Tax avoidance is the use of legal methods to reduce the tax you owe. This is achieved through the use of eligible credits and deductions, as well as strategic tax planning that prioritizes favourable tax treatment. Tax evasion is the illegal reduction of your tax burden by omitting or falsifying information. While tax avoidance is completely legal and often incorporated into tax legislation, tax evasion is illegal and can be subject to both civil and criminal prosecution. In the judicial system, different judges have adopted different attitudes. In general, for example, judges in the United Kingdom before the 1970s viewed tax avoidance neutrally; But these days, they may view aggressive tax avoidance with growing hostility. A historical example of tax avoidance that is still evident today is the payment of the window tax. It was introduced in England and Wales in 1696 with the aim of taxing the relative wealth of individuals without the controversy surrounding the introduction of an income tax.  The larger the house, the more windows it likely had and the more taxes residents paid. Yet the tax was unpopular because it was considered by some to be a „light tax“ (which led to the term daylight theft) and led homeowners to block windows to avoid them.
 The tax was abolished in 1851.  In the United States, the Internal Revenue Service classifies certain schemes as „abusive“ and therefore illegal. The alternative minimum tax was developed to reduce the impact of certain tax avoidance schemes. While tax evasion is legal in principle, if the IRS alone states that tax evasion is the „primary purpose“ of an expatriation attempt, „covered expatriate“ status is applied to the applicant, thereby paying an expatriation tax on global assets as a condition of expatriation.  The IRS assumes that the primary objective is tax avoidance if a taxpayer requesting expatriation has a net worth of $622,000 or more or has had an average annual net income tax of more than $124,000 in the 5 taxation years ending before the expatriation date. Tax evasion, on the other hand, is the umbrella term for efforts by individuals, corporations, trusts and other entities to illegally evade tax. Tax evasion and certain forms of tax evasion can be considered as forms of tax offences, as they describe a number of activities that are unfavourable to a State`s tax system.  Africa has lost at least $50 million in taxes. That is more than the amount of foreign development assistance. European companies operating in Africa are not much different from the actions of US companies such as Google, Apple and Amazon, which do not pay enough taxes due to tax evasion.
 In response to public opinion on tax evasion, the Fair Tax Mark was introduced in the UK in 2014 as an independent certification scheme to identify companies that pay tax „in accordance with the spirit of all tax laws“ and do not use options, deductions or reliefs or carry out certain transactions „contrary to the spirit of the law“.   The mark is managed by a not-for-profit organization. Tax avoidance is not the same as tax evasion, which relies on illegal methods such as under-reporting of income and falsification of deductions. Many entrepreneurs, freelancers and investors feel it is necessary to keep any receipts that may be useful for legal tax avoidance purposes. Tax avoidance and tax evasion are two very different things with different definitions and different consequences. Eliminating or reducing tax avoidance is at the heart of most proposals to change tax laws. The proposals, introduced over the past decade, aim to simplify the process by flattening tax rates and removing most tax avoidance provisions. Proponents of introducing a flat tax rate, for example, argue that it eliminates the need for tax avoidance strategies.
(Opponents, however, call the concept a regressive flat tax.) The difference between tax evasion and tax avoidance largely boils down to two elements: lying and underground. The increasing use of tax avoidance in the U.S. tax code has made it one of the most complex tax laws in the world. Taxpayers spend billions of hours filing taxes each year, much of it looking for ways to avoid higher taxes. Through tax evasion, a person uses all legal options to minimize their federal or state income tax, gift tax, or estate tax. For example, an individual can avoid federal income tax by investing a large amount of money in municipal bonds, since interest on these bonds is not considered taxable income on which federal tax is owed. Interest on the same amount of money deposited into a savings account must be included in taxable income. Other historical examples of tax evasion have been the deliberate destruction of roofs in Scotland to avoid large property taxes.
The roof of Slains Castle was removed in 1925 and the building has since deteriorated.  The owners of Fetteresso Castle (now restored) deliberately destroyed its roof after World War II in protest of the new taxes. Tax evasion must be distinguished from tax evasion, i.e. the use of illegal methods to avoid paying taxes. Tax evasion is a crime; Tax avoidance is not. While tax evasion can have a dubious connotation, the IRS actually encourages certain behaviors by offering tax credits in return. By incentivizing taxpayers to have lower tax liability, legislators can promote goals such as health insurance, education, and retirement savings that are healthy for the economy as a whole and ease the burden on individual taxpayers. There are many legitimate tax credits built into the tax code that allow taxpayers to legally reduce their tax liability.
Here are some common examples: Google continues to face criticism in the UK for the use of „Double Irish“, Dutch Sandwich and Bermuda Black Hole tax avoidance schemes.  Amazon also continues to face criticism in the UK and EU for its tax evasion. In October 2017, the EU ordered Amazon to repay €250 million in illegal state aid to Luxembourg after a „soft deal“ between Luxembourg and Amazon.com allowed the US company to artificially reduce its tax burden.  It was also found that PayPal, EBay, Microsoft, Twitter and Facebook use the Double Irish and Dutch Sandwich systems. Up to 1,000 people in the same year were also discovered using K2 to avoid taxes.  Putting money in a 401(k) or withdrawing a charitable donation are perfectly legal ways to reduce a tax bill (tax avoidance) as long as you follow the rules. Tax evasion is built into the Internal Revenue Code. The legislator uses the tax code to manipulate the behavior of citizens by offering tax credits, deductions or exemptions. In doing so, they indirectly subsidize various basic services such as health insurance, retirement and higher education. Or they can use the tax code to advance national goals such as greater energy efficiency.
In December 2010, the new coalition government commissioned a report to examine whether there should be a general anti-avoidance rule for the UK, recommending that the UK introduce such a rule, which was introduced in 2013. The rule prevents tax relief through legal agreements if such schemes are introduced solely for tax reduction purposes and would not otherwise be considered a reasonable course of action.  Prem Sikka, Professor of Accountancy at Essex Business School (University of Essex) and Scientific Advisor to the Tax Justice Network, highlighted a disconnect between multinational companies` demands for corporate social responsibility and „their internal dynamics to increase their profits through things like tax evasion“.