Control and optimize tax costs for businesses

Whether you are aiming for a career as a tax accountant, tax consultant or the owner of your own business, the biggest question you should still ask is: “How can we manage our tax expenses most economically within the legal framework? The following article from SMART SOLUTION FOR BUSINESS COMPANY LIMITED (S4B Vietnam) will provide you with basic knowledge about optimizing corporate tax costs.

1. Distinguish between tax evasion and tax avoidance

1.1 Not paying taxes

Tax evasion is the use of methods not permitted by law to reduce the amount of tax payable. There are two main moves:

• Hide information that should be provided to state agencies. For example: selling goods but not issuing invoices to reduce revenue;
• Create false information. For example: buying invoices to increase tax-deductible expenses, creating fake documents to refund VAT on imported goods. Obviously tax evasion is illegal and can be criminally prosecuted.

1.2 Avoid taxes

Tax avoidance is the use of methods within the framework of the law to minimize tax costs, such as applying tax incentive policies or applying gaps that the law has not yet provided for implementation. transactions. While “tax evasion” is a violation of the law, “tax avoidance” can help taxpayers minimize the amount they have to pay without violating the law.

Taxation Strategies: Strategies for Taxation Efficiency in Cost Management

 

2. The role of tax consulting organizations

Tax consulting organizations provide customers with a variety of services, including: tax consulting, compliance support with regulations related to important taxes such as corporate income tax, value-added tax increase, foreign contractor tax and personal income tax. At the same time, it also provides services on import and export tax and transfer pricing. Tax consulting organizations regularly update customers with the latest changes to Vietnam’s tax regulations. From there, advise customers on the most effective methods in organizing operations in Vietnam, as well as provide early warnings and support in dealing with risks. Some services of tax consulting organizations include:

2.1 Tax compliance consulting and support services

Providing consulting services and support for compliance with tax regulations related to taxes such as: corporate income tax, value added tax…

2.2 Review compliance with tax regulations

Tax consulting organizations have developed processes for reviewing compliance with tax regulations, ensuring clients that tax issues are under control. At the same time, the organization also provides information on outstanding tax issues to help customers effectively manage these issues, support risk assessment and determine necessary measures to minimize risks. .

2.3 Liaise with competent authorities, manage tax risks and resolve disputes

Establishing a good relationship with competent authorities is one of the important factors leading to successful business in Vietnam, especially in the tax field. Contacting competent authorities is one of the services that tax consulting units provide to customers. Through regular contact with competent authorities, tax consulting organizations can advise clients on frequent changes in laws and support clients during tax audits/audits. .

2.4 Tax payment and audit support services

Tax inspection and examination are regular activities of tax authorities in the process of enforcing tax laws. However, most companies encounter difficulties when being inspected and tax audited. The reason is because this process requires companies to thoroughly understand tax regulations and tax inspection and audit processes, and have clear plans and strategies.

On the other hand, working with tax authorities also requires highly specialized skills. If companies employ employees who lack experience working with tax authorities, the company may be placed in undesirable situations. Tax consulting experts with extensive experience in solving problems related to tax inspections, audits and working with tax authorities of tax consulting organizations can support customers in all stages of a tax inspection or audit.

3. Some tax optimizing and planning methods

3.1 What is tax planning?

The essence of tax planning is the process of finding different tax solutions to determine when, how and whether certain transactions should be carried out to optimize the amount of tax payable.

To add value to each transaction, decision makers need to always align with the business’s strategy, estimating the likely impact of tax implications over time on all stakeholders. regarding transactions. Adding value is achieved by negotiating the most optimal tax options, which means converting transactions to other forms that are most tax-advantaged in an integrated relationship with business strategies.

Business Tax Planning Strategies

>>>Read more: How to doing business in Vietnam?

3.2 Tax planning methods

Tax strategy is based on applying:

• Time value of money means paying taxes sooner or later;
• The difference in taxable value means more or less taxable income;
• Tax rate differences are due to different tax rates for different types of businesses and different tax rates in different countries.

3.3 Four methods commonly used in tax planning

To better understand these four methods, let’s use current tax laws to analyze and give examples.
Method 1: Creating new – is taking advantage of incentives and tax benefits from creating branches and subsidiaries, for example, newly established in areas with low tax rates.
Method 2: Conversion – is changing the operating mechanism, changing the nature of transactions so that assets and income generated are subject to lower tax rates than if conversion was not made.
Method 3: Time – is the transfer of taxable value to a more favorable tax period.
Method 4: Splitting – is dividing the taxable value between two or more taxable subjects to reduce the total tax payable by all taxable subjects.

SMART SOLUTION FOR BUSINESS COMPANY LIMITED (S4B Vietnam)

• Address: Unit 602A, Tower A, Handi Resco Office Building. 521 Kim Ma Street, Ba DinhDistrict, Hanoi
• Tel: + 84 24 3974 4181
• Email: service@s4b.com.vn

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