Tax planning refers to a series of tax planning activities aimed at saving taxes, deferring tax payments, and reducing tax risks by planning and arranging strategic models, business operations, investment behaviors, and other issues within a predetermined framework for taxpayers.
The following content elaborates on the ten basic methods of tax planning.
1. Tax Planning Strategies for Taxpayers
1 Different types of taxpayers:
For sole proprietorship, partnerships, and individual partners in partnerships, the taxable income is calculated by subtracting the costs, expenses, and losses from the total income for each tax year. These taxpayers are required to pay personal income tax instead of corporate income tax.
Corporations are required to pay corporate income tax on their profits in accordance with tax laws. If corporations distribute profits to natural person shareholders, they are also required to pay a 20% personal income tax.
2 Conversion between different
types of taxpayers:
General taxpayers vs. small-scale taxpayers
The methods of calculation and administration for value-added taxes (VAT) are different for these two types of taxpayers. General taxpayers implement input tax deductions, while small-scale taxpayers must use a simplified calculation method to pay VAT without input tax deductions.
3 Avoiding becoming a statutory taxpayer:
According to tax laws, property tax is levied on properties such as houses located in cities, towns, townships, and industrial zones that have roofs and enclosures that can shelter people for activities such as production, learning, entertainment, living, or storage. Buildings outside of houses, such as walls, parking lots, outdoor swimming pools, and fountains, are not considered properties for property tax purposes. To avoid being subject to property tax, businesses can build outdoor structures such as parking lots and swimming pools and separately account for their costs in the accounting records away from factories and office buildings.
2. Tax base planning method
1. Controlling or arranging the timing of the realization of tax bases
(1) Delayed realization of tax bases
(2) Balanced realization of tax bases
(3) Early realization of tax bases
2. Decomposition of tax bases
By decomposing the tax base, the tax base is transformed from a more tax-intensive form to a less tax-intensive form
3. Minimization of the tax base
Legitimate reduction of the total tax base
3. Tax rate planning method
1. Proportional tax rate planning method
Proportional tax rate planning method makes taxpayers apply lower tax rates.
2. Progressive tax rate planning method
Prevent the tax rate from rising: pay attention to the impact of the progressive tax system such as personal income tax and land value-added tax on the tax burden.
4. Tax incentives planning method
1 Tax incentives
Tax incentives for special industries, specific regions, specific behaviors, and special periods.
2 Forms of tax incentives
(1) Tax exemption
(2) Tax reduction
(3) Exemption amount
(4) Starting point
(5) Tax rebate
(6) Preferential tax rates
(7) Tax credits
3 Create conditions for the application
of preferential policies
The movie “Wolf 2”, which is the attention of all the people, has grossed up to 5.46 billion yuan in 2017, topping the box office list. The director and star of the movie, Wu, set up a cultural company, namely Dengfeng International Culture Communication Limited, a legal person enterprise in Horgos, Xinjiang. And Horgos is by far the most comprehensive tax incentives, the biggest incentive is that the enterprise income tax of the cultural industry company is fully exempted within five years.
[Case Analysis ]
According to the total box office of 5.46 billion yuan of “Wolf 2”, according to the agreement, Wu shared 1.84 billion yuan, if there is no tax incentives, then this case to pay tax according to the 25% corporate income tax rate, the amount of deductible items before the corporate income tax is 270 million yuan.
According to the national tax law, the tax payable for enterprise income tax would then be: (1.84-2.7)*25%=393 million yuan
If the enterprise is registered in Horgos, the tax payable will be: (18.4-2.7)*0%=0
Wu saves 393 million yuan in corporate income tax through the Horgos arrangement.
[Tip] Through the above arrangement, the taxpayer can indeed realize the purpose of tax saving, but it is worth noting that the taxpayer should try to match the substance with the form in the process of tax planning, otherwise he/she will probably face greater tax risks.
5. Accounting policy planning method
1. Apportionment planning method
Amortization of intangible assets, amortization of amortized expenses, depreciation of fixed assets, inventory valuation methods, overhead allocation.
2. Accounting estimation planning method
There are many uncertainties in the production and operation of enterprises, some items can not be calculated accurately, but can only be estimated, therefore, in the accounting, the continuation of the transaction or matter in the continuation of the results of the uncertainty needs to be estimated in the accounts. Such accounting estimates can affect the amount of income or expense recognized in a given period, which in turn affects the enterprise’s tax liability.
6. Tax burden transfer planning method
The operation platform of tax burden transfer planning is price, and its basic operation principle is to use price fluctuation and price decomposition to transfer or avoid tax burden. Whether the tax burden transfer planning can be realized through the price fluctuation, the key depends on the elasticity of supply of goods and the size of the elasticity of demand. Decomposition of unconventional techniques, it is more skillful.
1. Tax burden forward planning method
Taxpayers raise the prices of commodities or factors of production in order to transfer the tax burden to buyers or final consumers.
2. Tax burden after transfer planning method
The taxpayer transfers the tax burden to the enterprise providing the factors of production by lowering the purchase price of the factors of production, depressing the wages or in other ways.
The liquor manufacturer produces liquor products, which are a special kind of consumer goods and are subject to consumption tax. In order to maintain appropriate after-tax profits, it is a common practice for liquor manufacturers to increase the ex-factory price accordingly, but this will affect the market on the one hand, and lead to the climb of ad valorem consumption tax and VAT on the other hand. Is there any planning method to realize the tax burden transfer?
[Case] Setting up an independent sales company. The winery establishes an independent sales company and utilizes the method of increasing the circulation link to transfer the tax burden. As the consumption tax of alcohol products is only levied at the factory, i.e., the consumption tax is levied on the factory price of the products, and the subsequent distribution and retailing are no longer paid.
In this case, the introduction of an independent sales company can adopt the price transfer strategy of “low price before high price”, selling to its own sales company at a relatively low price first, and then the sales company can distribute the products at a reasonably high price, which can ensure the overall sales revenue while reducing the consumption tax burden.
7. Deferred tax planning method
1. Deferred revenue recognition
Different settlement methods: commissioned sales
2. Payment of expenses in advance
Need to pay the expenses paid in advance
[Case] a paper mill in July to Huiwen stationery store sales of white cardboard 1.13 million yuan (including tax prices), the settlement of payments using the sale of payment, Huiwen store in October only remittance 339,000 yuan. For such sales business, the paper mill how to tax planning?
[Case Analysis] This business, because the purchaser is a commercial enterprise, and the settlement of payment after sale, so you can choose the commissioned sales mode, that is, commissioned sales settlement tax treatment: the paper mill in July can not calculate the sales tax, in October, according to the receipt of the sales list of the sales unit to confirm the sales, and the calculation of sales tax:
[33.9/(1+13%)]*13%=39 (million yuan)
The declaration and calculation of sales tax can be suspended for the goods for which the sales list has not yet been received. If it is not treated as commissioned sales settlement, the sales tax should be accrued:
[113/(1+13%)]*13% = 13 (million yuan)
Therefore, for this type of business, deferred tax can be realized by choosing the entrusted sales settlement method.
8. Avoidance platform planning method
In tax planning, often the tax law provides a number of critical points called avoidance platform. The basis for the establishment of the avoidance platform is the critical point, because the critical point will be a key point due to the accumulation of “quantity” and cause “quality” breakthrough. When certain thresholds are breached, tax benefits will be obtained due to lower tax rates or more preferences, which is the basic principle of the avoidance platform planning method.
1. Tax base threshold planning
Starting point, deduction limit, tax rate jumping tipping point
2. Preferential thresholds
Absolute number tipping point, relative proportion tipping point, time tipping point
9. Asset reorganization planning method
1 Merger planning method
It refers to the enterprise using mergers and acquisitions and asset reorganization means, change its organizational form and equity relationship, realize the tax burden reduction planning method.
The merger of enterprises can enter into new fields and industries, and enjoy the preferential tax policies in new fields and industries;
Merger and acquisition of a large number of loss-making enterprises, profit and loss to make up for, and realize cost expansion;
Enterprise merger realizes the reduction of circulation links of related enterprises or upstream and downstream enterprises, and reasonably avoids turnover tax and stamp duty;
Enterprise merger may change the nature of taxpayers, such as from small-scale taxpayers to general taxpayers, from domestic enterprises to Sino-foreign joint ventures;
The enterprise merger can make use of tax-free reorganization preferential policies to avoid the tax burden in the process of asset transfer.
2 Separation Planning Method
Separation refers to the separation and transfer of part or all of the assets of an enterprise to an existing or newly established enterprise, and the shareholders of the enterprise to be separated are exchanged for the shareholding of the separated enterprise, so as to realize the legal separation of the enterprise. Using the means of separation, the separation planning method can effectively change the scale and organizational form of the enterprise and reduce the overall tax burden of the enterprise.
Separation into multiple taxable entities to form a group of enterprises with related relationships, and implement group management and systematic planning;
Enterprise separation will separate the low-tax or zero-tax business in part-time or mixed sales, and calculate tax separately to reduce the tax burden;
Enterprise separation will make the taxable entity applying the progressive tax rate to be divided into two or more taxable entities applying the low-tax rate, and the tax burden will be naturally lowered;
Enterprise Separation increases
10. Business transformation planning method
Business conversion planning method is a flexible means to inject the purchase, sale, transportation, building and other businesses, intangible asset transfer can be reasonably converted into an investment or joint venture business ……