The act of using complex corporate structures or cross-border arrangements to hide improper gains and evade taxes belongs to the typical category of tax evasion or tax fraud, and is an illegal act expressly prohibited by the laws of various countries. Although there are attempts at such operations in reality, the international community has strengthened supervision through legal and technical means, which are extremely risky and have serious consequences. The following analysis is carried out from multiple angles： --- ### **1. Common methods and principles** Some entities may try to avoid taxes in the following ways, but all involve illegal risks： -**Offshore company and shell structure**: Shell companies are established in jurisdictions with low tax rates or strong confidentiality to transfer profits to offshore entities through false transactions or Transfer Pricing. -**Multi-layer shareholding and cross-control**: Design a complex equity structure, blur the identity of the actual controller, and conceal the flow of funds. -**Abuse of tax treaties**: Use the terms of tax treaties between different countries to artificially construct the status of “tax residents” to enjoy low tax rates. -**Fictitious costs and expenses**: Reduce taxable profits by exaggerating costs, service fees or royalties through affiliated enterprises. --- ### **2. Legal and regulatory response** A multi-level anti-tax avoidance framework has been formed on a global scale： -**International rules**: The “Base Erosion and Profit Transfer (BEPS)” project promoted by the OECD requires countries to coordinate rules to combat cross-border tax avoidance. -**Information transparency**： -**CRS (Common Reporting Standard)**: More than 100 countries/regions participate in the automatic exchange of financial account information, making offshore assets easier to track. -**Registration of beneficial owners**: Most countries require companies to disclose the actual controller to combat anonymous shareholding. -**Strengthening of domestic law**： -**Controlled Foreign Enterprise (CFC) rules**: Compulsory taxation on companies that keep profits in offshore entities. -**General anti-tax avoidance clause (GAAR)**: Allows tax authorities to deny transaction arrangements that lack commercial substance. --- ### **3. Actual cases and consequences** -**Panama Papers and Paradise Papers**: The leaks revealed the abuse of offshore structures, leading to tax investigations and recoveries in many countries. -**EU tax collection against multinational companies**: Companies such as Apple and Amazon are required to pay billions of euros in taxes due to the transfer of profits. -**Criminal penalties**: Tax evasion may face fines, asset confiscation, or even imprisonment (such as severe penalties under the U.S. Overseas Account Tax Compliance Act (FATCA)). --- ### **4. The boundary between legal tax planning and illegal tax evasion** -**Core of legality judgment**： -**Commercial substance**: Whether the transaction has a real economic purpose (such as job creation, actual operation). -**Compliance disclosure**: Whether to fully declare related-party transactions and overseas assets. -**Follow local tax laws**: Even if the structure is complex, it must comply with the specific anti-avoidance provisions of each country. -**Risk warning**: Structures that rely on “confidentiality” (such as some offshore tax havens) have gradually lapsed with the transparency of information. --- ### **5. Conclusion: High risk and unsustainable** Although there has been the phenomenon of using complex structures to evade taxes in history, in the current global tax regulatory environment, the concealment and success rate of such operations have decreased significantly. Tax authorities in various countries have improved their audit capabilities through data sharing, artificial intelligence audits, etc. Any attempt to hide gains through illegal structures will not only face legal sanctions, but will also damage the reputation of the company. **Recommendation**: Companies and individuals should conduct tax optimization within the legal scope and seek the help of professional tax consultants to ensure compliance with the compliance requirements of all jurisdictions. For existing historical issues, legal risks can be reduced through proactive disclosure programs (such as China's “self-examination and tax reimbursement” policy).