Tax evasion is the illegal evasion of any type of tax or duty (so it includes smuggling) by individuals, companies, trusts or other corporate entities.

Typically evasion occurs when taxpayers deliberately misrepresent the true state of their affairs to the tax authorities to reduce their tax liability and includes dishonest tax reporting, such as declaring less income, profits or gains than the amounts actually earned, or overstating deductions.

Tax evasion is an activity commonly associated with the “informal sector” a term that refers to that part of an economy that is not taxed, monitored by any form of government or included in any gross national product (GNP), unlike the formal economy.

Other terms used to refer to the informal sector include the “black market”, the “shadow economy”, or the “underground economy”. Associated idioms include “cash in hand”, “under the table” or “off the books”.

Tax evasion is highly illegal and often includes or leads to prosecution for money laundering offences against people who receive and spend money obtained from tax evasion as well as the person or entity who evaded tax in the first place.

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