Many expats in China may always have a thought:
"I work hard for a whole year, and save every penny for the profit, but once the tax notice comes, I feel exhausted. Is there any legal method can help me to pay less tax?
Yes, of course!
Firstly, please make a tax planning.
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Tax Planning
Taxpayers plan and arrange the operation, investment, finance and other economic activities within the law in advance, making full use of the preferential policies and differential treatments of the tax law, to achieve the goal of reducing or deferring taxes, and to maximize the after-tax profit.
Tax Planning is a legal method to save your money! If you make a good tax planning, you can spend less and gradually make your corporate earnings grow.
So what are the differences between legal method of tax planning and other illegal methods?
Tax Evasion
Tax Evasion is the illegal evasion of taxes by individuals, corporations and trusts. Tax evasion often entails taxpayers deliberately misrepresenting the true state of their affairs to the tax authorities to reduce their tax liability and includes dishonest tax reporting, such as declaring less income, profits or gains than the amounts actually earned, or overstating deductions.
Tax evasion is an activity commonly associated with the informal economy. One measure of the extent of tax evasion (the "tax gap") is the amount of unreported income, which is the difference between the amount of income that should be reported to the tax authorities and the actual amount reported.
Tax Fraud
Tax fraud occurs when an individual or business entity willfully and intentionally falsifies information on a tax return in order to limit the amount of tax liability.
Tax fraud essentially entails cheating on a tax return in an attempt to avoid paying the entire tax obligation. Examples of tax fraud include claiming false deductions, claiming personal expenses as business expenses and not reporting income.
Incomplete Paid Tax
Because of being not familiar with law , financial system or careless work, taxpayers unconsciously miss or pay less tax.
All illegal behaviors above
once been inspected,
you will face with different levels of
legal responsibility!
How Much You Should Pay
According to the related regulations from the Tax Bureau,
■ If the monthly sales/turnover of the enterprise is less than 30,000 RMB (including) , the value-added tax will be free.
■ If the Annual Taxable Income of the enterprise is less than 200,000 RMB (including) , only 50% of the Annual Taxable Income needs to be calculated and the Income Tax rate will be 20%.
■ If the Annual Taxable Income of the enterprise is more than 200,000 RMB, the Income Tax rate will be 25%.
Tax planning requires fully knowledge of taxation and Chinese law, otherwise it’s easy to make mistakes. So we suggest enterprises to entrust a professional agency to do the tax planning.
If you need any help,
just feel free to contact HACOS!
HACOS,Business Services Solutions Master