"This is the stone of other mountains. You can attack jade. " In other words, if domestic enterprises know something about the tax planning methods of foreign enterprises, it will certainly be helpful for them to explore the road of tax planning of their own enterprises.
What taxes do foreign companies need to plan?
In European and American countries, when it comes to tax planning, it mainly refers to the planning of income tax. Foreign tax planning generally does not involve commodity tax. In addition to the value-added tax, consumption tax and other taxes levied on goods should be added to consumers' prices, so there is no need for planning, and the planning space of commodity tax is also an important reason.
Countries that implement value-added tax abroad generally levy value-added tax on goods and services, and the collection of value-added tax often only gives preferential treatment to goods (people's necessities) through zero tax rate or low tax rate, but not to specific enterprises, so that enterprises engaged in the same production and business activities face the same value-added tax treatment. In addition, some countries (such as the United States) levy sales tax in the retail sector, and production and wholesale enterprises do not have to pay sales tax in their business activities, so there is no tax planning; Retail enterprises engaged in business, their sales must be taxed according to the unified tax rate of the state, and there is basically no room for planning. The situation in China is quite different from that in foreign countries. First, value-added tax is a major tax in China. There are a lot of enterprise benefits in China's current value-added tax system (that is, certain enterprises such as welfare enterprises are subject to refund on demand or refund on demand), so that the tax burden of enterprises that produce or sell the same product may be different. This preferential tax system will inevitably drive enterprises with heavy tax burden to make tax planning for value-added tax, otherwise they will not be able to compete fairly with enterprises enjoying value-added tax benefits. Second, China is currently implementing a commodity tax system with value-added tax and business tax in parallel, so there is a problem of mixed marketing. In addition, the tax burden of value-added tax and business tax is different, which provides space for enterprises to plan commodity tax. It is precisely because of the above reasons that enterprises in China also attach great importance to the planning of commodity tax.
Income tax needs tax planning mainly because it is not easy to pass on, and taxpayers generally have to pay their own taxes in the end. In this way, income tax becomes a kind of cost for enterprises to engage in business activities. The more income tax paid by enterprises, the less actual income after tax. If enterprises can make income tax planning, they can reduce the tax cost and improve the marginal rate of return after tax. In addition, because the income tax cannot be deducted before tax, the decrease of the taxable amount of enterprise income tax planning will not increase its taxable income accordingly. In other words, the benefits of income tax planning are tax-free. Of course, in foreign countries, income tax planning is more common, not only because it is necessary to plan, but also because income tax has a large planning space, which mainly comes from tax loopholes in tax laws of various countries and numerous tax preferential measures.
Basic methods of income tax planning for foreign enterprises
1. Realization of tax avoidance
Using this method for tax planning does not mean that enterprises should avoid obtaining actual economic income, but try to obtain economic income that is not recognized as taxable income in the tax law. For example, the tax laws of various countries stipulate that income is generally realized through market transactions, and only income realized through transactions needs to be taxed. If assets are not exchanged or realized, taxes will not be levied, which is a theoretical loophole in the income tax laws of various countries. In order to make use of this theoretical loophole for tax planning, foreign enterprises often have to buy physical assets with value-added potential. Its specific practice is usually to use bank loans to buy real estate such as land. After the real estate is added, it is not in a hurry to sell it, because as long as this part of the added real estate is not sold, enterprises do not have to pay capital gains tax, and enterprises can also enjoy the tax benefits brought by pre-tax deduction of bank loan interest.
Borrowing can also achieve the purpose of avoiding taxable income. For example, an enterprise owns 6,543,800 yuan of real estate. Now the enterprise urgently needs 2 million yuan. Of course, an enterprise can sell a part of its property to earn income, but then it must pay income tax on the income from the transfer of this part of its property. For the purpose of tax planning, enterprises can use real estate as a mortgage loan of 2 million yuan. Of course, you have to pay interest on borrowing money, but as long as the interest amount is less than the tax payable on the sale of real estate, borrowing money is desirable.
2. Deferred realization of taxable income
If a taxpayer can postpone the realization of taxable income, he can postpone the payment of tax. Deferred tax payment has two advantages for taxpayers: first, they can continue to enjoy the funds and make profits from them; Second, the present value of future tax payable will decrease after discounting with interest rate. For example, suppose the taxpayer invests the money saved by tax deferral, the return on investment is 10%, and the income tax rate is 30%, then the after-tax return on taxpayer's investment is 7%.
In this case, if the taxpayer delays the payment of tax payable 1000 yuan to ten years later, the present value of tax payable 1000 yuan is only 508 yuan. If the taxpayer invested 508 yuan that year, the sum of the principal and after-tax interest for the next year would be 544 yuan. If taxpayers invest principal and interest every year, 508 yuan will increase to 1000 yuan after ten years. If the tax payment is delayed for a long time and the market interest rate is high, the economic benefits brought by the tax payment delay will be even greater.
In many countries, accelerated depreciation or rapid depreciation can be used to delay the realization of taxable income. The implementation of these two depreciation methods will not reduce the total income tax payable by enterprises. However, due to the large amount of depreciation included in the cost in the early stage of the enterprise and the small amount of taxable income, the tax payment time is mainly postponed to the later stage, so that the present value of the sum of taxes paid in each year will be reduced. Foreign enterprises often delay the realization of taxable income by choosing favorable inventory cost valuation methods. For example, when the price rises, enterprises can choose the LIFO method to calculate the actual cost of raw materials. Because in the case of rising prices, the price of raw materials purchased later will be higher than that of raw materials purchased first, and enterprises will give priority to calculating the cost of raw materials with higher prices, which will undoubtedly postpone some profits to the later stage, thus achieving the purpose of delaying tax payment. The "deferred tax payment" regulations in Britain and America also provide many enterprises with the opportunity to postpone the realization of taxable income. According to the jurisdiction of residents, British and American countries generally tax the overseas profits of their own companies, but in order to encourage multinational companies to operate and develop overseas, it is stipulated that the income of multinational companies from abroad will not be taxed before being repatriated to their own countries, and only when this part of overseas income is repatriated will it be taxed. Because of this regulation, British and American multinational companies often have to keep their overseas profits abroad for tax planning reasons, which makes the profits not meet the conditions of taxable income.
3. Distribute profits among affiliated enterprises
Because of the special relationship between affiliated enterprises in capital and management, the transaction between them does not necessarily adopt market price, so profits can be transferred between affiliated enterprises through transfer pricing. Especially when the income tax rates applicable to affiliated enterprises are different, it becomes an important method for enterprise tax planning to transfer profits to affiliated enterprises with low applicable tax rates by using transfer pricing.
Making zero-interest loans to affiliated enterprises is also an important way to distribute profits among affiliated enterprises. Assuming that the market lending rate is 10%, if enterprise A lends 15,000 yuan to enterprise B, enterprise A can get interest of15,000 yuan, and enterprise B can also get15 if it invests this15,000 yuan. At this time, there is no income transfer between A and B. However, if enterprise A borrows RMB 6,543,800+0.5 million from enterprise B at zero interest, enterprise A does not get any income from enterprise B, but enterprise B can get investment income of RMB 6,543,800+0.5 million with this loan. It can be seen that this interest-free loan transfers a sum of income from enterprise A to enterprise B. If enterprise A and enterprise B are affiliated enterprises and enterprise B applies a lower tax rate, A can transfer profits to enterprise B in this way, thus reducing the total tax burden of enterprise groups.
4. Control the capital structure of enterprises
There are two ways for enterprises to raise funds externally: one is equity financing; The second is debt financing. Even though these two financing methods can enable enterprises to raise the required funds, they are not the same in tax treatment, so enterprises should carefully consider financing methods when making tax planning. Because enterprises must give investors a certain return whether they issue stocks or borrow money to raise funds. However, according to the tax laws of various countries, dividends paid by enterprises can not be included in the cost, but interest paid can be included in the cost of enterprises. Therefore, from the perspective of taxation, debt financing is more favorable than equity financing.
Basic methods of transnational tax planning for foreign enterprises
Transnational tax planning, also known as international tax avoidance, refers to the tax avoidance activities carried out by multinational companies by taking advantage of the differences in tax laws of various countries and the loopholes in their foreign-related tax laws or international tax laws. This kind of tax planning requires taxpayers to engage in some activities that cross their own borders, or taxpayers to move across their own borders, or taxpayers to transfer their own funds or property out of their own countries to make them flow internationally. The tax obligation to be evaded by transnational tax planning is not limited to the taxpayer's country of residence, but also includes the source country of income; The purpose of taxpayers' transnational tax planning is often not to reduce their tax burden in a certain country, but to reduce their global total tax burden. The common methods of transnational tax planning of foreign multinational corporations include:
1. Transfer profits to affiliated enterprises in low-tax countries through transfer pricing.
Transfer pricing is the most commonly used international tax avoidance method for multinational companies to transfer profits within the company group so that the profits of the company group can be realized in the affiliated enterprises of low-tax countries (or tax havens) as much as possible. The profits artificially displayed by multinational companies in the accounts of affiliated enterprises in low-tax countries (tax havens) by using transfer pricing are sometimes called "false profits". Multinational companies transfer profits within the group from affiliated enterprises in high-tax countries to affiliated enterprises in low-tax countries through transfer pricing. Judging from the tax burden of affiliated enterprises in low-tax countries, it is higher than before, but at the same time, the profits and tax burden of affiliated enterprises in high-tax countries have declined. The reduction of corporate tax burden in high-tax countries is bound to be greater than the increase of corporate tax burden in low-tax countries, which will eventually lead to the decline of the overall tax burden of multinational companies.
2. Abuse of international tax agreements
The so-called abuse of international tax agreements means that residents of third countries use international tax agreements signed between other two countries to obtain tax benefits that they should not have. Multinational companies can often achieve the purpose of tax avoidance by abusing international tax agreements. International tax agreements signed between countries (agreements to avoid double taxation on income) generally have preferential clauses to provide income tax, especially withholding income tax, to residents of the other country. For example, countries generally levy 25% ~ 35% withholding income tax on dividends and bonuses paid by their residents to non-residents, but according to international tax agreements, the withholding tax rate of dividends can be reduced to below 15%, and some even to zero. The tax agreement signed by Party A and Party B should have benefited the residents of Party A and Party B, but the residents of the third country should not have benefited from it. However, residents of third countries can often try to benefit from the tax agreements signed by Party A and Party B through certain means. Its main means is to set up a subsidiary in one of country A and country B, and make it a local resident company, which is completely controlled by the residents of a third country. In this way, the subsidiaries can enjoy the preferential treatment in the tax agreement signed by both parties, and then the subsidiaries can transfer the benefits to the residents of the third country through the relationship with them, so that the residents of the third country can indirectly benefit from the tax agreement between Party A and Party B. According to the different purposes of the residents of the third country abusing the tax agreement between A and B, the subsidiaries they set up in A or B can be holding companies, finance companies, patent licensing companies, etc.
3. Transfer property by means of trust
Trust, also known as trust entrustment, refers to the legal act that the property owner entrusts his property to a person or institution he trusts to manage it on his behalf. Although trust is very common in the world at present, countries have different understandings and regulations on trust. In common law countries, trust relationship is generally regarded as a legal relationship, and the client entrusts his own property to a trust institution (trustee) for management. At this time, the trust legally cut off the ownership chain between the client and his property. Based on the basic understanding that trust can cut off the chain of ownership relationship between the client and his property, common law countries generally do not tax the property income entrusted to the trustee by the property owner. Moreover, most countries in the common law system implement discretionary trust, and the beneficiaries of the trust (even the trustor himself) do not own the ownership of the trust property, so as long as the beneficiaries do not get the benefits distributed by the trust institution, the beneficiaries do not have to pay any taxes on the trust property.
It is not difficult to see that the tax treatment of trusts in common law countries can provide taxpayers with certain international tax avoidance opportunities. Because, if the income tax rate of a country is very high, then the residents of that country can transfer their property abroad, entrust the property to a trust institution located in a tax haven for management in the form of discretionary trust, and all the income from the trust property is accumulated in the tax haven. By establishing this foreign trust, property owners and trust beneficiaries can completely get rid of the obligation to pay taxes to their own governments on the income of this property; At the same time, because its property is managed by the tax haven trust (trustee), the local government does not levy or underpay income tax on the income obtained from the trust property.
4. Establish an internal insurance company
The so-called internal insurance company refers to an insurance company invested and established by a company group or company consortium engaged in the same business, which is specially used to provide insurance services to its parent company or sister company to replace the external insurance market.
Its establishment is mainly for commercial reasons, but multinational companies can also use internal insurance companies for transnational tax planning.
The specific way is to establish internal insurance companies in tax-free or low-tax countries (tax havens), and then the parent company and subsidiaries will transfer a large amount of profits out of the country of residence by paying insurance premiums, so that part of the profits of the company group will remain in the accounts of internal insurance companies in tax havens for a long time. Internal insurance companies don't have to pay high taxes for this profit locally; Moreover, this profit will not be repatriated to the country where the parent company is located and will not be taxed.
5. Choose a favorable company organization form
When a country's enterprises invest abroad, they can choose different organizational forms or set up subsidiaries or branches in the host country. As the subsidiary is an independent taxpayer, its losses cannot be recorded in the account of the parent company; The branch and the head office are the same legal entity, and the company calculates profits and losses in a unified way, so the operating losses of the branch can offset the profits of the head office. Because the tax laws of European and American countries generally allow the head office to pay taxes together with overseas branches, when multinational companies invest and set up factories abroad, they often lose a lot in the early stage of production due to various subjective and objective factors. In this way, multinational companies can set up branches in the host country first, so that their opening losses can offset the profits of the head office when collecting taxes, thus reducing the total tax burden of multinational companies. However, it is more favorable for overseas institutions to enter the normal profit stage and be reorganized into subsidiaries, because subsidiaries and parent companies pay taxes separately, and subsidiaries may apply lower tax rates in their host countries; If the residence purpose of the head office adopts progressive tax rate, paying taxes separately can also avoid the increase of the total profit of the head office and the increase of the marginal tax rate.