financialtreat – will explain about Some Things to Know About Tax Planning which you will get in the following article. let’s look at this article carefully!
Tax planning or what is commonly referred to as tax planning is an effort to reduce or make a tax burden as minimal as possible to be paid to the state so that later the tax that must be paid to the state does not exceed the actual amount.
Tax planning is one of the most important things that must be done by a company because basically for a company, taxes are a burden that can reduce their net profit.
Some Things to Know About Tax
So that by doing a tax plan, a company can distance itself from all risks of tax non-compliance which will greatly minimize unexpected tax debt.
According to William H. Hoffman, an expert and author of the book, explained that tax planning is an effort by taxpayers to get tax savings or tax savings through tax avoidance procedures or systematically in accordance with the provisions of the applicable Tax Law
Usually, one of the things that is done in tax management will be done while still complying with applicable tax regulations, aka legal. Where legally in question is an activity carried out for tax savings by utilizing things that are not contained and not regulated in the law so that there will be no violation of the constitution or the applicable Tax Law.
There are at least 3 objectives to carry out this tax planning activity, namely with the aim of reducing some of the expenses incurred by the company to pay taxes so that the costs incurred are more efficient.
to take into account and prepare tax payments to be equivalent to applicable tax regulations in order to minimize the emergence of sanctions or fines that can increase the tax expenditure of a company, and this tax planning is carried out not to evade tax payments but is carried out in order to regulate the tax paid by the company no more than the amount it should be.
This tax planning is divided into 2 types, namely:
- National Tax Planning which in its implementation is very guided by domestic laws. In national tax, it is usually carried out by corporate taxpayers who only have their business in Indonesia or in other words companies that make transactions with domestic taxpayers only.
- International Tax Planning which in its implementation is usually often carried out by corporate taxpayers who have their activities or businesses both domestically and abroad. in international tax, it is generally done if the taxpayer makes transactions not only with domestic taxpayers.
But it also carries out such transactions with taxpayers from abroad and must be fundamental to the Applicable Act or tax treaty. However, for a company to carry out tax planning or this planning, the company should be able to understand the requirements contained in this planning.
These requirements include that both companies that will carry out tax planning activities are not allowed to violate the applicable tax regulations because if there is a violation, it will pose a risk to the taxpayer.
This then makes the tax planning fail and has the potential to cause fines and other tax sanctions, it is not allowed to falsify supporting evidence or other existing data that can be used to pay taxes.
And it must be considered that this tax planning activity can enter the business because otherwise by doing planning, it will weaken every tax planner himself.
Tax Planning Objectives
This planning is carried out, among others, for the purposes of:
- Minimize company expenses to pay taxes so that the costs incurred are more efficient.
- Take into account and prepare tax payments in accordance with applicable regulations so that there are no sanctions or fines that actually increase tax expenditures. Not to shirk paying taxes but to arrange for the taxes paid to be no more than the amount they should be.
Advantages of tax planning:
- Reduction of the tax burden according to the rules;
- Considerable savings from the first year onwards;
- Basic knowledge of the taxation system;
- Structured tax planning, adapted to your living conditions;
- More decision-making power: Control your own tax payments.
Who Is Tax Planning Suitable For?
In addition, the tax strategy is also relevant for start-ups or new businesses, since it sets out the right tax course from scratch, you will be spared from paying taxes that can often be expensive and time consuming. Depending on the initial situation, the tax expert always checks whether the tax strategy is right for you.
Tax Planning Requirements
Of course, specific requirements must be met when making tax planning. Such requirements include:
- Do not deviate from tax regulations. If the rules of taxation are violated, the taxpayer will bear the risk. This can threaten the success of planning.
- Proof of transaction and other data is not fictitious (as per actual circumstances).
- Acceptable on a business and tax basis. This is closely related to the overall plan of the enterprise. If the implementation of “tax planning” does not make business sense, then it will weaken the plan itself.
- Tax planning is a plan implemented by the government to reduce taxes legally. planning can be done through several strategies.
Stages of Conducting Tax Planning
Analyzing Existing Information
The first stage of tax planning is to analyze the different components of the taxes involved in a project and calculate as accurately as possible the tax burden that is insured.
This can only be done by considering each element of the tax. Both individually and in total taxes that should be able to be formulated as the most efficient tax planning.
Create One or More Tax Plan
Select the form of operating transactions or international relations. In almost all international taxation systems, at least two countries are determined first. From the point of view of taxation, the planning process cannot be outside of the stages of selecting the most profitable transactions, operations and relationships.
Evaluation of Tax Planning
Tax planning as a plan that is a small part of the entire strategic planning of the company. Therefore, it is necessary to evaluate to see the extent of the results of the implementation of a tax plan against tax burdens. Differences in gross profit, and expenses other than taxes on various planning alternatives.
Looking for Weaknesses And Then Re-Fixing The Tax Plan
To say that the results of a tax plan are good or not. It must necessarily be evaluated through various plans made. Up to date planning must still be carried out even though additional costs. Are needed or the probability of success is very small.
Updating the Tax Plan
Although a tax plan has been implemented and the project has also been running. It is still necessary to take into account any changes that occur. Both from the law and its implementation according to the country in which. The activity is carried out which can have an impact on the components of an agreement.
Tax Planning Scheme
In general, there are five strategies that companies usually do in making tax planning:
Tax Avoidance
Tax avoidance is a company’s effort to avoid the imposition of taxes through transactions that are not tax objects. For example, the company converts employee benefits in the form of money into natura because natura is not the object of tax PPh21.
Tax Saving
Efforts to streamline the tax burden through the selection of alternatives to taxation at a lower rate. For example, the company changed the provision of natura to employees to benefits in the form of money.
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Optimizing Allowable Tax Credits
Most corporate taxpayers are less aware that they can credit taxes already withheld. As long as they do not deviate from the regulations. For example, Income Tax (PPh) 22 on the purchase of diesel and/or imports. PPh 23 on service or rental income. And foreign fiscal tax on employee service travel.
Delaying in Paying Tax Obligations
Companies as taxpayers can postpone the payment. Of Value Added Tax (PPn) by delaying the issuance of output tax invoices until the permissible time limit. Especially for credit sales. VAT can be paid at the end of the following month after the month of delivery of the goods.
Avoiding Violations of Tax Regulations
Corporate taxpayers must master the applicable tax regulations to avoid. The emergence of tax sanctions in the form of administrative sanctions. Such as fines, interest, or increases, to criminal sanctions.
That’s the explanation of tax planning. Many of the general public still don’t know how important planning is. But with this explanation, it is hoped that it will increase knowledge and benefit everything.