The difference between tax planning and evasion tax avoidance and tax saving concepts

1. Tax evasion. China's Tax Collection and Administration Law explains: "If a taxpayer adopts the means of forgery, alteration, concealment, or unauthorized destruction of account books and accounting vouchers, overlisting expenditures, or omitting or underlisting income, or making false tax declarations, and fails to pay or underpays the tax payable, it is tax evasion."

2. Tax avoidance. There is no consensus on the interpretation of tax avoidance.

According to the International Fiscal Documentation Bureau, tax avoidance refers to the act of reducing the tax liability of individuals or businesses by legal means, through careful arrangement, taking advantage of loopholes in tax laws or other deficiencies.

3. Tax planning.

Tax planning, for its purpose and outcome, is often referred to as tax saving. Tax planning is the arrangement of taxpayers through tax activities to make full use of all the benefits provided by tax regulations, including tax reductions and exemptions, so as to obtain the maximum tax benefits. Tax planning is the active use of tax policy, which is in line with the spirit of the tax law.

Tax evasion is illegal, tax avoidance may be legal or illegal, tax planning is a method, and tax planning is legal within the scope of the law.

1. What is tax evasion?

Tax evasion refers to the act of falsifying, altering, concealing, or destroying account books and accounting vouchers without authorization, listing more expenditures or omitting or underlisting income in account books, or adopting various non-public means or means of making false tax declarations, concealing the true situation, failing to pay or underpaying taxes, and deceiving the tax authorities.

Therefore, the purpose of tax evasion is to underpay or not pay taxes; The means lie in deception, through the falsification of accounting books, etc., to conceal the true situation and make false declarations.

2. What is tax avoidance?

It is generally believed that tax avoidance refers to the behavior of taxpayers to reduce the amount of tax paid to a minimum without violating the provisions of the tax law. It is generally believed that there is a difference in principle between tax avoidance and tax evasion, that is, the latter is an illegal act, while the former is not illegal, it only makes maximum use of the difference in tax rates in different regions, and makes use of the legal space given by the tax law itself to pay less or no tax.

In accordance with the provisions of the General Anti-Tax Avoidance Administration Measures (for Trial Implementation) promulgated by the State Administration of Taxation, special tax adjustments are implemented for tax avoidance arrangements implemented by enterprises that do not have reasonable commercial purposes and obtain tax benefits. In other words, legal and reasonable tax avoidance measures must not be taken only for the purpose of tax avoidance, but must also have a reasonable commercial purpose.

3. What is tax planning?

Tax planning is to plan tax-related business and formulate a complete set of tax operation plans, so as to achieve the purpose of tax saving.

Tax planning is legal within the scope of legality, if the purpose of tax planning is to deceive the tax authorities by falsifying accounting books and other methods to underpay taxes, how is it an illegal act, and serious criminal liability needs to be borne.

Article 295 of the Criminal Law of the People's Republic of China stipulates that [Crime of Teaching Criminal Methods] Whoever teaches criminal methods shall be sentenced to fixed-term imprisonment of not more than five years, short-term detention or controlled release; where the circumstances are serious, a sentence of between 5 and 10 years imprisonment is to be given; where the circumstances are especially serious, a sentence of 10 or more years imprisonment or life imprisonment is to be given.

"Teaching criminal methods" refers to the act of intentionally teaching others specific experience and skills in committing crimes by using words, words, actions, images, or other methods.

Therefore, tax evasion is a violation or even a crime, and tax avoidance is recognized and protected by law on the premise that it has a reasonable commercial purpose, otherwise the state will take anti-tax avoidance measures. Tax planning is a kind of planning for tax-related business, and legal planning is protected by law.

The connection and difference between tax evasion, tax avoidance and tax planning are:

1. The connection between tax evasion, tax avoidance and tax planning is based on the subject of behavior; The purpose of the act is the same; The tax environment of the behavior is the same, and all three are in the same tax collection and management environment and tax legislation environment; It's all planned.

2. The difference between tax evasion, tax avoidance and tax planning is that tax planning refers to the taxpayer's adoption of legal means to carry out planning and countermeasures aimed at reducing tax burden under the premise of complying with the tax law and complying with the intention of the tax law; Tax evasion refers to the tax violation of taxpayers who do not pay or underpay taxes by means of false declaration, false declaration, concealment, forgery and other illegal and fraudulent means; Tax avoidance refers to the behavior of taxpayers who take advantage of loopholes, exceptions and defects in the tax law to avoid or reduce their tax liability.

Law of the People's Republic of China on the Administration of Tax Collection

Article 52.

If a taxpayer or withholding agent fails to pay or underpays the tax due to the responsibility of the tax authorities, the tax authorities may require the taxpayers or withholding agents to pay back the tax within three years, but shall not impose a late payment penalty.

If the taxpayer or withholding agent fails to pay or underpays the tax due to calculation errors or other errors, the tax authorities may recover the tax and late payment penalty within three years; If there are special circumstances, the retrospective period may be extended to five years.

In the case of tax evasion, tax resistance or tax fraud, the tax authorities shall not be subject to the time limit specified in the preceding paragraph in recovering the unpaid or underpaid taxes, overdue fines or taxes obtained by fraud. Article 63.

A taxpayer who forges, alters, conceals, or destroys account books or accounting vouchers without authorization, or who overlists expenses or omits or understates income in the account books, or refuses to file or makes false tax declarations after being notified by the tax authorities, or fails to pay or underpays the tax payable, is guilty of tax evasion. If a taxpayer evades taxes, the tax authorities shall recover the taxes not paid or underpaid, and impose a fine of not less than 50% but not more than five times the amount of taxes not paid or underpaid; where a crime is constituted, criminal responsibility is pursued in accordance with law.

If a withholding agent fails to pay or underpays the withheld or collected tax by means listed in the preceding paragraph, the tax authorities shall recover the tax not paid or underpaid and the late payment penalty, and impose a fine of not less than 50% but not more than five times the amount of the tax not paid or underpaid; where a crime is constituted, criminal responsibility is pursued in accordance with law.

The differences between tax planning and tax evasion are as follows:

1. Tax planning is fundamentally different from tax evasion. Tax evasion refers to the illegal behavior of taxpayers to achieve the purpose of not paying or underpaying taxes by adopting various illegal and fraudulent means such as false declaration, false declaration, concealment, and forgery; Tax evasion refers to the behavior of taxpayers to avoid or reduce their tax burden by carefully arranging, taking advantage of the defects and loopholes of the tax law, and taking advantage of the differences between accounting regulations and tax laws; Tax planning is a kind of planning behavior of enterprises, and the premise is that it must comply with national laws and tax regulations;

2. Tax planning and tax evasion are all aimed at reducing the tax burden of individuals or enterprises and achieving the purpose of not paying or underpaying taxes. Tax planning is a legal act and is subject toLaws and Regulationsprotection and support; Tax evasion is punishableLaws and RegulationsThis is the biggest difference between the two.

Constitution of the People's Republic of China

Article 56.

Citizens of the People's Republic of China have the obligation to pay taxes in accordance with the law.

It is generally believed that tax planning is to legally reduce or even exempt taxpayers from the tax burden they should bear or bear additionally through the prior arrangement and planning of their own business, investment, financial management and other activities within the scope stipulated in the tax law, so as to maximize after-tax benefits. Since tax planning is premised on complying with tax laws, and most of the time is to maximize after-tax benefits by selecting the best plan, it is legal and reasonable. Tax avoidance is an economic behavior in which taxpayers take advantage of the differences in tax systems in different countries or regions, different ownership systems, different types of taxes, and even differences in tax system elements, etc., through careful arrangements for their own business, investment, financial management and other activities, in order to achieve the least tax liability.

Since tax avoidance does not violate the relevant provisions of the tax law, it is non-illegal; However, it is often unreasonable to exploit loopholes in the tax system and maximize its own interests (mainly group interests) at the expense of national tax interests. For tax avoidance, the tax authorities may deal with it in accordance with the Tax Administration Law and the relevant tax collection and administration regulations.

Article 63 of the Tax Administration Law stipulates that a taxpayer who forges, alters, conceals, or destroys account books or accounting vouchers without authorization, or lists more expenses or omits or understates income in the account books, or refuses to file or makes false tax declarations after being notified by the tax authorities, and fails to pay or underpays the tax payable, shall be guilty of tax evasion. Different from tax planning, the means adopted by taxpayers to evade taxes are illegal, and they increase collective or individual interests at the expense of national tax interests, so they are illegal and unreasonable. The tax authorities may, in accordance with the relevant provisions of the Tax Administration Law and the Criminal Law, deal with tax evaders, recover tax evasion, impose late fees, impose fines and even pursue criminal liability.

Enterprise tax planning can be carried out within a reasonable and legal scope, and the use of formal preferential tax policies to do tax planning reasonably

In the tax depression, the local government will give enterprises value-added tax and income tax support incentives.

Value-added tax: 50% retained by the local government, 30%-65% by the local financial incentive enterprise

Income tax: 40% retained by the local government, 30%-65% by the local financial incentive enterprise

The financial incentives for value tax and income tax are paid in the current month and returned in the next month, so that enterprises can get the rewards in time.

Small-scale sole proprietorship:

The fixed amount of sole proprietorship enterprises in the park is levied

Verify the income tax of individual production and operation

VAT 1%,

Additional Tax,

Comprehensive tax rate.

Tax planning refers to an economic planning activity that achieves the lightest or best tax burden and obtains the greatest tax benefits by taking advantage of the tax incentives granted by tax laws and regulations within the scope permitted by laws and regulations before the investment, financing, operation, dividend distribution and other businesses occur. Generally speaking, tax planning refers to a management activity that does not violate the tax law and relevant laws and regulations by making prior planning and arrangements for tax-related matters of the taxpayer, so as to enjoy the maximum tax benefits, reduce the tax cost of the enterprise, and maximize the value of the enterprise.

Preferential tax policies that can be enjoyed by general taxpayers.

50% of the VAT is retained by the local government, and 70%-90% of the financial support can be obtained.

The local government retains 40% of the enterprise income tax, and can get 70%-90% of the financial support.

Cost invoices that cannot be obtained: the policy of issuing on behalf of natural persons can be adopted, and the comprehensive expenses are the invoice amount, and a tax payment certificate will be issued.

The difference between tax avoidance and tax avoidance: Due to the difficulty of distinguishing between tax avoidance and tax planning, there are great differences in the legal definition of tax avoidance and tax planning in countries around the world. Some countries believe that taxation cannot be imposed in the name of morality, and that it should bear its statutory tax obligations according to the requirements of the tax law, as long as it is not illegal, it should be allowed, and there is no need to distinguish what is tax avoidance and what is tax planning.

Some countries divide tax avoidance into two types: legitimate tax avoidance and improper tax avoidance, and the legitimate tax avoidance is called tax planning, and there is no legal objection. The concept of tax avoidance in China is not expressed in law, but is only scattered in tax policy documents and people's theoretical discussion articles, and the general view is to oppose illegal tax avoidance and tacit legal tax avoidance.

The difference between tax planning and tax evasion: There is an essential difference between tax planning and tax evasion. Tax planning is the taxpayer in the tax law allowed by the use of tax regulations, tax policy to make a fuss, which does not harm the interests of the state, on the contrary, through tax saving to promote the development of tax units to develop production, enhance the development of tax units, so that tax can find new growth points, this kind of behavior, should not be opposed.

Tax evasion refers to the act of a taxpayer who forges, alters, conceals, or destroys account books or accounting vouchers without authorization, overlists expenses or omits or understates income in account books, or makes false tax declarations, and deliberately underpays or fails to pay the tax payable. China's tax evasion has been severely condemned by the "Law on the Collection and Administration of Taxation", and corresponding punishment measures have been formulated. Therefore, it is necessary to correctly understand the difference between tax planning and tax evasion, and carry out reasonable tax planning for tax items, so as to improve the economic efficiency of taxpayers without really harming the interests of the state.

Tax planning is in line with national laws and is reasonable and legal, while tax evasion is illegal to exploit loopholes in the law.

Tax planning refers to the planning of taxpayers to take advantage of loopholes and gaps in the tax law by non-illegal means to obtain tax benefits. Tax planning is neither illegal nor legal, and is fundamentally different from tax evasion by taxpayers who do not respect the law.

1. It is generally understood that tax planning is the adjustment and planning of financial, tax and economic business under the premise of legal compliance, which is conducive to more reasonable, efficient and profitable economic operations;

2. Tax evasion is illegal;

3. As for tax avoidance, the general understanding is that it is hoped that the tax avoidance behavior will be carried out between legal and illegal, and under normal circumstances, tax avoidance will attract the attention of financial and tax inspection agencies, and there are generally financial and tax risks.