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Tax avoidance is the legal utilization of the tax regime, to reduce the amount of tax that is payable by means that are within the law. Tax planning includes legitimate tax savings、tax avoidance and illegal tax evasion. It is often very hard to distinguish them. Taxpayers, based on gaining tax benefits, may abuse legal forms to avoid the constituent elements of taxation by irregular transactions and attain the economic benefits equivalent to normal transactions. Such actions shall be termed tax avoidance. Tax evasion is the use of tax loopholes to obtain tax benefits or reduce taxation. As referred to J.Y. Interpretation NO.420, in relation to laws involving taxation, they should be construed in accordance with the principle of taxation by law and the respective purposes of the laws, balancing therewith the economic purposes and the principle of substantive fairness of taxation. So Article 12-1 of Tax Collection Act and Act Article 7 , Paragraph 1、2,of The Taxpayer Rights Protection was formulated with the principle of equality in substantive taxation. As referred to in Article 7, Paragraph 3、6、7、8,of The Taxpayer Rights Protection Act, the authorities may not impose a penalty on tax evasion, except that taxpayers conceal, make false and misleading presentation, or provide incorrect information to material items when declaring or being investigated, which results in the tax collection authorities making an inaccurate decision.
In accordance with chapter note of this thesis study motivation, purpose, thesis chapters structure, to clarify the meaning of tax avoidance and the difference among legitimate tax savings、tax avoidance and illegal tax evasion and discuss how to value tax avoidance in tax law, procure the legal effects of it and tax avoidance prevention. Then I will discuss the significance and effect of tax avoidance by an analysis of the principle of equality in substantive taxation. Finally, I will restudy and analyze some tax avoidance cases.
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