Tax evasion and tax avoidance represent two distinct but closely related concepts within the realm of taxation. Tax evasion involves illegal actions to deliberately conceal or misrepresent income, assets, or transactions in order to reduce tax liability. It is a criminal offense and is subject to severe penalties, including fines and imprisonment. On the other hand, tax avoidance refers to the strategic use of legal methods and loopholes within the tax code to minimize tax liability. While tax avoidance is generally legal, it often raises ethical and moral considerations, as it may be perceived as exploiting gaps in tax regulations to gain unfair advantages.
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