Definition

Noun: - The minimization of tax liability by lawful methods: The legal arrangement of one's financial affairs to reduce the amount of tax owed. It involves using provisions within the tax law, such as deductions, credits, and allowances, to lower tax bills.

Usage

"Tax avoidance" is a formal term used in legal, financial, and political contexts. It describes a legal activity, in contrast to the illegal act of "tax evasion." It is typically used as an uncountable noun.

Examples

• The company engaged in aggressive tax avoidance by shifting profits to subsidiaries in low-tax jurisdictions.
• There is a fine line between legitimate tax avoidance and illegal tax evasion.
• The new law aims to close loopholes used for corporate tax avoidance.

Advanced Usage

• "Aggressive tax avoidance": Refers to strategies that push the boundaries of the law to minimize taxes, often using complex and artificial arrangements.
  • The government is cracking down on aggressive tax avoidance schemes.
• In economic discourse, the term can be used to discuss the ethics and macroeconomic impacts of legal tax minimization strategies.

Variants and Related Words

• Tax avoider (n): A person or entity that practices tax avoidance.
  • The new regulations target serial tax avoiders.
• Avoid (v): To keep away from or prevent. In a financial context, it specifically relates to legally minimizing tax.
  • The scheme was designed to avoid paying certain taxes.

Synonyms

• Tax mitigation: Often used interchangeably with tax avoidance, emphasizing the lawful reduction of tax.
• Tax planning: The broader process of organizing finances to minimize tax liability, which includes avoidance strategies.

Antonyms

• Tax evasion: The illegal non-payment or underpayment of taxes.
• Tax compliance: The act of accurately reporting and paying all taxes owed according to the law.

Related Phrases and Idioms

• "Closing a tax avoidance loophole": A common phrase describing legislative action to prevent a specific legal method of avoiding tax.
  • The budget proposal focused on closing a major tax avoidance loophole for offshore income.
• "Legal tax avoidance": A phrase sometimes used to emphasize the lawful nature of the activity, distinguishing it from evasion.
  • Using an ISA (Individual Savings Account) is a form of legal tax avoidance encouraged by the government.

Noun

1. the minimization of tax liability by lawful methods