Tax planning - a legal way to reduce tax liabilities

Tax planning - a legal way to reduce tax liabilities. It uses the opportunities provided by the tax legislation by adjusting the activities and methods of accounting. It refers to purposeful activity of the taxpayer, focused on maximum utilization of all the nuances of the existing tax laws to reduce tax payments in the budget.

Tax planning is one of the main components of the process of financial planning. There is a preliminary calculation of the possible alternatives regarding the amounts of taxes and mandatory payments based on the overall activity or in relation to the specific transaction (the project). Calculations are carried out according to the different legal forms of implementation. Tax planning is available to anyone, but the implementation should be in the planning stage of a single business transaction, not after its completion.

There are external and internal tax planning

External planning can be conducted by several methods: the replacement of a tax entity, the replacement activity, the replacement of tax jurisdiction.

The method of replacing the tax subject is based on use of tax optimization of such organizational-legal form of doing business, is subject to a more favorable tax treatment. For example, the inclusion in the business plan "nonprofit" companies - with benefits in taxation - saving on taxes.

The method of changing the form of taxable entity assumes transition to new activities, which are more acceptable in terms of taxation. An example of this method is the transformation of the trade organization's sales agent or commission agent, working for "someone else" instructions with "foreign" goods for certain remuneration. Or using commercial loan agreement - for reasons of easier accounting and lower taxation.

Method of replacing tax jurisdiction is to register the organization in providing under certain conditions, preferential taxation. Developing company's growth strategy includes possible affiliate organization structures in the outer zones with minimal tax burden (offshore).

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