirements.
Penalties for tax evasion
Such evasion is punishable and punishable by law. Depending on the amount that has been evaded, it is punished with fines (in money), which depend on the amount evaded, or, even in the most serious cases, with jail terms of up to five years.