Offshore tax avoidance refers to offshore tax avoidance. How to avoid taxes? I will share with you how to avoid taxes in offshore companies. You are welcome to read it. It is for reference only!
Ways to avoid taxes in offshore companies
By buying high and selling low, profits are transferred to offshore companies and losses are left to domestic companies, thus avoiding domestic value-added tax.
Transfer pricing
Transfer pricing is an important method of tax avoidance.
Tax avoidance has always been the goal pursued by most offshore companies. In August 2010, the Luohe Municipal Taxation Bureau of Henan Province revealed that Goldman Sachs transferred the equity of Henan Shuanghui Investment Development Co., Ltd. (hereinafter referred to as "Shuanghui Development") overseas and obtained huge profits, but did not pay taxes to the Henan Provincial Taxation Bureau and evaded Corporate income tax is 420 million yuan. In March 2006, Goldman Sachs and CDH registered the company Shine B Holdings I Limited (hereinafter referred to as: Shine B) in the British Virgin Islands. Shine B Company fully controls Rotex Corporation (a joint venture established by Goldman Sachs and CDH in Hong Kong in February of the same year), and Rotex Corporation controls Shuanghui Development Company. Through the Virgin Company Shine B, Goldman Sachs realized the actual reduction of its holdings in Shuanghui Development outside China. By the end of 2009, its shareholding in Shuanghui Development dropped to 3.3%. This is vastly different from the 31% indirect shareholding held by Goldman Sachs in Shuanghui Development in 2006. According to Shuanghui Development's annual reports for 2006, 2007, and 2008, Goldman Sachs' income may reach 2.1 billion yuan. According to the newly revised Corporate Income Tax Law in 2008 and other regulations, corporate capital operation projects, including equity transfers, and non-resident corporate income tax management have been included in the key scope of my country's tax collection and administration. This is a typical tax avoidance case using overseas indirect equity transfer.
A company in Hebei and M Group (overseas) in a certain country jointly invested in a Sino-foreign joint venture Company A with a registered capital of 250 million yuan and a total investment of 300 million yuan, mainly engaged in automobiles. and production and sales of related spare parts. However, Company A's annual report data has always been in a low profitability state. Investigations by the Hebei State Taxation Bureau and the Shijiazhuang State Taxation Bureau found that Company A engaged in "transfer pricing" behavior in both importing raw materials from related parties (M Group) and exporting products to related parties: importing raw materials from M Group at high prices, and after processing the products, Export to M Group at low price. ?One high and one low? reduce the profits of company A and also reduce the corresponding taxes. In December 2008, Company A paid back tax payable of RMB 43.75 million to the tax authorities. Zhu Guangjun is a researcher at the Taxation Science Institute of the State Administration of Taxation. Having served as a tax bureau chief at the grassroots level, he is very familiar with the use of offshore companies for tax avoidance. Zhu Guangjun said that because there are no taxes in offshore places such as Virgin and Cayman, by buying high and selling low, profits are transferred to offshore companies and losses are left to domestic companies, thus avoiding domestic value-added tax. In 2007, a research report completed by the "Utilization of Foreign Capital and Foreign-Invested Enterprises Research" research group of the National Bureau of Statistics showed that about two-thirds of the investigated loss-making foreign-invested enterprises had abnormal losses. These enterprises passed? Tax avoidance through transfer pricing and other methods amounted to more than 30 billion yuan.
Mailbox companies
Mailbox companies are also an important method of tax avoidance.
The so-called "mailbox company" is to register an offshore shell company to achieve tax avoidance through document manipulation.
Mei Xinyu, a researcher at the Ministry of Commerce, told such a case. A domestic company registered a company in the British Virgin Islands to engage in the production of electrical parts. The actual production business is placed in China, with a unit cost price of 5 US dollars, and is sold to Virgin Company at a very similar price. Then, it is sold to an American company at a price of approximately 7 US dollars, and the American company sells it to domestic companies at a price of 7 US dollars. .
The entire buying and selling process is just on the books and does not actually happen. However, the income from both China and the United States is approximately zero, so the value-added tax of both countries cannot be collected. Virgin is exempt from income tax, which greatly reduces the company's total global tax payment and saves operating costs.
Before December 1, 2010, when my country’s super-national treatment of corporate income tax reduction and exemption for foreign investment was not abolished, many domestic capitals flocked to Cayman, Virgin Islands and other places to set up offshore companies, and later Return to China as a foreign investor and enjoy the treatment as a foreign investor.
Preferential measures such as export tax rebates set up by the government to encourage exports are often falsely claimed by offshore companies. Some companies use "fake exports" to obtain tax benefits. After completing relevant export procedures, they ship the goods to the high seas, then transport them back to the country, and then go through customs import procedures to obtain tax-free treatment. There are even some companies that do not transport their goods to the high seas, but place them directly in some domestic bonded warehouses. After completing the relevant export procedures, they obtain the "profit" of tax refunds.
A successful case of tax avoidance by offshore companies
A private clothing company in Beijing (Company A) mainly produces and sells mid- to high-end clothing. Although Company A has good design capabilities, it generally produces branded clothing, that is, it is authorized by a foreign brand clothing company to put the company's label on the clothing produced by Company A and then sell it. However, Company A must pay trademark usage fees to foreign companies based on the number of pieces of clothing listed, which has reduced Company A's profits a lot. However, consumers' brand recognition in countries and regions such as Hong Kong and Italy is still much higher than in China. brand. In addition, as the production and sales of clothing become larger and larger, the impact of income tax on final profits becomes more and more obvious.
It is an unavoidable fact that consumers now recognize international brands, but you can consider registering a trademark abroad to solve the problem of paying high trademark usage fees to other companies. As for taxation, you can take advantage of the special preferential provisions in China's tax policy and the tax reduction and exemption policies of certain countries to reasonably and legally reduce the tax burden for Company A.
Operation:
1. Company A finally chose to register a company B in Hong Kong;
2. After the company registration is successful, it will register in Hong Kong and mainland China Apply to register a Hong Kong trademark at the same time;
3. Establish a Sino-foreign joint venture clothing company (Company C) in Beijing. The shareholders are Company A and Company B. Company B’s capital contribution accounts for 25% of the registered capital of Company C. %, Company A invests in the clothing production factory;
4. Company B and Company C sign a trademark license agreement.
Effect:
1. In terms of brand, Company A has its own international brand, which not only caters to consumers’ recognition of international brands, but also enhances consumption through Sino-foreign joint venture sales. consumers’ trust in the brand. And in the long run, Company A can finally stop struggling to create a famous brand for itself instead of others.
2. From the perspective of costs and taxes, Company A no longer needs to pay trademark usage fees to foreign companies, which reduces a large part of the cost;
3. In terms of taxes, first of all , according to the tax policy for Sino-foreign joint ventures stipulated by law in order to attract foreign investment, Company C can enjoy the income tax preferential treatment of "two years of exemption and three years of half reduction" starting from the profit-making year; secondly, the trademark usage fee of Hong Kong Company B can also be used by C The company's pre-tax profits are reduced, allowing income taxes to be reduced in a controlled manner.
4. Other advantages. On the one hand, since it has its own brand, after Company A expands, it can not only consider developing into other regions or even abroad, but also carry out brand operations such as paid trademark licensing. On the other hand, after individual shareholders of Company A become shareholders of a Hong Kong company, they can have advantages in terms of visas to go abroad and the use of foreign exchange that domestic corporate shareholders cannot have. At the same time, Company A can even make preliminary preparations for future listing and financing in Hong Kong and other places.
Therefore, through a series of operations such as registering offshore companies, Company A has reasonably and legally gained advantages that domestic companies cannot match in terms of branding, taxation and costs. It can be said that the economic benefits and long-term benefits are obvious.
The above is how I provide you with how to avoid taxes in offshore companies. I hope you like it!
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