antitaxavoidance

Antitaxavoidance refers to measures and strategies implemented by governments and tax authorities to prevent taxpayers, both individuals and corporations, from illegally reducing their tax liability. This contrasts with tax *evasion*, which is outright illegal and involves concealing income or providing false information. Antitaxavoidance focuses on preventing the exploitation of legal loopholes, complex tax planning schemes, and artificial arrangements designed solely to minimize tax obligations.

Governments enact antitaxavoidance rules to ensure fairness and maintain the integrity of the tax system. These rules aim to tax economic substance rather than mere form, meaning that transactions will be taxed based on their underlying commercial reality, regardless of how they are structured. Common antitaxavoidance measures include general anti-avoidance rules (GAARs) and specific anti-avoidance rules (SAARs). GAARs provide broad powers to tax authorities to disregard artificial transactions that lack commercial purpose. SAARs target specific types of avoidance schemes, such as those related to thin capitalization, transfer pricing, or hybrid mismatches. International efforts, like the OECD's Base Erosion and Profit Shifting (BEPS) project, also play a significant role in combating cross-border tax avoidance by multinational enterprises. The goal is to ensure that profits are taxed where economic activities are performed and value is created.