To reduce the amount of income tax that employees have to pay, some employers give their staff advantages instead of taxable money, called perks, such as company cars and free health insurance.
Multinational companies often register their head offices in tax havens - small countries where income taxes for foreign companies are low, such as Liechtenstein, Monaco, the Cayman Islands, and the Bahamas.
Using legal methods to minimize your tax burden - the amount of tax you have to pay - is called tax avoidance. This often involves using loopholes - ways of getting around the law, because of an error or a technicality in the law itself. Using illegal methods - such as not declaring your income, or reporting it inaccurately - is called tax evasion, and can lead to big penalties.
Comprehension
Answer the following questions.
1. What does tax policy mean?
2. Taxation is one of the methods of financing, isn’t it?
3. What are the forms of taxation?
4. What is called perks?
5. Where do multinational companies often register their offices?
6. What is a tax burden?
7. How is the legal method to minimize the tax burden called?
8. Using loopholes is an illegal method, isn’t it?
9. What is tax evasion?
10. What can tax evasion lead to?
Vocabulary
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