Case Analysis On Tax Planning Of HD Electric Company

In recent years more and more attention is paid to tax planning in Chinese enterprises. Within the law, tax planning is to make prior planning and arrangements before production and business activities in order to reduce the tax payment as much as possible. Through continuous reforms in 1980 s, the competition in the electric power industry is becoming fiercer and fiercer, as a result, the monopoly of power enterprises is gradually broken. However, as state-owned monopolies, most power enterprises lack the awareness of tax planning, which is actually an effective means to save cost and to realize the maximization of the enterprises’ core values, thus should be valued. Therefore, it is of great significance to implement the tax planning in power enterprises.Combining with the existing tax laws and regulations as well as accounting policies, this paper investigates the feasibility of the tax planning in HD power company. Based on the existing theories and practices, this paper analyzes the actual business condition and environment in HD, and designs specific tax planning schemes according to the issues in tax payment. The optimal scheme will be chose to study the expected effect of the planning through a comparative analysis of tax payments and profits before and after the tax planning. This paper firstly introduces the basic information of HD company and its present management condition, tax payment as well as financial status. Then considering the existing tax laws and regulations, following the principle of the maximization of the enterprise’s overall benefit, combined with the company’s actual situation, the author adopts varied feasible methods to analyze the transport expense, capital structure, organizational form selection of investment units, fixed assets depreciation method, inventory valuation method, pre-tax deductions of the corporate income tax, equity investment and property reorganization, and then proposes a whole set of tax planning scheme. Finally possible risks in the planning process are investigated, with some corresponding preventive measures put forward.