A Comparative Analysis of Tax Avoidance of Corporations in the United Kingdom and Saudi Arabia Laws

Abstract

Tax avoidance has remained a matter of public concern, especially following the 2007/2008 financial crisis. The nature of tax avoidance calls for more stringent tax reforms as well as increase regulations to be able to combat this problem that has denied many countries around the world their due income. Although there is less consensus on what tax avoidance is and when it raises legal and moral questions, the essence of tax avoidance and tax evasion has always been to minimize tax burden. This thesis explores the topic of corporate tax avoidance as one of the legal mechanisms with a negative effect on tax system thus, affecting a county’s ability to raise the much needed revenue to meet its obligations to the electorates. This problem has persisted over time and continues to be a concern in our era. The legitimacy of such practices provided companies with a justification for tax avoidance purposes, leading to their widespread engagement in this phenomenon, to the detriment of government revenues. Consequently, it has become a source of concern for governments worldwide, prompting countries to address this issue. This research is focused on tax avoidance in two different jurisdictions in terms of tax regulation and the extent of their tax backgrounds. The study serves as a comparative analysis between the tax laws of the United Kingdom and Saudi Arabia, both economically significant countries with distinct tax systems, despite some commonalities. The phenomenon of tax avoidance has often stirred controversy among various jurisdictions. The primary reason for this controversy lies in the significantly varied tax systems, with each jurisdiction adopting a unique tax system. This variation in tax systems has attracted numerous companies to invest in jurisdictions with what can be described as "attractive" tax systems due to their low or zero tax rates. Consequently, the tax system labels them as detrimental or harmful due to the negative consequences brought about by such a phenomenon.