Study Of Corporate Tax Planning Strategies

As a philosophical proverb prevailing in western countries goes, there are only two matters in the world that are unavoidable, one is death, and the other is taxation.Taxation determines the economic profits, and turns to be a key element in decision-makings for an enterprise. While tax planning, the fundamental right of an enterprise, is conducive to profits maximization, and has attracted more and more attention. In this view, this article studies the strategy and method of tax planning, with an aim to draw some suggestions to the activities and gradually improve the level of tax planning for domestic enterprises.Tax planning is a vital component of financial activities, and is one of the important means to realize the profit maximization. With the characteristics like validity and purpose-orientation, tax planning differs from illegal activities, such as tax dogging, tax evasion, tax revolt and tax deceit. It has become into an economic lever and instrument to maintain the interests of the country and taxpayer, and an indispensable choice made by enterprises under the circumstances of market economy.A good master of basic techniques and procedures are the prerequisites of tax planning. The techniques can be classified in the following eight kinds, namely, Tax Exemption Technique, Tax Reduction Technique, Tax Rates Difference Technique, Splitting Technique, Deduction Technique, Tax Credit Technique, Tax Deferral Technique, and Tax Repayment Technique. The procedures are, a well-known of the related regulations, good understanding of the financial situation of the tax payer, signing of the contract of mandate, enactment of tax planning, and control of the planning program.Tax planning can be implemented within every period and phrase of each enterprise's development. For example, in the period of enterprise establishment, tax planning can be used in organization formation, structural establishment, registration venue, and capital subscription. In the period of fund-raising, it instructs financing method and cannel. In the phrase of capital investment, it helps to choose the investment method. In the phrase of profit allocation, it gives full play of the tax preferential and drawback re-investment policy. In the phrase of restructuring, it makes good use of relevant policies on enterprise merger and separation.Since risks also exist in tax planning, it is the objective requirement to conduct risk prevention with an aim of profits maximization. The main causes of the risks are, risks originated from policy, warps occurred during the tax execution, different understandings between tax subject and taxpayer, changes of the enterprise activities, and misunderstanding of the policy, etc. Some detailed measures for risk prevention include, raising the risk prevention awareness of tax planning, enhancing the connection between enterprise and tax departments, studying of the related regulations and laws, keeping an eye on the analysis of cost and profits concerning tax planning, and turning to tax agency for professional service.