The Application Research Of Tax Planning In Manufacturing SMEs

The wide rang and large amount of SMEs (Small and Medium Enterprises), especially themanufacturing SMEs, are the main forces in Chinese economic development, which contribute a lot to theGDP, taxes and employment. Whether the manufacturing SMEs can maintain sustainable development,therefore, is of significant importance in the development of national economy, national taxation, and socialstability. However, manufacturing SMEs are still confronting with the problems of financing difficulty andheavy taxes, of which the expenditure of taxes has become a large part and compulsory expenses formanufacturing SMEs. Driven by personal interests, some manufacturing SMEs commit tax fraud, tax revoltand tax evasion by accounting fraud so as to pay less tax. It not only needs to “block” but also to “clear”such illegal behavior, in other words, to reduce the tax costs by guiding the enterprises through some legaltax planning. The application research of tax planning in manufacturing SMEs, therefore, is quitenecessary.Though tax planning is of great significance for manufacturing SMEs, there is little concrete casestudy of the tax planning since it is fresh and new. After familiar with and mastering tax laws, regulationsand relevant literatures, then combining theory with cases, this paper will make an in-depth investigation onA machinery manufacturing company (one of the manufacturing SMEs, hereinafter referred to as CompanyA). On the prerequisite of company A’s current operating conditions, this paper will propose some taxplanning schemes for company A by starting from the following three points, namely financing, investmentand operating activities in financial management and comprehensive application of accounting, financialmanagement, tax planning and other cross-discipline expertise. Based on this, this paper will also makecomprehensive analysis about the risks of the plan and then the measures to solve the problems so as tomake the tax planning schemes rational, feasible and have minimized risks.Firstly, the main body of the paper defines tax planning and manufacturing SMEs. Secondly, thedocuments and literatures for manufacturing SMEs tax planning are summarized and evaluated. The thirdpart is the theoretical basis of this paper, which mainly introduces the principles,four methods applied inmanufacturing SMEs, the relevant risks and the solutions. Then comes to the case study part which applies the four methods mentioned in part three to the financing, investment, operation and other tax-related issuesof company A, puts forward some tax planning schemes for company A, discusses the risks of each schemeand then assists company A alleviating its taxes, reducing its tax-related risks, increases its competition.Lastly, take the same type of manufacturing SMEs, like company A as an example, the paper extends theideas, approaches and notes to other manufacturing SMEs from one to the entire industry.According to this paper, with the introduction of more preferential tax policies for manufacturingSMEs, how to make full and good use of the policy and how to use the regulatory accounting behavior toalleviate the tax’ burden of manufacturing SMEs is a problem worthy of our attention. On the premise oflegal and reasonable, based on complete, standard and real accounting, making use of all the planningmethods, using the tax polices flexibly as the key points, making tax planning according to their actualsituations, evaluating and solving the risks of planning, then the manufacturing SMEs should form acomparatively complete tax planning scheme.Tax planning is an accounting work,the formulation andimplementation of planning project process are linked with the accounting behavior closely from beginningto end.Tax planning must take accounting events as the object, the implementation of planning need byaccounting of accounting.The result will also be reflected in the change of the total amount of accountingprofits finally. Tax planning can not only save tax expenses for the enterprises, but also improve thecomprehensive competitiveness and sustain the sound development of the enterprises as a kind ofmanagement. After the research in this paper, it is hoped that it will provide some references for the taxplanning of manufacturing SMEs.