On Tax Planning In Enterprise Financial Activities

There is an intricate relationship between tax and the financial activity of enterprises. However, what is this intricate relationship? And what role does the tax play in the financial activity of enterprises? These two questions arouse the author's interest. In recent years there has been a calling for the tax planning, which attracts more attention from the enterprises' financial decision makers. Tax planning refers to the arrangements and plans on the enterprise's operation, investment and financial management so as to reduce the burden of taxation within the state policies and regulations. Tax planning is different from tax avoidance, tax cheat and dodging tax. In fact it is an effective way to maximize the integrated interests of enterprises. Consequently it belongs to the financial management. How to perfect the financial management system in enterprises by tax planning has importance in practice and theory.This paper focuses on the tax planning within the financial activities, through which enterprises can minimize their taxation within the tax law permission. It discusses the employment of tax planning in three aspects of financial activities -investment, financing and distribution.This paper is divided into four parts altogetherThe first part introduces tax planning concept and illustrates the necessity and feasibility of the enterprise carrying out the tax planning.The second part explains the guidelines that should be followed by enterprises. There are four main principles: time value of the fund; zero risk of paying tax; consideration of the whole body; cost-benefit analysis.The third part presents the concrete applications of tax planning on financing activity, investment activity and distribution activity, which are the three main aspects in financial activities.The fourth part looks into the future of tax planning in China.Tax planning has already become the indispensable part in the financial activity of enterprises. Enterprises as tax payers must face this inevitable outcome of themarket economy. Establishing tax planning sensitivity in financial management can protect enterprises' proper interests by legal means. Tax planning will surely receive more attentions and grow more vigorously as an important means to accomplish the goals of financial management.