Economics · Economy

Which of the following statements correctly explains the difference between tax evasion and tax avoidance?

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1Both tax evasion and tax avoidance are illegal, but tax evasion involves providing tax authorities with deliberately false information.
2Tax evasion is illegal, whereas tax avoidance involves the minimisation of tax liabilities by the use of lawful means.✓
3Both tax evasion and tax avoidance are illegal, but tax avoidance involves providing tax authorities with deliberately false information.
4Tax avoidance is illegal, whereas tax evasion involves the minimisation of tax liabilities by the use of lawful means.

Correct answer

Tax evasion is illegal, whereas tax avoidance involves the minimisation of tax liabilities by the use of lawful means.

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