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A technicality in some legislation or regulation that makes it possible to avoid certain consequences or circumvent a rule without breaking the law, such as in the use of a tax shelter.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
A deliberate or accidental provision in a law that allows an individual or corporation to which it would otherwise apply to be exempt from it. Most loopholes are deliberate and are placed there to ensure that the law is not draconian, to please a lobbyist, or for some other reason. For example, a country may pass a law requiring most companies to register with the government. However, it may contain a loophole allowing the exemption of companies that find registration too difficult or expensive. Occasionally, the government may close a loophole, which means that it takes away the exemption.
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