An Exploration Of Tax Planning In Shipping Industry Of China

Tax is an important expenditure in the enterprise operation.Compared to shipping companies of other countries,Chinese shipping companies load a greater tax burden.We conduct a study of tax planning of Chinese shipping industry to reduce tax burden level of shipping companies and improve the international competitiveness of Chinese shipping enterprises.According to modern study of tax planning,we should conduct our tax planning study of sub-sector,combined with the business features of different industries and government tax policy,so tax planning theory research can be deepen.The shipping industry,including container shipping,dry bulk transportation and oil and natural gas transportation business,they have different business features. After acquainted with the shipping industry business processes and tax policy,we find that shipping companies can use process features to make tax planning.These features include cross-border operations,capital-intensive,to pay third-party commission, ship leasing,income expect and so on.We should analyze the level of tax burden level of Chinese shipping industry before the discussion of tax planning methods.So that we can understand the management level of tax planning in Chinese shipping industry and found that tax planning deficiencies.In this paper,we adopt a comparative study to analyze tax burden level.We select CSCL(China Shipping Container Lines Co.,Ltd) representative of Chinese shipping company and the Hong Kong-listed shipping company OOCL(Orient Overseas Container Line Co.,Ltd) as our sample,compare the tax burden level of two companies.The effective tax rate designed in this paper includes the rate of "Tax Bearing to Pre-tax Profit" and "Tax Cost to Pre-tax Profit". The average rate of "Tax Bearing to Pre-tax Profit" and rate of "Tax Cost to Pre-tax Profit" of CSCL from 2003 to 2007 respectively reach 13.18%and 14.82%.They are much higher than the OOCL corresponding rates 4.53%and 5.17%.It both indicates that Chinese shipping companies load high burden of tax and there is a great space for Chinese shipping corporate to plan tax.On the base of introducing the theory of tax planning techniques,combining with the process characteristics of the shipping industry and taxation policy,drawing experience of Hong Kong shipping companies,we present some tax planning techniques for Chinese shipping company.These techniques include the subsidiary company registering,capital structure designing,the method of shipping equipment acquiring,as well as the sales tax planning of shipping industry.Taking into account the heavy burden of taxation of Chinese shipping industry, and highly concentration of the industry,so it is easy for communicating among shipping enterprises,we put forward the shipping industry should actively seek to support of national policy,including tax incentives.Also,we should have a clear understanding of the risks in tax planning and take effective measures.