A Case Study On The Tax Planning Of LG Real Estate Development Company Based On "Business Tax To VAT"

The coexistence of business tax and value-added tax(VAT)caused many problems such as double taxation,the incomplete chain of VAT deduction and the inconvenience of tax collection and management.In order to solve these problems,lighten the taxpayers,burden,and promote social and economic development,China started a pilot program of replacing business tax with VAT in January 1,2012.After testing,the program was extended overall in May 1,2016.From then on,the curtains of replacing business tax with VAT in real-estate industry were raised.Real-estate industry is one of the pillars of China's economic development,and it is also the important source of central and local governments' revenues.Taxes related to real-estate enterprises are complex and heavy.On today's market place,it is important for real-estate enterprises' living and developing to develop tax plans,make efforts at tax reduction and attenuate tax-related risk.From the investigate status of tax planning theory,this paper analyses the characteristics and tax status of real-estate industry,and discusses the influences of replacing business tax with VAT on operating management and tax burden for real-estate enterprises,using the methods of literature research,case analysis and comparative analysis.The paper selects LG as the research object,which is a real-estate company of great influence at home and abroad.Through finding out the problems existing in its tax administration,the paper clarifies the importance of making tax plans.Based on the framework of law,the paper also considers tax-related items in the aspects of development,sales and ownership,such as land acquisition,financing,construction,sales,sales price,sales promotion,sales income decomposition,property ownership and rent income decomposition.Finally,the paper summarizes that real-estate enterprises should focus on the thinking of main taxes,tax incentives,basic factors of tax rate,tax deferral and opportunities of tax reform.Meanwhile,the paper suggests that real-estate enterprises should stick to the principle of systematic planning,pay attention to investment in tax planning,and strengthen the prevention of tax planning risks.Tax planning is a "double-edged sword".It helps enterprises to reduce the tax burden and the operation costs while it brings great tax-related risks.According to the framework of law and development strategies,with the help of specialists or professional organizations,using available methods,it is a necessary choice for real-estate enterprises to make scientific and effective tax plans throughout their operating.