【正文】 (c) by selling, and perhaps leasing back, assets that have appreciated but for which the tax base has not been adjusted 。 vide Webley et al. 1991: 2). Tax avoidance “is the art of dodging taxes without breaking the law. ……tax avoidance means of traveling within the framework of the law or acting as per the language of the law only in form, but murdering the very spirit of the law and thus acting against the intention of the law and defeating the purpose of the particular legal enactment” (Lakhotia and Lakhotia 1998: 10). Perhaps the most celebrated statement made in defense of tax avoidance came from the pen of Judge Learned Hand. In a dissenting opinion, in Commissioner v. Newman case, he once said: Over and over again courts have said that there is nothing sinister in so arranging one?s affairs as to keep taxes as low as possible. Everybody does so, rich or poor, and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant. [Commissioner v. Newman, 159 848 (CA2,1947), vide Scholes et al., 2021: 5]. Tax Planning As stated earlier, tax planning is legal, desirable for the fiscal policymakers and ethical. In a narrow sense, tax planning and tax avoidance are used interchangeably. But for tax avoidance purpose, usual means are the exploiting the ?tax loopholes?, or getting the advantages of tax law ambiguity, and hence it is often distinguished from tax planning. According to Lakhotia and Lakhotia (1998: 10), “?Tax planning? takes maximum advantage of the exemptions, deductions, rebates, reliefs and other tax concessions allowed by taxation statutes, leading to the reduction of the tax liability of the tax payer.” However, according to Scholes and Wolfson (1992: 3), “Traditional approaches to tax planning fail to recognize that effective tax planning and tax minimization are very different things. The reason is that in a world of costly contracting, implementation of taxminimizing strategies may introduce significant costs along nontax dimensions. Therefore, the taxminimization strategy may be 13 undesirable. After all, a particular easy way to avoid paying taxes is to avoid investing in profitable ventures.” Thus, effective tax planning means not to minimize tax, but to maximize aftertax rates of return on assets. TRADITIONAL TAX PLANNING TECHNIQUES Traditional tax planning is equivalent to tax avoidance with the main purpose of legal reduction of tax liability. Following are the major issues regarding this type of tax planning. Tax Planning Principles: Jones and RhoadsCatanach (2021) have suggested following four tax planning principles: ^ Taxes decrease if ine earned by entity is subject to a low rate. ^ Taxes decrease if payment can be deferred to a later year, because tax deferred is tax reduced. ^ Taxes decrease if ine is generated in a low rate jurisdiction. ^ Taxes decrease if ine is taxed at a preferential rate. For planning purposes only relevant rate is rate at which the transaction will be taxed, ., marginal rate – rate at which next Taka of ine will be taxed. The marginal tax rate may change as follows: (a) higher bracket due to more ine, or (b) law may be changed and a new rate is prescribed. Factors Affecting Tax Planning: According to Jones and RhoadsCatanach (2021), following are the factors affecting tax planning: ? Which entity undertakes the transaction? ? Over what period does a transaction take place? ? In which jurisdiction does the transaction take place? ? What is the character of the ine? The above factors have been briefly discussed below. ^ Choice of Entity: The first factor to affect the tax planning is the entity undertaking the transaction. Different entities have different tax rates. Passthrough entities (soleproprietorship) allow shifting ine to owner and one level of tax. Nonpassthrough entities (panies) are subject to double taxation, once at corporate level and then again at the shareholder level. ^ Period of Transaction: Tax planning is affected by the period over which a transaction takes place. Tax deferred is tax saved based upon time value of money. Common techniques are to accelerate deductions (., following accelerated depreciation) and to defer ine (., through installment sale). A taxpayer has to consider when taxes are actually paid (., quarterly estimates versus end of year putation). ^ Tax Jurisdictions: The third factor by which tax planning is affected is the jurisdiction in which the transaction takes place. Tax liability depends whether the ine will be accrued in foreign country (subject to exemption or tax relief) or Bangladesh or whether the ine will be earned by establishing the entity in a low tax zone or a high tax zone. ^ Character of Ine: The final affecting factor is the character of the ine. Depending on the ine character, certain types of ine are exempted fully or partially. Certain types of ine are taxed at preferential rates (., capital gain on transfer of stocks and shares of private limited pany taxed 10%, dividend ine from shares taxed to panies 15%). A final tax liability is a function of three variables: the law, the facts, and the administrative (and sometimes judicial) process. If any taxpayer is not satisfied with either the law or the administrative and judicial processes, there is relatively little that s/he can do (unless, of course, s/he has enough money and clout to get a tax law change). The facts, however, are generally amenable to modification. If a taxpayer is wise enough to understand when and how to modify them, s/he may very well reduce 1 her/his tax liability significantly. The most highly qualified professional tax experts earn most of their lucrat