Taxpayers strive to optimize tax payments.
Tax planning is active and targeted legal action of a company that is aimed at obtaining tax benefits (reduction of taxes, fees, duties and other obligatory payments). Tax benefit is a reduction in amount of tax liability, which is achieved by reducing the tax base, obtaining a tax deduction, benefits, applying a lower tax rate, as well as obtaining the right to a refund (offset) or tax refund from the budget.
The Tax Code prohibits taxpayers from reducing the tax base or the amount of tax payable, misrepresenting information about facts of economic life, objects of taxation to be reflected in tax and (or) accounting or tax reporting of the taxpayer.
Organizations calculate the tax base in accordance with the results of each tax period based on data from accounting registers and other documented data on objects subject to taxation or related to taxation. When calculating taxes, taxpayers are not entitled to reduce the tax base for a particular tax by the amount of expenses that are not real and reflected in the accounting illegally.
Modern tax planning of expenses requires special attention. The concept of tax planning consists of the right recognized by each taxpayer to use all means allowed by law, ways and methods to minimize their tax liabilities. Such opportunities are due to the presence in the tax law of a very broad area where the rules of law are not defined with sufficient accuracy, or there can be ambiguous interpretation.
The Tax Code of the Russian Federation indicates that a taxpayer has the right to use tax benefits if there are appropriate grounds and in the manner established by the legislation on taxes and fees. The planning of tax payments is based on the most complete and correct use of all statutory benefits and advantages, as well as an assessment of the position of tax authorities and consideration of the main directions of the tax, budget and investment policies of the state.
The tax burden
Tax burden is a value that indicates the level of tax burden of the taxpayer. There are many ways to calculate this burden. As a rule, it is expressed as a relative value, in the numerator of which is the amount of accrued taxes for the tax period, and in the denominator is any economic base (income, profit, net assets, etc.).
If the object of tax planning is the assessment of the degree of severity and effectiveness of tax system, then only directly paid taxes and fees are taken into account. If the effectiveness of the organization’s work on the implementation of tax legislation is assessed, then other indicators are taken into account – fines, penalties, and forfeits.
In general, the methods for determining the tax burden of the taxpayer differ in the set of taxes and contributions included in the calculation. An important role is also played by the underlying asset, to which the calculated indicators can be tied, i.e. the total amount of taxes for the billing period is compared with it.
Tax planning purposes
The main purposes of tax planning are:
- optimization of tax payments;
- reduction of tax losses for a specific tax or group of taxes.
When minimizing taxes, the taxpayer uses all the advantages and disadvantages of existing legislation, including its imperfection, complexity and inconsistency. At the same time, he uses such tax schemes that allow the usage of forms of economic action with minimal taxation.
However, if tax planning goes beyond the legal framework, then planning is already becoming tax evasion. This will entail checks from the Federal Tax Authority (FTA) and other governmental bodies that control financial and tax activities, which often results in fines, administrative or criminal liability.
The result of tax planning will be a reduction in tax payments, optimization of tax and non-tax payments, competent planning of the ratio of income and expenses of the company. In addition, the taxpayer will learn to make the most of the possibilities of the current tax legislation and adjust his activities and accounting scheme in such a way as to use the minimum tax rates.
Strategic and ongoing tax planning
Depending on the length of the period and the nature of the tasks to be distinguished, strategic (long-term course of organization and solving large-scale tasks) and current (everyday) planning of tax payments are distinguished.
Strategic tax planning includes:
- review and forecast of business customs and judicial practice, the regulatory framework and its changes for the planning period;
- making forecasts of tax liabilities of the organization, including force majeure posibility;
- options for schemes of financial, documentary and inventory flows;
- drawing up a network schedule of compliance with the tax, financial and commercial obligations of the organization;
- mandatory risk assessment of various tools, the study of options for possible causes of sharp deviations from the calculated performance indicators of the organization;
- written justification of the applicable schemes indicating tax consequences;
- making a forecast of the effectiveness of the applied tax optimization tools.
The essence of strategic tax planning is the analysis of various taxation schemes and the choice of the option that best suits the activities of the enterprise and allows to achieve the greatest reduction in tax payments.
Current or operational planning – actions taken in the course of a company’s activity, which is aimed at reducing the tax burden. Unlike strategic, operational planning is more short-term.
Current tax planning involves the following activities:
- regular monitoring of legal acts and comments of tax experts;
- making forecasts of tax liabilities of the organization and the consequences of planned transactions;
- drawing up a compliance schedule with tax obligations and changes in the assets of the organization;
- forecast and study of possible causes of sharp deviations from the average performance of the organization and the tax consequences of innovations or ongoing transactions.
To carry out these activities, business entities need legal systems that must be updated at least once a month, as well as the support of specialists and experts.
Stages of tax planning
The main areas of tax planning are reducing tax payments and optimizing the tax scheme of an enterprise. It is better to start with the idea of business reorganization to conduct tax planning. Based on its goals and objectives, the optimal taxation system is selected, whereupon you can consider the use of tax benefits. First of all, the global directions of strategic planning are determined, and then the mechanisms of operational planning are evaluated and reorganized.
The main stages of tax planning are:
- identification of tax risks;
- analysis of tax problems and task setting for the development of a tax scheme;
- selection of basic tools for tax planning;
- development of a tax scheme;
- carrying out activities in accordance with the developed tax scheme.
Tax risks include:
- risks of control by the tax authorities;
- risks of increasing taxes;
- risks of criminal liability for illegal optimization schemes
To mitigate these risks, you should use only the legal possibilities of tax planning.
In the process of planning tax payments should adhere to the following principles:
- Rationality and economic feasibility. The benefits derived from tax optimization should significantly exceed the costs that must be implemented to realize this decision.
- Comprehensive calculation of savings and losses. Before introducing a tax optimization scheme, it is necessary to compare potential savings and possible costs.
- Documentation of operations. All taxpayer business transactions must be carefully documented. This is useful when conducting tax audit and as evidence in court.
- Individual approach. Only knowing all the intricacies of the company, you can recommend a particular tool for tax planning of expenses. You cannot mechanically transfer the same scheme from one enterprise to another.
- Comprehensive tax savings (the principle of the variety of methods used to minimize taxes).
- Lead time. Planning must be carried out before the business transaction or the end of the tax period.
Tax planning tools
The main and most widely used tools of modern tax planning include:
- special tax regimes (simplified taxation system, single tax on imputed income);
- preferential tax zones in the Russian Federation and abroad;
- tax benefits provided by tax legislation;
- reduced tax rates;
- separate elements of taxation;
- accounting policies for tax purposes, elements of accounting for tax purposes;
- form of contractual relationship;
- transaction prices (contract policy);
- special methods for optimizing tax obligations and tax planning.
Proper application of the current legislation, the use of all possible benefits, rights and guarantees can significantly reduce the risks of tax planning to a minimum level.