EN | 中文  

Taxation Services

Corporate Tax Planning

Corporate Tax Planning plays an essential role in supporting a company’s value-adding activities and strategic decisions. It helps businesses to ease tax burden and operate more smoothly and efficiently. The basic objective of corporate tax planning involves the reduction of a company’s Effective Tax Rate (ETR) to achieve tax efficiency and remain competitive in its industry. In comparison to paying a tremendous amount of corporate tax annually, effective corporate tax planning is a better alternative for companies.

Why is Corporate Tax Planning important?

The primary reason for conducting corporate tax planning is to avoid illegitimacy. Tax planning allows enterprises to cope with any changes in the external environment, and lead to more systematic business operations. Effective corporate tax planning facilitates businesses to reduce tax costs, and therefore companies can enjoy higher earnings for shareholders or can gain money for reinvestment. Higher shareholder earnings and reinvestment capital are signs of flourishing business operations and can attract more potential investors which will further improve the company’s financial position.

Tax activities will be reflected on the company’s financial statements, and well-planned corporate tax contributes to more healthy-looking financial statements. As tax and finance are closely connected, companies must conduct effective tax planning prior to financial planning, in order to execute future financial activities as planned.

China has a very complex corporate tax system. According to tax regulations, local Chinese companies and Foreign-Invested Enterprises (FIEs) must follow respective tax policies and pay corporate tax every business year. The basic corporate tax categories include income tax, turnover tax, property and behavior taxes, tax on resources and special purpose taxes. The sophistication of China’s taxation policies has made reducing effective tax rate a challenging task for many corporations. Only tax experts who are extremely familiar with the local tax system can manage to conduct effective corporate tax planning.

A comprehensive tax planning involves many methods that all aim to reduce expenses from every aspect of Corporate Tax. One of the most straightforward ways to do so is to make full use of local tax benefits. China, an economy with relatively high tax rates, provides an abundance of tax incentives to firms. For example, regarding Corporate Income Tax, the ‘Enterprise Income Tax Law of China’ No. 28 has announced that approved high and new technology enterprises’ (applicable to both locally- and foreign-owned companies) income tax rate is 15% instead of the ordinary tax rate of 25%. Further, approved small low-profit enterprises’ (applicable to both locally- and foreign-owned companies) income tax rate is 20%. Apart from this, transfer pricing, depreciation of fixed assets and inventory costing method are all commonly adopted approaches in corporate tax planning.

How can LehmanBrown help you with corporate tax planning?

LehmanBrown International Accountants has tax experts to help companies with their corporate tax planning. We can help both local and foreign corporations to conduct top-quality tax planning, ensuring the use of legal tax practices only, to ensure clients will see better business performance from their own firm. Our team has excellent service standards and will acquire comprehensive understandings about your business before planning tax strategies in order to provide the most suitable plan of your desire. At LahmanBrown, we make sure that all of our clients are satisfied with our services, and hope to establish great business relationships with them.

To make an enquiry about LehmanBrown’s corporate tax planning service, please contact us at enquiries@lehmanbrown.com