tax envasion
It is an illegal activity in which a person or entity deliberately avoids paying a true tax liability.
tax avoidance
Legal strategy to limit or even avoid taxes by utilizing tax regulation without breaking the rules and its usually happened by the help of professional tax consultant
transfer pricing illustration
There’s comp A located in malaysia has a subsidiary or branch company in indonesia which name is comp B (selling food).
Comp B import the raw material from comp A. the actual normal price of raw material for comp B’s product is only 5usd/pcs but they make 10usd/pcs in the transaction
Why they do that?
To reduce tax rate for comp B in indonesia & increase comp A’s profit in malaysia.
They make the raw material price as high as possible so comp B’s profit will looks very low its not rarely the company like comp B willing to recorded having loss or not getting any profit so they dont have to pay expensive tax
