Recommendations for Effective Tax Management

Tax avoidance is considered a legal way of tax planning, unlike tax evasion. Generally speaking, tax avoidance is a set of measures aimed at reducing taxes through elaborate tax planning schemes and accurate contracting.

Needless to say that tax planning measures are taken into account alongside the current legislation, and effective tax avoidance is reached due to the prevention of potential penalties and the correct tax accrual and payment.

Tax avoidance includes the following measures:

  • Employment of the spouse or a family member to minimise taxes.
  • Transferal of assets into a tax haven. A tax haven is a typically low-tax jurisdiction.
  • Trusts and holdings allow for a beneficial tax base foundation.

Effective tax avoidance can be organised only by a qualified accountant or an IFRS expert, as there is a fine line between tax avoidance and tax evasion. As a general rule, financial instututions are extremely careful about cooperating with clients using certain schemes as to avoid the integrity of all parties involved being questioned.

Regulations fighting tax evasion:

Section 33 of Income Tax Act contain key regulations fighting tax evasion actions. The Company actions are subject to this legislation in the event that tax authorities determine them to be:

  • Changing the amount of the tax deemed to be paid.
  • Exempting any individual for tax liabilities.
  • Reducing or exempting tax liabilities that have been legitimately imposed.

Eltoma Corporate Services provide a wide range of services in relation to tax avoidance, as well as reorganising and incorporating various holding structures.

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