How to reasonably avoid tax in private enterprise

"Reasonable tax avoidance" is also known as "tax planning". It originated from the case of "Commissioner of Inland Revenue v. Archduke of Winster" in 1935. Sir Tomlin, a member of the British House of Lords who participated in the case at that time, made this statement on tax planning: "Any person has the right to arrange his own business. He cannot be compelled to pay more tax if he can pay less tax by some arrangement made under the law." This view is shared by the legal profession. After more than half a century of development, the standardized definition of tax planning has been gradually formed, that is, "in the scope permitted by the law, through the prior planning and arrangement of business, investment, financial activities, as far as possible to achieve the economic benefits of tax savings (Tax Savings)." This definition shows that tax planning has the following three obvious characteristics:

One is the legality

It means that tax planning can only be carried out within the scope permitted by law, and it is a tax evasion behavior to violate the law and avoid tax business. The relationship between taxpayers and taxpayers is the basic relationship of taxation, and the tax law is the *** same criterion to deal with the relationship between taxpayers and taxpayers. Taxpayers should pay tax according to the law, and tax authorities should collect tax according to the law, which is unquestionable. However, in reality, enterprises in compliance with the law, there are often a variety of tax burdens varying tax programs to choose from, enterprises can be selected through the decision-making to reduce the tax burden, increase profits, tax planning becomes possible.

The second is planning

Indicates prior planning, design and arrangement. In real economic life, the tax obligation usually has a lag: the enterprise transaction behavior occurs, only after the payment of turnover tax; earnings realization or distribution, only after the payment of income tax; after the acquisition of property, only after the payment of property tax, which objectively provides the possibility of planning in advance before tax payment. In addition, business, investment and financial management activities are multifaceted, while tax provisions are targeted, and tax treatment is often different for different taxpayers and taxable objects, which suggests to taxpayers that they can choose a lower tax burden decision. If business activities have occurred, the taxable amount has been determined and then go to plot to pay less tax, it is not tax planning, but tax evasion.

Third is the purpose

To obtain the tax benefits of "tax savings". This has two meanings: one means to choose a low tax burden. Low tax burden means low tax cost, which means a high rate of capital recovery; the other means delaying the tax period (as opposed to violating the tax law by defaulting on taxes). The postponement of the tax period may reduce the tax burden (e.g., avoiding a high marginal tax rate), or it may reduce the cost of capital (e.g., reducing interest payments); either way, the result is a saving in tax payments, i.e., tax savings (Tax Savings). From the origin and definition of tax planning can be seen, tax planning is not only an important way to maximize corporate profits, but also a way to promote the level of business management, but also an important part of the decision-making of business leaders, which is precisely the fundamental reason for the rapid development and popularization of tax planning activities in the developed countries of the West. In short, tax planning is to seek the best combination of enterprise behavior and government policy intention in the operation, successful tax planning often can make the operator bear the lightest tax burden, but also can make the government to give the policy intention of the tax laws and regulations can be realized. Therefore, in a sense, even from the standpoint of the government's macro-control (such as industrial policy, etc.), tax planning activities should be encouraged, or at least not prohibited.

Tax planning as an important element of business activities, is in certain objective conditions exist. Such objective conditions seem to include at least two types of factors, including the level of the government's rule of law and changes in the tax law.

First of all, the rule of law is a prerequisite for tax planning. Tax planning is based on the current tax system, if the actual tax operation in a certain area is not based on the current tax law, but on other factors similar to income indicators, then tax planning will lose its practical significance, because the prerequisites have disappeared, which is the first issue that enterprises should pay attention to tax planning.

Secondly, because the tax law as a kind of law has both stability and a certain degree of flexibility and change, so tax planning should always pay attention to changes in the tax law. In the system of transition has not been completed, the tax law is adjusted more frequently at this stage, this point should pay particular attention to, because the tax law once adjusted, the basis of tax planning may disappear or change, the results of planning may be completely opposite to the original planning expectations. In other words, the decision-makers and financial personnel of enterprises should pay attention to the changes and adjustments of the tax law and adjust the strategies and methods of tax planning accordingly. Any adjustment of the tax law, the content itself may be the basis of the new tax planning, but the key lies in the decision makers how to adapt to the local use of tax planning tools to achieve corporate profit growth.