What do you mean by tax arbitrage?

Business & Management
#1

Tax arbitrage can be referred to as financial instrument) or transactions that allow the parties involved to exploit loopholes in or differences between their tax exposures, so that all involved pay less tax.

#2
  • Tax arbitrage is the practice of profiting from differences that arise from the ways various types of income, capital gains, and transactions are taxed.
  • Both individuals and corporations seek to pay the least amount of tax that they legally can; they can accomplish this in many different ways.
  • A business can take advantage of tax systems, for example, by recognizing revenues in a low tax region while recognizing expenses in a high tax region.