1. Transfer pricing

Using the differences in tax rates in different places of registration (different countries or tax preferential zones), the profits of high-tax tax entities are transferred to low-tax rates through transaction transfers. taxpayer.

Since transfer pricing is a very common planning method, the tax bureau requires enterprises of a certain size to provide transfer pricing documents for filing at the same time.

2. Thin capitalization

Changing equity income into debt income, increasing the pre-tax rate by increasing borrowings (debt financing) and reducing the proportion of share capital (equity financing) Deductions to reduce corporate tax burdens.

3. Tax incentives

By changing the form of the enterprise, such as dividing the R&D department into a R&D subsidiary (separating part of the production and R&D functions from the group company in order to meet the high-tech declaration conditions) come out and establish a separate subsidiary), you can enjoy the preferential income tax rate of high-tech enterprises and legally take advantage of the preferential tax policies provided by the state.

IV. Tax Agreement

A tax agreement refers to a written agreement concluded through negotiation between two or more sovereign countries in order to coordinate their tax jurisdiction relations and deal with relevant tax issues. . Countries that sign tax treaties with each other usually include sections such as double taxation avoidance and tax sparing. Compared with countries that have not signed tax treaties, signing tax treaties can effectively reduce double taxation and reduce corporate tax burdens.

5. Hybrid mismatch

For hybrid financial instruments, the most common situation is that they are regarded as claims in one country and as equity in another country. This qualitative difference often results in payments under the financial instrument being treated as interest before tax deductibility in the country of the payer, but as dividends enjoying tax-free treatment in the country of the payee.

Generally, the same expense is deducted multiple times (i.e. double deduction), or the same payment is deducted as an expense in one country (region) but is not included in income in another country (region) (deduction by one party, The mismatch result of one party regardless of income).

6. Controlled foreign companies

Establish controlled foreign companies in low-tax countries or tax havens, and retain profits in the foreign company through various commercial arrangements without distribution or with a small amount of distribution to evade domestic tax obligations.

7. Royalties

Royalties refer to any payment made by people for the use of rights or intangible property such as information and services. For example: Income obtained by individuals from providing the right to use patent rights, trademark rights, copyrights, non-patented technologies and other franchises. Difficulties in pricing royalties provide room for companies to shift profits.