Addressing Tax Evasion and Tax Avoidance in Developing Countries International Tax Compact (ITC) TAX EVASION TAXES TAX HAVENS GOOD GOVERNANCE Developing countries are confronted with social, political and administrative difficulties in establishing a sound public finance system. As a consequence, developing and emerging countries are particularly vulnerable to tax evasion and avoidance activities of individual taxpayers and corporations. The study aims at developing a deeper understanding of the problem of tax evasion and avoidance in developing countries. Against the background of growing interest by international development cooperation, governments of developing and developed countries and international institutions in this topic, the study contributes to the systematization of knowledge. It becomes apparent that although there is a theoretical basis explaining tax evasion and tax avoidance behavior, little is known about the patterns and the extent of tax evasion and avoidance in the regions of the world and the different techniques used to evade and avoid paying taxes in individual developing countries. Section 2 focuses on the terminology of tax avoidance and evasion followed by a presentation of governmental, cultural, social and legal factors that influence the (voluntary) compliance with the tax system (Section 3). Different modes of tax evasion and avoidance are outlined in Section 4. Section 5 describes approaches and measures to combat and reduce the scope of tax evasion and avoidance activities. The last section concludes. Eschborn GIZ 2010 2010 Text 43p http://iffoadatabase.trustafrica.org/iff/2011-09-09_gtz_addressing-tax-evasion-and-avoidance.pdf