Basic methods of tax planning

An important way for enterprises to realize deferred tax payment is to adopt favorable accounting treatment methods to deal with temporary differences. Through the treatment, the accounting income of the current period is greater than the taxable income, and deferred income tax liabilities appear, so that the tax period can be deferred and tax benefits can be obtained.

If deferred tax payment can maximize the tax items and the extension period, it can maximize tax savings:

Maximize deferred tax items

Try to get more deferred tax items under reasonable and legal circumstances. Under the same other conditions (including the total amount of tax paid in a certain period), the more tax deferred items, the less tax paid in this period, the greater the cash flow, and the more funds available for expanding working capital and investing, so the more taxes can be used for reference.

Maximize the deferred period

Try to maximize the tax deferred period under reasonable and legal circumstances. Under the same other conditions (including the total amount of tax paid in a certain period), the longer the tax deferred period is, the more income will be generated by the cash flow increased by the deferred tax payment, so the more tax will be saved.

transfer pricing planning method

transfer pricing planning method is mainly used for tax planning through the transaction forms of affiliated enterprises that are not in line with business practices. It is one of the basic methods of tax planning. It is widely used in international and domestic tax planning practice.

transfer pricing refers to the transfer of products or non-products in the process of exchange or trading in order to transfer income, share profits or transfer profits, not according to market trading rules and market prices, but according to their common interests or to maximize their income. In this transfer, according to the wishes of both parties, the transfer price of products can be higher or lower than the price determined by the relationship between supply and demand in the market, so as to achieve the purpose of paying less or even not paying taxes. For example, in the case that the tax burden borne by production enterprises and commercial enterprises is inconsistent, if the tax burden borne by commercial enterprises is higher than that of production enterprises, the related commercial enterprises and production enterprises can increase the profits of production enterprises and reduce the profits of commercial enterprises through some form of contract, so that the tax burden borne by them and the tax burden borne by them can be minimized.

when transferring income or profits between enterprises, the main pricing methods are:

price transfer based on internal costs. Here it is divided into actual cost method and standard cost method. The actual cost method refers to the actual cost pricing of products purchased by the sales profit center; The standard cost method refers to pricing at a predetermined assumed cost.

transfer the price based on the market price. This includes using the market price and cost increase of external transactions.

There are many ways to transfer pricing between affiliated enterprises, generally speaking, the main ones are:

Planning by commodity trading. That is to say, the commodity transactions between affiliated enterprises adopt the strategy of lowering the price or raising the price, and transfer income or profits to reduce the tax burden as a whole. For example, some enterprises with high tax rates intentionally depress the price of products and transfer profits to affiliated enterprises when selling products to affiliated enterprises with low tax rates. This is the most widely used method in transfer pricing.

planning by purchasing and selling raw materials and spare parts. Tax planning can be realized by controlling the purchase and sale prices of spare parts and raw materials, thus affecting the product cost. For example, the parent company supplies spare parts to the subsidiary at a low price, or the subsidiary sells spare parts to the parent company at a high price, so as to reduce the product cost of the subsidiary and make it obtain higher profits. Another example is to use the policy of not paying consumption tax after the entrusted processed products are recovered and sold directly to plan the pricing transfer.

make use of the services provided by affiliated enterprises to plan. When affiliated enterprises provide labor services to each other, they charge labor service fees by means of high pricing, low pricing or even no pricing, so that the profits between affiliated enterprises can be transferred according to needs and the tax burden can be reduced.

make use of the difficulty of intangible assets valuation to plan. Because there is no uniform standard for evaluating the value of intangible assets, affiliated enterprises can adjust their profits through transfer pricing to minimize the tax burden. For example, if an enterprise provides its production formula, trademark rights, etc. to affiliated enterprises free of charge or at a low price, the transfer income will not be counted or counted, but in addition, it will benefit from the profit retained by the other enterprise.

In addition, tax planning is carried out by renting machinery and equipment and using management fees.

in order to ensure the effectiveness of tax planning using transfer pricing, attention should be paid to the following aspects: first, cost-benefit analysis. Second, consider that the price fluctuation should be within a certain range to prevent the tax burden from being adjusted by the tax authorities. Third, taxpayers can use various methods to make all-round and systematic planning arrangements.

Tax Law Loophole Planning Method

Planning by using tax law loopholes is a method of planning by using the neglect of tax law words or the loopholes of tax collectors in tax practice, which belongs to tax avoidance planning. Taxpayers can use loopholes in the tax law to fight for their legitimate rights and interests that are not illegal.

loopholes mainly refer to the literal provisions of certain contents in the tax law, which lead to the diversity of understanding of the tax law due to the ambiguity of grammar or words, and the fact that the tax law should exist but is largely ignored in actual operation. Loopholes are inevitable in a country's tax law, and they are scattered in legislation, law enforcement and other links, which are mainly determined by the complex, diverse and changeable characteristics of time change, location difference, personnel quality, technical means and economic situation.

the change of time often makes the relatively perfect tax law full of loopholes, and the difference of location inevitably leads to loopholes. The low quality of personnel will also lead to tax loopholes, and backward technical means will limit the improvement of tax system and the improvement of tax efficiency; The disharmony of the internal structure of the legal system will also cause tax loopholes. These loopholes are exactly where taxpayers can increase revenue and reduce expenditure and reduce tax burden.

Method:

Make use of the contradictions in the tax law for planning. There are many contradictions in China's tax law, and taxpayers can make use of the contradictions in the tax law to plan. For example, there are many contradictions in the provisions of tax jurisdiction in China's Tax Administration Law, including the problems of institutional setup and cooperation, and the contradictions or uncertainties in the provisions of the tax law itself.

Making use of unscientific setting of tax institutions for planning

At present, the problems of bloated institutions, redundant personnel and low efficiency in our country have not been completely solved. Just because the institutions are complex and numerous does not mean that all the institutions that should be set up on the tax side are set up; On the contrary, the institutions of this setting are not complete, but many institutions that should not be set up still exist. This will lead to the imbalance of coordination within the organization, and if it is linked with other government agencies, there will be more problems in its setting and cooperation. This is where taxpayers can take advantage.

planning by tax jurisdiction

in the provisions of tax territorial jurisdiction in China, turnover tax and income tax are both insufficient. For example, Article 22 of the Provisional Regulations of the People's Republic of China on Value-added Tax mainly defines the tax payment places of fixed and non-fixed businesses, but it lacks many necessary supplements and restrictions. For example, the judgment standard of fixed and non-fixed business households and the ownership of judgment right. In fact, such loopholes also exist in laws and regulations on consumption tax, business tax, customs duties, corporate income tax and personal income tax.