Corporate Tax Avoidance vs Tax Evasion: A Legal and Ethical Review
Peri Lakshmi Naga Sujatha¹, Srirangan Vanitha Sree², M L Chaitanya³, Dr. Tejaswini S⁴
¹,²,³ MBA 2025–27, Faculty of Management Studies, JAIN (Deemed-to-be University)
⁴Assistant Professor, Faculty of Management Studies, JAIN (Deemed-to-be University)
Abstract
Corporate taxation plays a fundamental role in sustaining public finance systems across the world. At the same time, corporations actively engage in tax planning strategies to manage financial efficiency. This research examines the distinction between corporate tax avoidance and tax evasion from legal, regulatory, economic, and ethical perspectives. While tax avoidance refers to legally structured tax minimization within the framework of statutory provisions, tax evasion involves deliberate concealment, falsification, or fraudulent reporting in violation of tax law. The study evaluates judicial doctrines such as substance-over-form and economic substance principles, statutory mechanisms including General Anti-Avoidance Rules (GAAR) and Specific Anti-Avoidance Rules (SAAR), and international reforms under the OECD’s Base Erosion and Profit Shifting (BEPS) framework and Global Minimum Tax initiatives. Using a doctrinal and analytical methodology based on secondary legal sources, policy reports, and academic literature, the research explores how modern tax governance increasingly emphasizes transparency, fairness, and responsible corporate conduct. The findings indicate that although avoidance may be technically lawful, aggressive strategies undermine fiscal equity and corporate social responsibility. Tax evasion, in contrast, constitutes criminal misconduct with severe financial and reputational consequences. The study concludes that sustainable tax systems require a balanced combination of strict enforcement, global coordination, and ethical corporate leadership.
Keywords: Corporate Tax Avoidance, Tax Evasion, GAAR, BEPS, Global Minimum Tax, Corporate Governance, Tax Ethics, Fiscal Fairness
