It is necessary to clearly distinguish acts of tax evasion and tax avoidance in order to run enterprises and organizations effectively and comply with the provisions of law. In order to optimize your tax expenses, you should be able to master and manipulate these methods so that you can control your tax costs in a safe manner, contributing to the profitability of the company and building a healthy business environment.
In addition, tax consulting organizations have always been one of the leading supporters of reliability in building tax systems and plans that are consistent with the company’s laws and strategies.
While “tax evasion” is an offense, “tax avoidance” can help taxpayers mitigate the amount of tax they pay without breaking the law.
Tax consulting organizations provide a wide range of services to customers, including: Tax consultancy, support for compliance with important taxes such as corporate income tax, value added tax, foreign contractor tax and personal income tax. At the same time, we also provide services on import, export and transfer taxes. Tax consulting organizations regularly update their customers on the latest changes to Vietnam’s tax regulations. From there, advising customers on the most effective ways of organizing operations in Vietnam, as well as providing early warning and assistance in dealing with risk.
- What is a tax plan?
The nature of tax planning is the process of finding different tax solutions to determine when, how and whether to make some transactions to optimize the tax payable.
In order to increase the value of each transaction, the decision maker needs to always determine the correct strategy of the business, estimating the possible effects of the tax over time on all parties involved. dealing with. Increasing value is achieved by negotiating the best tax options, which means converting transactions to other forms of taxation that are most beneficial in terms of business synergy of enterprise/ individual.
- Method of tax planning
Tax strategy is based on application:
- Time value of money is tax paid sooner or later;
- The difference in taxable value means that the taxable income is more or less;
- The difference between the tax rates due to the different types of business tax rates and the tax rates in different countries is different.
There are four methods commonly used in tax planning: (1) creating new (2) transformation (3) time (4) splitting:
To better understand these four methods, let’s use the current tax law to analyze and give examples.
- Method 1: New creation – is to take advantage of tax incentives from the creation of branches and subsidiaries, for example, to establish new ones in areas with low tax rates.
- Method 2: Tax rate change strategy – a change in the operating mechanism, a change in the nature of the transaction so that the asset and income generated are subject to a lower tax rate if no conversion is made.
- Method 3: Time strategy – is the shift of the taxable value to the more favorable tax period.
- Method 4: Split – is the distribution of the taxable value of two or more taxable objects to reduce the total tax payable by all taxable persons.
