Nowadays it is important for every business to know the methods of tax optimization.
By achieving it, this will inevitably lead to increased profitability, which is also a priority for each company. Every subsequent year, new tax rules, regulations and tax policy changes are introduced, making the tax system increasingly difficult to understand. That is why every entrepreneur must find new methods of tax optimization of their companies.
In the following lines, we will give you several methods for tax optimization of a company.
Tax optimization– meaning:
Tax optimization is an activity of the taxpayer related to the reduction of its tax payments. There are enough ways you can significantly reduce your tax payments. It should, of course, be taken into account that minimum payments are not always acceptable in view of the activities of companies.
In other words, tax optimization is an adjustment of the amount and structure of taxes. It should be ensured that it covers all areas of activity of the company
- Change of relations with counterparties – when choosing a civil-law rule for shaping relations legally. In this method, complex relationships with counterparties are divided into several simpler actions in order to optimize taxes.
- Deferral of taxation – the date for payment of taxes is directly related to the date when the tax establishments themselves appeared, and are tied to a certain calendar period – this can be a month, quarter or year.3. Direct tax reduction – one of the most common methods. This method of tax optimization optimizes all tax-related operations as well as taxable properties.
- Direct tax reduction – one of the most common methods. This method of tax optimization optimizes all tax-related operations as well as taxable properties.
- Method of delegation – the responsibility for paying taxes is transferred to another organization. It is usually one that is specially designed for similar purposes. This method of tax optimization is often used when planning and calculating income taxes.
- The entity or object of taxation shall be established in a separate, different regional jurisdiction – this is usually the subject with the lowest tax rate precisely for the operation or object of the property. This is possible because, for different entities, the State may vary territorially in setting rates of taxation.
Other important points:
It is important to know that any method of tax optimization must necessarily be checked. It shall be made on the basis of certain criteria:
- Legality. Methods for tax optimization must fully meet the legal requirements. A key point here is the development of mechanisms for responding to a change in the laws in force.
- Results. Here we are talking about the completeness of the company’s use of all options for maximizing its tax cuts.
- Autonomy. Regardless of which methods of tax optimization you choose; you should make sure that they do not create unnecessary difficulties in management and implementation and be fully controlled directly when applying them.
- Safety. The way to optimize taxes needs to be carefully considered. Thus, the negative consequences for the company in the future will be avoided.
- Reliability. A mechanism for resistance to any possible changes of internal and/or external factors should be prepared.
We at T&G Consulting are proud of our long experience in tax optimization and are ready to give you the accurate assessment. Together we will achieve the desired results and you can rest assured that your business is in good hands. CONTACT US