Tax planning issues relate to one of the most important parts of planning corporate financial results indicators and key performance management indicators. The tax planning at holdings and groups of companies is crucially important.
The main tasks of tax planning are:
– determination of the optimal amount of tax payable to the budget on the operating results of a company, group of companies or holding
– “reallocation” of the tax burden between the groups of companies or entities of the holding
– standardization of business processes in order to achieve maximum tax effect and minimize tax risks
We provide the following services in the area of tax planning:
Accounts planning is a consultation on the development of internal documents (standards, policies, procedures, etc.) aimed to resolve those aspects of the activity which, in accordance with the current legislation, can be established by internal regulatory acts of an enterprise. Such regulations include accounting policies (for a separate company as well as for a group of companies/holding in general), marketing and pricing policies, regulations on financial discipline, transfer pricing policy etc.
Based on our experience, a company that has a well-functioning system of internal control built on the basis of internal regulatory acts, in case of a dispute with the tax authority, has a much better chance of defending its integrity, than a company without sucha system.
Economic and legal planning is a consultation regarding the choice of civil mechanisms allowing the acquisition and implementation of the right of ownership (property rights) in order to achieve maximum positive tax effect.
Fiscal planning is a consultation on the ways of executing economic activity that, by reference to specific features, gives the optimum tax effect (usually by selecting a preferential or simplified tax regime, etc.).
We have wide experience in the creation of fiscal tax planning mechanisms using both different tax regimes applicable within the Ukraine and instruments of international tax planning (including offshore).
Budget planning is a consultation on the organization of the process of budget preparation and control, taking into account the optimization of tax amounts.
The relevance of such services is due to the fact that in the case of the absence of an efficiently organized tax planning process and in the case of its isolation from the budget process, the amount of tax payments are usually defined as a constant, introduced from outside (by founders or management) or calculated as the sum of the tax burden, intended to “satisfy” the tax authorities. Such an approach is not an efficient way to business success.
In the above case, the amount of tax payments are often a “surprise” for a single company or an entire group of companies/holding. This leads to tax planning instruments being selected ex post facto, which increases the cost of such instruments and reduces the economic efficiency. Often the legitimacy of such instruments is on the outskirts of the law, which leads to a substantial increase of tax risks.
As a part of our budget planning services, we help our clients:
– single out from the budgets those expense items that make it possible to obtain tax benefits and those that don’t provide such benefits
– determine the amount of tax payments as a function of income and expenses that provide tax benefits
– plan, not only cash flow, but also the resources that can be used as a tax planning instrument (for example, assets held for sale, funds for reimbursable financial aid or loan, etc.)
The adoption of such mechanisms helps our clients to evaluate the potential tax burden on the operational horizon and choose appropriate and legitimate tax planning instruments.