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Abstract

The following research presents an analysis reflecting on a key issue namely tax evasion. The study reflects an understanding on the concept of tax evasion, the factors that are most likely to result in such evasions, as well as the impacts of such evasions on a country, its people, and its economy. The study analyses the effect of such tax evasions on the criminal liability of the UAE, in specific, and to achieve this, the theoretical understanding and reviews on the concept have been done to effectively understand how evasion works and affects UAE and its economy in the process.

The study has been accomplished based on a secondary research method, where text books, researched journals, news reports, and other online researched articles and publications have been used to conduct the study. The research has been presented systematically, discussing the concept of tax evasion in the beginning, following which gradually, the types of tax evasion, the risks related to such evasions, the reasons and impacts of evasion in a country, the effects on a country’s economy, have been discussed.

Tax evasion is an illegal act that often individuals and organizations attempt, by means of illegal acts, in order not to pay for their due taxes. Tax burdens, ineffective implementation of regulations, and the intentions to save funds on one’s own self for self-interests and expenses, are some of the factors that cause individuals and/or organizations to evade their taxes. The impacts of tax evasion could be obtained as being extremely negative on the overall economy and growth of a country. Taxes that are evaded are supposed to add to the economy of a country.

With regards to UAE, it could be obtained from the study that UAE has lenient tax policies, with no income tax on individuals, and special tax schemes for the companies that operate in the country, particularly implying the large number of foreign companies that operate through the free trade zones of the country. The European Union has presented a note of concern for the UAE, along with listing the country on the list of tax havens, stating that the companies that operate in the free trade zones are not necessarily making payments for their taxes, and hence indulging in tax evasions.

The country has recently introduced its new tax laws in 2017, which targets stricter implementation of tax policies and payments in the UAE. This has been found to be a key attempt of the country towards preventing tax evasion possibilities in the country, which otherwise could result in increased criminal liability for the country. With the new law being established, the country can be expected to control its tax payments more effectively, however there is a need to implement strict supervision and monetary policies.

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