Corporate Income Tax Planning Studies, And Related Accounting Issues

Taxation planning is defined as an economic activity that taxpayers or theiragents initiatively employ legal approaches based on knowledge of taxation,accounting, law and finance etc., to minimize taxation cost and maximize enterprisevalue. Although taxation planning has come into being for a long time in westerndeveloped market economies, it has only a decade history in China. Along with rapiddevelopment of the economy and fierce competition between enterprises, enterprisesare placing more and more emphasis on taxation planning. Especially after China'sentry into WTO, the in-burst of foreign companies and consulting firms entailsimmediate action in taxation planning for domestic enterprises.Taxation planning of enterprise income tax is one of the main parts of taxationplanning. As enterprise income tax can hardly be passed along and occupies arelatively large part in total taxes, and as it enjoys considerable room for planning forits big elasticity, more and more enterprises begin to plan their income taxes.Chapter One expounds taxation planning and taxation planning of enterpriseincome tax from theoretical perspective, and mainly analyses the practicalsignificance of taxation planning. The following chapter firstly demonstrates presentstatus of taxation planning, and then it summarizes the mis-understanding in presenttaxation planning in detail, which lays logical base for the unfolding in the latter partof this paper.Chapter Three exposits present Law of Enterprise Income Tax in China, anddivides taxation planning of enterprise income tax into three basic approaches bymethodology: planning by tax ratio, planning by tax volume, and planning by taxbase.Chapter Four is the core part of this thesis. As the approach of planning by taxbase involves extensive contents and thus is complicated, taxation planning ofenterprise income tax is expected to receive notable results. Beginning with severalaspects concerning tax base, the paper unfolds analysis of taxation planning ofenterprise income tax. In the last two sections of this chapter, it adds approaches oftaxation planning of enterprise income tax by long-term share investment accountingand by loss carry-forward.The thesis provides guidelines for taxpayers to implement concrete taxationplanning through explaining taxation planning of enterprise income tax in detail.Furthermore, specific examples concerning taxation planning facilitate understandingof the taxation planning theory, and are instructive for tax payers' taxation planningpractice.