Taxation Essay Example | Topics and Well Written Essays - 500 words - 1

Taxation - Essay Example This way, a universally applicable tax framework will serve to eliminate tax avoidance issues. Another argument for this proposal is based on the premise that; the establishment of such a global universally applicable tax framework will create transparent and comparable information in financial statements (Gassen & Sellhorn, 2006:n.p.). This is because, when all countries and consequent all organizations are applying a globally universal tax framework, they will produce similar and comparable financial statements in all respects, which will then enhance transparency, and consequently help end tax avoidance issues (Ault & Arnold, 2010:47). The application of a universal tax framework globally, will bring a convergence of the International Financial Standards and the accepted National Accounting Standards in different countries worldwide (Ball, R., Kothari & Robin, 2000:44). The convergence of the two set principles will the seal the possible loopholes applied for tax avoidance. First, the regulatory frameworks of different countries in relation to taxation are very different, with some taxable aspects of the incomes and revenues within some countries being exempted from tax in other countries (Hope, 2003:236). This means that establishing a universal taxation system will eventually create inherent flawed tax accounts, which are not suitable for the purpose of inspection by the authorities (Nobes, 2002:72). While financial statements are made for the purpose of the stakeholders of any organization, tax accounts are purely prepared for the purpose of authority inspection and in fulfillment of the necessary tax obligations (Barth & Lang, 2008:469). Therefore, the establishment of one international tax framework will eventually create a conflict between financial accounting and tax accounting. Another argument against the proposal is that; a universal global tax