The Research Of Tax Planning Risk And Countermeasure

Tax planning means the process of tax-payers designing countermeasures to mitigate tax duties(reducing, exempting or postponing tax payment) by utilizing their due rights according to stipulations in tax boundary and the tax law about "allowed" versus "not allowed", "shall" versus "shall not". From the perspective of the Game Theory, the tax-collectors constituted by government entities and the tax-payers constituted by enterprises is a unity of two opposites. One the one hand, the government endeavors to maximize taxation by leveraging state authority. On the other hand, tax-payers would like to minimize tax payment for benefits of the enterprises. The purpose of tax planning is to reduce the tax-payers' tax payment reasonably and legitimately, and support them to avoid taxation risks. The risk of tax planning is, in general sense, the cost or loss of failures in tax planning activities due to various reasons. According to the causes, tax planning risks can be classified into eleven categories such as policy risks, tax administrative execution inaccuracy, etc. According to whether they can be measured quantitatively, the tax planning risks can be defined as qualitative risks and quantitative risks. It is more challenging to analyze the qualitative tax planning risks, to which this paper proposes ways to evaluate and measure. This paper also discusses how to avoid or prevent the tax planning risks from enterprises and tax agencies' perspectives respectively. It also proposes an innovative solution - probability analysis as a tool to develop the tax planning risk evaluation scheme. This paper raises an example that KPMG failed in tax planning to emphasize the importance to attention of the tax planning risks.