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According to the World Bank, Portugal is ranked as a leading country for tax complexity and bureaucracy ( World Bank, 2011a, 2011b, 2013a, 2013b). In Portugal, the tax system is based on self-assessment and is known to be very complex, with a high level of tax law ambiguity and “volatility”.
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The effect of the work of these professionals on tax (non)compliance, particularly in an aggressive tax planning context, by dealing with tax complexity, came to be recognized by the OECD, in 2006, in the Seoul Declaration 1 ( OECD, 2008). Tax professionals are the tax preparers, tax practitioners, tax agents, tax accountants, tax consultants, tax advisors, tax intermediaries and certified accountants to which taxpayers resort in order to comply with their tax obligations. This trend, in general, occurs without previous preparation of the taxpayers, supporting an increased perception of tax complexity and its consequences in terms of tax compliance ( Evans & Tran-Nam, 2010 McKerchar, Meyer, & Karlinsky, 2008).Īs a result of the taxpayers’ perception of tax complexity, it has shifted the paradigm in the relationship between tax administrations and taxpayers and a new “player” has been introduced into the “equation”: the tax professionals ( Erard, 1993). This system transfers tax compliance tasks to taxpayers instead of tax administrations. The perception of tax complexity has also been increasing largely because of the adoption of the self-assessment system in many countries ( Loo, McKerchar, & Hansford, 2009).
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This is a vicious circle, in which tax noncompliance and tax complexity nowadays frequently emerge as cause and effect of one other. However, tax complexity created to serve as a barrier against tax fraud, tax evasion and other ways of reducing or entirely avoiding one's commitment to pay taxes, ultimately often becomes a springboard for the realization of these same schemes of tax noncompliance, by exploiting the ambiguities and loopholes that tax complexity provides. Furthermore, tax authorities have passed more complex anti-abuse regulations. The increased sophistication of business dealings and the globalisation of markets have given rise to more complex and refined mechanisms of tax evasion.