Tax planning is a set of strategies whose objective is precise to reduce the tax burden by omitting the tax-generating factor.
Tax planning makes it possible to point out options within the legislation to adjust without evading tax payments.
What is tax planning?
Tax planning is an accounting process that makes it possible to reduce the tax burden. It occurs through the removal of the tax-generating factor in the tax planning phase.
This possibility allows the manager to adopt actions that legally reduce the amount paid in taxes and duties.
In other words, it should be noted that tax planning does not mean tax evasion as the latter is one of the ways to reduce the payment of taxes through the omission of information, false declarations, or non-payment of taxes.
Thus, all procedures carried out in the tax planning strategy are legal, safe, and intentional. It does not violate any law or generate debt in taxation. It can even be an accounting management strategy for the business.
What are the benefits of tax planning?
Tax planning offers great advantages for companies. The biggest one is the reduction of payment of tax fees. This generates savings for the company, which in the long term will be significant.
For this, it is necessary to invest in tax planning, which must be done annually, preferably with the help of a tax expert. In addition to tax planning, it is important to carry out effective tax management.
Types of tax plans
How to carry out tax planning in practice? In a nutshell, there are two ways:
Through procedures provided for in legislation – in this case, attitudes are taken regarding actions that have already been provided for by law in exchange for a reduction in taxes. This is the case of tax incentives, for example: investing in an insurance product.
Through loopholes in the legislation itself – this is when the interpretation of the law is used, without inflicting it – as is the case of the company’s change of address to pay better rates, which is not prohibited.
Tax planning is practiced before the taxable event occurs. In addition, it will depend on the configuration of your company, the tax regime, the segment of activity, and the conditions in which the business is at the moment.
Therefore, it is important to keep the business’s accounting and tax information always up to date.
Every company that does tax planning can avoid the debt of some taxes, within the law, and save without depending on evasion.