NCJ Number
80053
Date Published
1980
Length
147 pages
Annotation
A work group of the Swedish Crime Prevention Council investigated loopholes in the tax legislation which allowed Swedish citizens living and owning businesses in foreign countries or conducting international business to evade taxes. Recommendations are made for law reform to prevent tax evasion and tax fraud.
Abstract
The working group found that the law as it stands makes several kinds of quasi-legal transactions possible which can amount to significant tax losses. Swedish citizens living in foreign countries who don't report all income, Swedish citizens who send funds out of the country, buy property, or invest in businesses, etc., in foreign countries, and import-export firms who use a middleman in another country to claim the profit that would be taxable under Swedish laws all are benefiting. Recommendations of the working group are aimed at closing these loopholes. It suggests that persons or companies making payments to foreign countries for interest, installments, or for services be taxed on these payments. Another proposal would prohibit carrying on business with middlemen or liaisons in low-tax countries. In addition, the working group suggests that tax authorities be granted the right to require documents from these foreign countries for tax auditing purposes, whether or not the taxpayer is under suspicion of wrongdoing. Finally, the group suggests a modification to the regulation allowing tax exemptions for a certain amount of income taken in by persons living and working in foreign countries. The modification would require taxpayers enjoying the exemption to prove that they have lived in the country for at least 1 year. Further the working group suggests that the topic of foreign taxation be investigated further, particularly regarding the amount of money involved in international transactions. Discussion also touches on difficulties in enforcing tax laws across international borders since many foreign countries are not cooperative and refers to taxation laws regarding foreign investments and income in the United States, Canada, France, Belgium, West Germany, Great Britain, Denmark, Norway, and Finland. The current text of the law on foreign taxation is presented next to the proposed text. An illustration of a foreign transaction involving tax fraud is appended.