The types of tax avoidance are categorized into three forms of domestic tax avoidance, international tax avoidance and tax burden shifting according to their characteristics and contents. From a practical point of view, domestic tax avoidance means that enterprises avoid domestic tax obligations through various methods, ways and means. The methods are as follows:
Changing into a "foreign" enterprise
China's foreign-invested enterprises to implement tax tilt policy, so the transition from domestic enterprises to Sino-foreign equity joint ventures, cooperative ventures and other business models, is not a good way to get to enjoy more tax reductions, exemptions, or tax reprieve.
Tax Oasis
Any production, operation, service-oriented enterprises and enterprises engaged in high-tech development set up in special economic zones, coastal economic development zones, old downtowns of cities where special economic zones and economic and technological development zones are located, as well as state-recognized hi-tech industrial zones, bonded zones, are entitled to enjoy a greater degree of tax incentives. Small and medium-sized enterprises in the choice of investment location, you can purposefully choose the above specific areas to engage in investment and production and operation, so as to enjoy more tax concessions (this section readers can refer to the "Push open the door of the" offshore oasis "article).
Special industries
For example, tax exemptions for the service industry: childcare centers, kindergartens, nursing homes, and welfare institutions for the disabled are exempted from business tax on the parenting services they provide.
Marriage introduction and funeral services are exempt from business tax.
Medical services provided by hospitals, clinics and other medical institutions are exempt from business tax.
Civil welfare enterprises that have placed "four disabled persons" to account for more than 35% of their production staff are exempted from paying business tax on businesses that fall within the scope of the business tax item "service industry" (except for advertising).
Labor services provided by individuals with disabilities are exempt from business tax.
Interest income from small loans to farmers by financial institutions is 90% of the total income when calculating taxable income Enterprises can increase the rate of bad debt provision, which is to be included in the administrative expenses, thus reducing the profit for the year and paying less income tax.
Enterprises can try to shorten the depreciation life, so that the amount of depreciation increases, the profit decreases, the income tax paid less. In addition, different depreciation methods used, the amount of depreciation charged varies greatly, which ultimately affects the amount of income tax. Private owners of small and medium-sized enterprises should take into account how to apportion the cost of water, electricity and fuel consumed in the operation, and whether the cost of living of family members, transportation costs and various types of miscellaneous expenses are included in the cost of products.
Today's business community, this item is frequently used. They will buy their own house, car expenses, and even the cost of children's daycare and school expenses are included in the company's business projects. This is not permitted by national policy, and although this method is not uncommon in today's business world, we do not advocate it here. Choose different sales settlement methods, delay the time of revenue recognition. Enterprises should delay the time of revenue recognition as much as possible according to their actual situation. Deferring taxes will bring unexpected tax savings to the enterprise.
There are many common tax avoidance methods, but they are generally no more than that: utilizing national tax incentives, transfer pricing, costing, financing and leasing. The promulgation and implementation of the new tax law will be the power of tax exemptions and reductions to the State Council, to avoid the phenomenon of too many tax exemptions and reductions too chaotic. At the same time, the tax law also stipulates various tax incentives in the form of law, such as: high-tech enterprises in high-tech development zones shall be subject to a reduced income tax rate of 15%; new high-tech enterprises shall be exempted from income tax for two years starting from the year of commencement of operation; enterprises utilizing "three wastes" as the main raw materials may be subject to a reduced or exempted income tax for a period of five years; Enterprises and institutions that carry out technology transfer and its related consulting, service and training are temporarily exempted from income tax if their annual net income is less than 300,000 yuan. Enterprises should strengthen the study of preferential policies in this area, and strive to adjust the income of enterprises to enjoy a variety of tax incentives, maximize tax avoidance, and grow the strength of enterprises.
At the same time, the economic development zones around the country are now springing up, they opened the investment conditions are very attractive, most of them are to reduce the corporate income tax for a number of years, reduce a variety of fees and other conditions to attract capital, technology and talent. If your enterprise is a high-tech industry or encouraged industry, such favorable conditions certainly become one of the priority factors for enterprises to avoid taxes. Transfer pricing method is one of the basic methods of enterprise tax avoidance, it refers to the economic activities of the two sides of the enterprise in order to share profits or transfer profits in the process of product exchange and sale, not in accordance with the fair market price, but according to the **** the same interests of the enterprise and the pricing of the product method. Using this pricing method product transfer price can be higher or lower than the market fair price, in order to achieve the purpose of less or no tax.
The tax avoidance principle of transfer pricing is generally applied to related enterprises with different tax rates. Through transfer pricing, part of the profits of an enterprise with a high tax rate are transferred to an enterprise with a low tax rate, which ultimately reduces the total amount of tax paid by the two enterprises. Various expenses incurred in the course of production and operation of an enterprise are to be amortized to cost according to a certain method. Cost sharing means that the enterprise in the premise of ensuring the necessary expenditure of costs, find ways to find a balance from the accounts, so that the costs are amortized into the cost of the largest possible amortization, so as to achieve the maximum tax avoidance.
Commonly used principles of cost sharing generally include actual cost sharing, average amortization and irregular amortization. With a careful analysis of the depreciation calculation method, we can summarize the general rule: no matter which apportionment is used, as long as the expenses are amortized into the cost as early as possible, so that the greater the expenses amortized into the cost at an early stage, then the more it can maximize the purpose of tax avoidance. As to which apportionment method is most capable of helping the enterprise to realize the purpose of tax avoidance to the greatest extent, it needs to be calculated, analyzed, compared and finally determined according to the time and amount of the expected expenses. The principle is to utilize certain financing techniques so that the enterprise can achieve the highest level of profit and the lowest level of tax burden. Generally speaking, there are three main channels for enterprises to raise the funds needed for production and operation: 1) self-accumulation; 2) borrowing (loans from financial institutions or bond issuance); and 3) stock issuance. Self-accumulation of bonuses is the enterprise after-tax distribution of profits, and stock issuance should be paid dividends is also as a way of after-tax profit distribution, both of which can not offset the income tax payable for the current period, and thus fail to achieve the purpose of tax avoidance.
The interest expense of borrowing is deducted from the pre-tax profit, which can offset the profit and ultimately avoid tax. Leasing is an economic behavior in which the lessor leases an asset to the lessee for a period of time specified in a deed or contract in exchange for a rent. From the lessee, the lease can avoid the burden of purchasing machinery and equipment and the risk of equipment obsolescence, because the rent is deducted from the pre-tax profit, can be deducted from the profit and achieve tax avoidance.