What are the differences between double tax avoidance and tax evasion?
Double tax avoidance and tax evasion are two distinct concepts that are both related to international tax law in Maryland. Double tax avoidance is when a person or company is able to take steps to ensure that they do not have to pay taxes to two different countries for the same income. This is done through international treaties, such as the US-UK Double Taxation Treaty, which allow for taxpayers to pay taxes on any income earned in one country in the other country. Tax evasion, on the other hand, is an illegal activity that involves deliberately and intentionally avoiding paying taxes that are legally owed. This can be done through various methods such as concealing income, underreporting income, avoiding reporting certain types of income, or claiming deductions or credits that are not legally allowed. Though both double tax avoidance and tax evasion both revolve around avoiding taxes, they differ in that double tax avoidance is a legal practice while tax evasion is illegal. Double tax avoidance does not involve any form of fraudulent activity or misrepresentation, whereas tax evasion does. Additionally, double tax avoidance is not available to everyone and must be taken advantage of through domestic and international treaties. Tax evasion, however, is available to anyone who is willing to risk the consequences of being caught engaging in the activity.
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