What is Tax Structuring?

"Tax planning" is also called "reasonable tax avoidance." It originated in the United Kingdom's "Inland Revenue Commissioner v. Grand Winster" case in 1935. Lord Tomlin, a member of the House of Lords who participated in the case at the time, described the tax planning as: "Everyone has the right to arrange his own business. If certain arrangements made under the law can pay less taxes, then they cannot Force him to pay more taxes. "This view has been agreed by the legal profession. After more than half a century of development, the standardized definition of tax planning has gradually taken shape, that is, "to the extent possible, tax savings can be achieved through the prior planning and arrangement of business, investment, and financial management activities within the scope permitted by law. Economic benefits. "

Tax Planning

(An enterprise planning behavior)

This concept illustrates

Tax avoidance planning

Refers to the taxpayer's plan to obtain tax benefits by using non-illegal means (that is, methods that seem to conform to the provisions of the tax law but substantially violate the spirit of the legislation) and use loopholes and gaps in the tax law. Tax planning is neither illegal nor legal, and is fundamentally different from tax evasion where taxpayers do not respect the law. State can only take

Choose a low tax plan

That is to say, choosing a scheme with a low tax burden among various tax schemes also means choosing a low tax cost;

Delayed tax time

The deferment of the tax period is equivalent to the enterprise receiving a government interest-free loan equal to the deferred tax.

(A) beneficial

(1) Tax planning is legal.

1. Tax planning is carried out within the scope permitted by laws and regulations. Taxpayers make choices to maximize tax benefits among various tax schemes on the premise of complying with national laws and tax regulations

(1) Do not violate the principles stipulated by tax laws.

(B) the principle of prior planning.

(3) The principle of efficiency.

Corporate tax burden control and tax planning

I. Whether an enterprise can carry out management activities with the purpose of reducing tax burden

Whether the "idea" of reducing the tax burden is guilty. What is the theoretical basis of innocence?

Is a good tax-enterprise relationship the only way to reduce tax burdens? Is there any other way?

Corporate tax reduction is

Full tax incentives

The promulgation and implementation of the new tax law puts the power of tax reduction and exemption under the State Council, avoiding excessive and disorderly tax reduction and exemption. At the same time, the tax law provides various tax preferential policies in the form of laws, such as: high-tech enterprises in high-tech development zones are levied income tax at a reduced tax rate of 15%; new high-tech enterprises are exempt from income tax for 2 years from the year of commissioning ; Enterprises using "three wastes" as main raw materials can reduce or exempt income tax within 5 years; enterprises and institutions carry out technology transfer and related consulting, services, training, etc., and the annual net income is less than 300,000 yuan temporarily levied Income tax and more. Enterprises should strengthen their research on preferential policies in this regard, and strive to enable enterprises to enjoy various preferential tax policies through income adjustment, maximize tax avoidance, and strengthen their strength.

At the same time, economic development zones across the country have sprung up. The conditions for investment promotion they have introduced are very attractive, and most of them attract capital, technology and talents by reducing or exempting corporate income taxes for various years, and reducing various expenses. If the enterprise is a high-tech industry or an encouraged industry, such preferential conditions will of course become one of the priority factors for enterprises to avoid taxation.

Of course, most of these tax preferential policies are issued for physical landing enterprises, and it is difficult to enjoy these policies for the business circulation industry and service industry. However, the business circulation business enterprises are not affected by the registration location, and can flexibly realize business transfer, thereby achieving Tax source transfer, this transfer can even be inter-provincial and inter-regional, and then enjoy tax preferential policies in other places. According to the unique advantages of this business circulation industry, enterprises can choose a development zone with open policies and good tax policies to register. Most of the development zones that have introduced this type of policy are remote, low in administrative levels, and traditional physical land-based enterprises have been greatly affected by geographical influence, inconvenient transportation, lack of mineral resources, and incomplete physical industrial structure.

However, preferential policies alone are far from enough. Companies registering in different locations, spending personnel, tedious processing of financial and tax matters in the later period, pressure on the public relations work of functional departments such as industry and commerce, land tax, and finance, and whether the preferential policies can be faithfully fulfilled. It is an issue that every decision maker should consider.

The following takes Yanshou County as an example to introduce in detail the policies issued by Yanshou County for commercial circulation companies.

Yanshou County is affiliated with Harbin City and is located in the middle of Heilongjiang Province. Yanshou County is a state-level poverty-stricken county. In order to further expand the economic development model and comprehensively develop the business and trade industry and the modern service industry, the following policies have been issued:

The value-added tax, personal income tax, and corporate income tax paid by the commerce and trade circulation enterprises and modern service industries stationed are refunded at 25% of the actual payment; business tax is refunded at 40% of the actual payment; urban construction tax, education surcharges, Stamp duty is refunded at 45% of the actual amount paid.

In order to better serve the enterprises settled in, Yanshou County set up the "Yanshou Headquarters Economic Operation Center" (hereinafter referred to as the operation center), which is responsible for the investment promotion of business and trade circulation enterprises, the receipt of formalities for the settled enterprises, fiscal and tax matters after the enterprises settled, and public relations of various functional departments Coordination.

Yanshou County does not require on-site office operations to provide a unified place of registration for the commerce and distribution companies that settle in it; it provides post-financial supporting services for settled enterprises, and is equipped with a full-time accountant to cooperate with companies for tax reporting, invoice collection, issuance, and accounting processing, etc. Finance and tax matters; implement protection policies for the enterprises in the country; general matters involving the industrial and commercial, national land tax, and finance departments shall be coordinated by the economic operation center of Yanshou Headquarters; except for corporate income tax, local taxes for other taxes are honored on a monthly basis, and commitments are made in The tax refund will be made within 7 working days after the tax is paid by the enterprise; the procedures required for the establishment of a newly registered enterprise shall be assisted by the economic operation center of Yanshou Headquarters in accordance with the rules and regulations of the first-question-responsibility system, the limited-time settlement system, and the lead-in system. The establishment of the operation center provides a one-stop, nanny-style service for the settled enterprises.

The investment model of Yanshou County is the popular headquarters economic investment in recent years. The main attraction of the headquarter economic investment is the introduction of business and trade and modern service industries. Through the policy and quality of services, Yanshou County is standing in the country. Forefront of investment promotion services in various regions.

Pricing transfer

Transfer pricing is one of the basic methods for corporate tax avoidance. It refers to the fact that, in the process of product exchange and purchase and sale, in order to share profits or transfer profits, the two parties involved in economic activities do not follow the fair market price, but rather between the enterprises. A common interest in pricing products. The transfer price of products using this pricing method can be higher or lower than the market fair price to achieve the purpose of less taxation or non-taxation.

The tax avoidance principle of transfer pricing generally applies to associated companies with different tax rates. Through transfer pricing, some of the profits of the enterprises with high tax rates are transferred to those with low tax rates, and the total tax payment of the two companies is eventually reduced.

share the expense

Expenses incurred during the production and operation of an enterprise shall be amortized to costs in a certain way. Expense sharing means that under the premise of guaranteeing the necessary expenses of the enterprise, the company tries to find a balance from the accounts so that the expenses can be allocated as much as possible when it is allocated to the costs so as to achieve maximum tax avoidance.

Commonly used cost allocation principles generally include actual cost allocation, average amortization, and irregular amortization. As long as you carefully analyze the depreciation calculation method, you can summarize the general rule: no matter which type of allocation is used, as long as the cost is allocated to the cost as early as possible, so that the larger the cost of the early cost allocation, the more it can achieve tax avoidance purpose. As for which allocation method can best help the enterprise to achieve the purpose of maximizing tax avoidance, it needs to be calculated, analyzed and compared according to the time and amount of expected expenses incurred and finally determined.

Tax avoidance through nominal financing

This principle is to make use of certain fund-raising techniques so that enterprises can reach the highest level of profit and the lowest level of tax burden. Generally speaking, there are three main channels for the funds required by enterprises for production and operation:

Accumulate:

2.

At this stage, the following four factors lead to the risk of tax planning for SMEs.

1. Risks caused by the unstable foundation of tax planning

SMEs need good basic conditions for tax planning. The basis of tax planning refers to the basic conditions of the management decision-making level of the enterprise and related personnel's understanding of tax planning, the level of accounting and financial management of the enterprise, and the integrity of tax-related enterprises. If the management decision-making level of SMEs does not understand, pays attention to, or even thinks that tax planning is to engage in relationships, find ways, get out of the way, and pay less taxes; or the accounting of enterprises is not complete, the accounting certificates are incomplete, accounting information is seriously distorted, Enterprises also have a history of tax evasion, or there are many records in violation of tax laws, etc., resulting in a very unstable tax planning foundation. Tax planning on this basis is extremely risky. This is the most important risk for SMEs in tax planning.

2. Risks caused by changes in tax policies.

Tax policy changes refer to the uncertainty of the timeliness of national tax regulations. With the development and change of the market economy and the adjustment of the national industrial policy and economic structure, the tax policy must always be changed accordingly to adapt to the development of the national economy. Therefore, national taxation policies are irregular or relatively short-term. Tax planning is pre-planning. Every tax planning requires a process from the initial project selection to its ultimate success. During this period, if the tax policy changes, it may make the tax planning plan designed based on the original tax policy. The change from a legal scheme to an illegal scheme, or from a reasonable scheme to an unreasonable scheme, leads to the risk of tax planning.

3. Risks caused by improper tax administrative enforcement.

The essential difference between tax planning and tax avoidance is that it is legal and in line with the intent of the legislator, but in reality this legality needs confirmation by the tax administrative law enforcement department. During the confirmation process, objectively there is a risk of tax planning failure due to improper tax administrative enforcement. Because no matter what kind of tax, the tax law is within the scope of taxation, and there is some flexibility. As long as the tax law does not specify the behavior, the tax authority has the right to determine whether it is a taxable behavior based on its own judgment. Due to uneven quality and other factors, the possibility of deviations in the implementation of tax policies is objective, and the result is that legal tax planning behaviors of enterprises may result in tax planning schemes becoming empty papers or deemed malicious due to deviations in tax administrative enforcement. Penalties for tax avoidance or tax evasion; or leave the tax planning behavior of the enterprise as a clear violation of the tax law for the time being, leaving enterprises with an illusion of tax planning and laying hidden dangers for greater tax planning risks in the future.

4. Risks caused by unclear tax planning purposes.

Tax planning activities are an integral part of corporate financial management activities. Maximizing profit after taxes is only a phased goal of tax planning, and maximizing the corporate value of taxpayers is its ultimate goal. Therefore, tax planning should serve the goals of corporate financial management and serve the realization of corporate strategic management goals. If the corporate tax planning method does not meet the objective requirements of production and operation, and the excessive tax burden reduction effect disrupts the normal financial management order of the enterprise, it will lead to the disorder of the company's internal operating mechanism and will eventually lead to a greater potential loss The occurrence of risk. Tax planning costs include explicit costs and hidden costs, of which explicit costs refer to all actual costs incurred in carrying out the tax planning. It has been considered in the tax planning plan. The implied cost is the opportunity cost, which refers to the benefits that the taxpayer has given up because of adopting the proposed tax planning plan. For example, an enterprise's increase in capital occupation due to the adoption of a scheme to obtain tax benefits. The increase in capital occupation is essentially a loss of investment opportunities. This is the opportunity cost. In the practice of tax planning, enterprises often ignore such opportunity costs, which results in the risk of unsuccessful planning results and planning costs.

Tax planning is for the purpose of maximizing the value of the enterprise. It is a method and means, not the ultimate purpose of the enterprise. At this point, it is unclear, and it is likely to make wrong decisions. Waste, greatly increasing unnecessary expenses; in order to postpone the profit year in order to adjust the arrival of the "two exemptions and three reductions" tax exemption period, neglecting production and operation, causing continuous losses, etc., this practice of putting the cart before the horse is harmful and inevitable, and it is inevitable As a result, the overall benefit of the company is lost, and the overall tax planning fails. ^[1]

First, recognize the trap

Tax planning is understood from a legal perspective. It is an act that is neither legal nor illegal. On the one hand, the starting point of tax planning is not based on the premise of violating tax laws and related regulations. It uses relevant laws and regulations, especially the loopholes in tax regulations and difficulties in taxation administration cooperation. In this sense, tax planning is not illegal. Sex. On the other hand, no country treats tax planning as a legal act and protects it through laws. On the contrary, tax authorities in various countries have carried out anti-planning activities to varying degrees, and listed or implied relevant anti-planning provisions in tax regulations and regulations. Relevant regulations. For example, in China, Articles 35, 38, 39, 40, 41 of the Detailed Rules for the Implementation of the Law of the People's Republic of China on Tax Collection and Administration, Article 7 of the Provisional Regulations of the People's Republic of China on Value Added Tax, Article 10 of the Interim Regulations of the People's Republic of China on Consumption Tax, Article 10 of the "Interim Regulations of the People's Republic of China on Enterprise Income Tax", Article 13 of the "Law of the People's Republic of China on Foreign-Invested Enterprises and Foreign Enterprises Income Tax", and "Financial System of Industrial Enterprises" 3 Articles 11, 32, 33, and 34, the "Administrative Rules on Taxation of Business Transactions of Affiliated Enterprises", etc. These articles and regulations have certain anti-planning effects. If we blindly emphasize the legitimacy of the planning and disobey the management of the tax authorities, we will eventually cause conflicts with the tax authorities in our actions and escalate the planning behavior into tax resistance. Another pitfall in understanding is that I think that tax planning is clever tax evasion, tax evasion or tax fraud; that is, renovating tax evasion methods; that is, through some relationships, go some way, go through the door, pay less, and pay less. This kind of understanding is extremely wrong and will directly lead to illegal and illegal behavior.

Operational traps

Traps are mainly manifested in the following aspects:

1. Believe in theoretical preaching. There are many expositions or similar books on tax planning, but there are not many practical applications, because these preaching or expositions often omit many prerequisites and environments to achieve tax planning goals, rendering a planning atmosphere . For example, many cases in the book "Tax Avoidance" published by a publishing house in 1998 are about the tax rate table and related regulations before the 1994 tax reform. There is a book called "Enterprise Tax-Saving Planning Strategies and Cases" with more than 100 pages that directly copied Taiwan-related publications. The words "Republic of China" appeared several times and it was dazzling. Tax planning decisions are related to all activities of an enterprise's production, operation, investment, financial management, marketing, management, etc., and have an overall impact. Tax planning can only succeed if certain conditions are met. Simply planning to pay less tax will inevitably fall into the operational trap. For example, the tax law stipulates that corporate debt interest is allowed to be deducted in accordance with regulations when calculating its taxable income. In theory, debt financing is generally believed to have a tax-saving effect on enterprises, which is conducive to increasing the level of equity capital income and can optimize the capital structure of enterprises. However, in fact, the above effects of debt financing have practical significance only when the cost of debt is lower than the investment income before interest and taxes. When the cost of debt exceeds the investment income before interest and taxes, debt financing will show a negative leverage effect. At this time, the return on equity capital will decrease with the increase in the amount and proportion of debt. And with the increase of the debt ratio of the enterprise, the financial risk and financing risk cost of the enterprise will inevitably increase accordingly. Therefore, if the company does not consider the various objectives of the company when considering tax planning, it only chooses the tax burden The sole criterion of the tax plan may lead to a decline in the overall revenue of the enterprise, and eventually picked sesame seeds and lost watermelons.

2. Ignore planning costs. Any tax planning has costs (that is, opportunity costs). When tax planning is performed to reduce the tax burden, there will be related costs. If companies use transfer pricing to reduce the tax burden, they need to spend a certain amount of manpower, material resources, and financial resources to set up institutions in low-tax areas or international tax havens; conduct necessary tax consultation before tax planning, and even hire professional tax experts Planning, etc. Another example is to convert the general taxpayer status into a small-scale taxpayer by rounding it down to zero, and will lose some customers because they cannot use the special VAT invoice.

Another example is to re-select the depreciation method and inventory evaluation method, etc., which also costs corresponding costs. In short, "cost-benefit analysis" should be carried out in tax planning to determine whether it is economically feasible and necessary. Otherwise, there is a good chance that you will lose more than you gain.

3. The internal relationship between tax types is divided. Each tax appears to be independent, with separate regulations and implementation rules, but in fact they have more or less internal connection through the carrier of economic behavior. In this regard, the simple calculation formula for calculating taxable income through corporate income tax can be seen intuitively. Taxable income = total income-deductible costs, expenses, losses, etc.-consumption tax, business tax, urban construction tax, resource tax, land value added tax, education surcharge, etc. When planning the turnover tax involved in the formula, the purpose of reducing the tax burden can be achieved only when the reduced burden of the turnover tax is higher than the corporate income tax burden. Otherwise, some turnover taxes may be paid less after planning, and more corporate income taxes may be paid in the end.

4. Underestimate the anti-planning ability of the tax department. Despite the efforts of the tax department in recent years, the quality of personnel has improved, and the level of equipment has also improved. However, compared to taxpayers, there is still a phenomenon of inverted business quality. It is this inverted phenomenon that has caused some operators to Tax planning is understood as high-level financial fraud, and tax evasion, tax evasion, and tax fraud are carried out through fraud. These practices of playing with fire are not tax planning in the true sense, and will eventually be punished by law.

Third, the time trap

In the final analysis, tax planning is the act of taxpayers making effective use of omissions and deficiencies in relevant tax laws and regulations, and paying less taxes without violating relevant laws and regulations. One of its basic characteristics is not illegal. But what exactly is illegal and what is not illegal depends entirely on the specific laws and regulations of a country. The specific laws that taxpayers face from one country to another may be different. Over time, the laws of the same country may also change. Especially for tax planning, the state and the tax authorities do not It may turn a blind eye, and the state and tax authorities will take measures to amend and adjust the incomplete and unreasonable laws and regulations exposed during the planning process.

In the face of changes in national law, taxpayers will also change the nature of their actions. Therefore, any tax planning plan is formulated in a certain period of time and in a certain legal environment with a certain business operation activity as the background. Has obvious timeliness. The real tax planners are those who are "prophets" who continue to make financial and marketing innovations. When a planning method is accepted by taxpayers and widely used, it is also the day when the state plugs the loophole. In other words, not breaking the law at this time does not mean that it will be legal in the future. At this time, it is the most favorable tax plan, and then it may be the worst tax plan. If it is impossible to accurately judge the duration of the "hole" and the method of plugging the hole, it is very likely to fall into the "time trap" of tax planning.

Avoiding tax planning traps

In order to help enterprises to correctly file tax returns and reduce the tax burden of small businesses, through rational planning of fundraising, investment and business activities, to create benefits for enterprises, enterprises should start in various ways, including consulting financial and tax professional institutions or experts to reasonably avoid tax planning traps. . Chanjet Accounting Homeland held a series of expert video lectures on tax planning. Among them, the national tax department specially sat in person to help the company to provide on-site explanations on hot topics of concern to the company. Among them were sunshine tax savings, contracts and Lectures on tax prevention, risk prevention for small business audits, etc., and more than a dozen experts interacted online to answer questions and help finance and taxation personnel learn and improve. At the same time, there are tax-related columns in the Q & A area. Many well-known financial and tax experts interpret the tax planning policies and issues for enterprises.