Private Owners Tax Avoidance: 3000 Pay Per Month?

Huang boss was rather depressed this month, and his subordinates' negligence caused him to "get 35 more."

Metallurgy in coastal areas supply and marketing Huang Huang, the agent, has been doing this business for nearly fourteen years. His company has been purchasing agents for large enterprises which need raw materials such as steel and so on. profit The main source.

He just made a about two million list in April, and this time his client is a large steel enterprise in the southern part of the country. He probably makes 5% of the list, that is, the profit of about 100000 yuan. But at the end of April, because of the negligence of the financial personnel, the company forgot to make the bill in time.

"Our private enterprises, the basic income of enterprises is our personal income," Huang boss said with annoyance. "Most of the original income can be deducted through all kinds of expenses, and processed on the books, so we have to pay more than 20 thousand yuan of personal tax in vain."

Huang boss is telling the truth. For most of the small proprietor of private enterprises and individual proprietorship enterprises, the payment of personal income tax is divided into the category of "white to cross over". It is understood that most of the private enterprise owners' personal income tax has been circumvented by various operations.

"It's not a secret. Taxation The Council knows what the situation is. " He said.

And Huang boss belongs to "private entrepreneurs, personal investment enterprises and partnership investors, individual business and large household", only the first category of the nine categories of high income group listed by the State Administration of taxation. In addition, the high income group also includes managers of enterprises and institutions, independent and all kinds of lawyer accountants, and all kinds of investment predators in the capital market.

"Everyone is in the name of" tax planning ", doing self deception about tax avoidance. A general manager of a tax office, who does not want to be named, describes the current situation of "personal tax planning" for the high-income earners.

According to the press survey, tax avoidance methods for Chinese high-income groups can be described in various ways. Any related industry will have a unique way of "doing accounts" or avoiding tax.

"The personal income tax law is the first law adopted by the people's Congress in China's fiscal and taxation legislation, but it is also the first time that left many problems and loopholes in its implementation," said Zhang Peisen, a researcher at the National Tax Administration Research Institute. "New types and forms of income continue to emerge.

So tax evasion is almost like a "cat and mouse game", which has been staged for years between the rich and the tax authorities.

1. how do small and medium-sized private entrepreneurs make accounts?

A profit of 100 thousand of the account, how to be made personal income only a few thousand dollars? Doorway dodo

Apart from the "careless tax" incident caused by occasional negligence, Huang's personal tax bill did not give him too much heart. In 2010, his personal income had basically returned to the level before the outbreak of the financial crisis. The average annual income was not a problem, but last year he paid a total of no more than 10 thousand yuan.

"I pay 3000 yuan on my own account, and I pay tens of yuan of personal tax on salary and salary every month." Huang told reporters.

For small and medium-sized private enterprises, the logical chain of circumvention of personal income tax begins with the evasion of value-added tax and the reduction of book profits of enterprises. At present, Huang's business is to reduce the value added tax by increasing various tax deductions, and to reduce the book profits of enterprises.

The biggest way is to deduct the expenses from transportation.

Because the transportation industry belongs to the business tax instead of the scope of value-added tax, in the course of production and operation, the government has taken remedial measures in view of the fact that freight charges can not get the VAT invoices, that is to say, the input tax is deducted according to the transport cost 7%.

For many small businesses that do not have too much overhead, 7% itself is a rich tax shelter.

And the transportation cost deducts one, its bigger space is also may mix the goods into the freight transportation, the false transportation expense special invoice.

The reporter understands, because the special invoice of transportation cost is now commissioned by the Local Taxation Bureau, the station can extract 1% of the management fee according to the invoice freight amount. Therefore, the station is driven by interests, and naturally this is a closed eye.

Huang boss introduced this, only in transportation costs can evade most of the enterprise book profits.

In addition to transportation costs, there are other kinds of value-added tax deduction channels. For example, the fixed assets that belong to the non deductible scope should be deducted by changing the name of the invoiced product, and the fixed assets purchased by other taxpayers shall be deducted from the enterprises, or the invoices should be deducted from the taxpayers of small-scale taxpayers or VAT taxpayers.

A manager of the purchasing department of a company told our reporter that a lot of large enterprises could not pay the invoices for their deductible invoices, but they would go to such companies. "Recently, several bosses have already looked for me." {page_break}

What is more direct is to purchase the deductible invoices to the various fiscal and tax consultants that specializes in Invoicing, ranging from medical consumables to steel instruments, from business tax invoices to value-added tax invoices, generally based on the invoice denomination in proportion to the price. A "finance and taxation company" said that an invoice with a face value of 600 thousand yuan would be quoted at 5%, and the proportion would be discounted if the denomination was larger.

After a round of processing, a business that can earn 100 thousand of the business can earn 10 thousand yuan.

After paying the value added tax, the 10 thousand yuan still needs to make a round of accounts when the company profits go to personal income. The secret of the second rounds of accounts is mainly to dismember the company's personal expenses to various expenses of various kinds of eyesight through various kinds of eyesight expenses such as business entertainment and travel expenses.

After such treatment, the final personal income of the tax authorities can only be several thousand yuan.

Huang boss disclosed that according to the tax mechanism now declared monthly, every month should make timely processing of the list made in this month. Once the account is forgotten, it will be useless to make up for it later, and there will be no tax rebate for the Inland Revenue Department.

The former general manager of a tax office, who did not want to be named, said that in fact, the tax authorities should not look at these things. The main reason is that many local tax authorities often do not perform strictly in the process of inspection.

Investigation of tax avoidance for the rich: private employers enter 1 million in the year and pay 3000 per month.

The general manager of the firm said that this situation is also related to the present tax collection mechanism, because the collection of corporate income tax is mostly in the state tax, and the collection of personal income tax is all in the local tax. Enterprises can prepare two accounts: the high wage version of the account is handed over to the state tax to lower the profits of the enterprise to pay less enterprise income tax, and the low wage version accounts to deceive the land tax.

At present, the lack of information communication channels between local tax departments has also created room for tax avoidance.

"Now the Inland Revenue Department's tax inspection of our enterprises is not mainly about income tax, but on the head of value-added tax."

Huang boss also disclosed: "our local tax bureau has a rule when doing routine tax inspection, for example, our company makes 10 million yuan sales or sales volume a year. In this case, they will set a lower limit ratio, such as 10 percentage points. As long as the amount of tax paid by this enterprise can reach 1 million yuan this year, they will not compare with your account again."

Huang said, generally speaking, after the tax authorities receive the "value-added tax", they will not be too concerned about corporate income tax and personal income tax.

The "escape salary" of the top 2. executives

Large enterprises often operate the high tax earning income as low rental income or non dividend dividend income.

Huang Huang's younger brother, Xiao Huang, now works in a large state-owned financial enterprise. At present, he is working on tax planning. In his view, the personal income tax avoidance space in his industry is not as large as that of his brother.

"They did all the work in a big way. Compared to ours, they were all embroidered legs."

Xiao Huang told reporters that there is little room for executives to circumvent the personal income tax on wages and salaries. Previously, they could avoid tax through medical insurance and enterprise annuity. Subsequently, the State Administration of Taxation issued several targeted letters, which are now blocked.

It is understood that the current wage savings in the cost of personal tax channels, mainly through welfare to reduce nominal wages, apportionment of wages and the use of year-end bonus. In particular, the latter, because of the 9 regulation of the State Administration of Taxation in 2005, has a chance to distribute the annual bonus once a year to 12 months to calculate the corresponding tax rate and quick deduction. Therefore, the company concentrates the bonus to the year-end payment as much as possible and reduces the tax payable.

In addition, although the State Administration of Taxation stipulates that enterprises and institutions should pay insurance premiums other than tax exemption for employees, they should pay taxes when the enterprises pay to the insurance company (that is, the insured accounts fall into the insured's account) and the employees' wages in the current period, but the insurance indemnity in the current policy is still tax-free. In this way, a company will set up supplementary medical insurance for all employees, and then the insurance company will pay the insurance compensation to the employees to avoid tax.

"This method is mainly the use of large enterprises, small businesses will not consider decades later, so the supplement of medical insurance will increase the immediate cost." A tax collector said.

And Xiao Huang said that the effort of large enterprises "flower boxing and embroidering legs" is mainly based on the individual tax conversion of other types of income. "In a word, it is the operation of a high tax rate category into a low tax rate." Xiao Huang said that the highest tax rate of wage income in the current personal tax is 45%, which is higher than the applicable tax rate of all other income categories. Therefore, for executives, converting wage income into other income can get a lower tax rate.

It is understood that executives of some enterprises as members of the board of directors of the company will choose to sign labor contracts with the company instead of employment contracts, so that the company's remuneration is remuneration for services. The rate of 20% is proportional to the tax rate instead of the highest 45% salary and salaries tax rate.

"The actual tax burden of labor remuneration is far lower than that of wages and salaries. As long as the amount of remuneration is higher than 19375 yuan, the choice of labor remuneration is beneficial," the tax collector said. "Most of the executives' income is far more than that."

In order to simplify the collection and management, some local tax bureaus even simply levy the business tax and personal income tax payable on the remuneration for services. It is understood that the comprehensive tax rate in a region is 8.5% (business tax is 5.2%, personal income tax is 3.3%).

"3.3% tax rate, which is almost a lower than the applicable tax rate of any kind of income category." The tax collector said.

In addition to labor remuneration, there are various types of income conversion, some large enterprises tax avoidance means are varied.

For example, property rental income has become a popular tax avoidance option by virtue of its low tax rate of 20%. The tax official disclosed that a company he knew was to reduce the tax burden by laying up the company's private car LOGO, and then paying the rental fee of the employee's advertising position. Since the rental fee is now divided into the property rental income, the applicable personal tax rate is also lower than the salary income.

There are also large numbers of tax evasion through 20% tax proportional dividends and dividend income. A staff member of a leading IT company in the country told our reporter that since most of the top managers of the company had ESOP, the company has always transferred the remuneration that should be paid through the wages to a high dividend and sent it to share holding staff so as to reduce the tax burden.

"Anyway, there's no difference for the company. It's all about making so much money." The employee said, "the state still has a positive regulation on employee stock ownership, and it is also encouraging for dividends."

In addition, because the existing regulations do not prohibit the enterprises from borrowing money from employees, according to the regulations of the State Administration of Taxation investors who borrow from their investment enterprises for a long time, according to the stipulation of "personal income tax on interest, dividends and bonuses", such expenditure is also suitable for a lower tax rate.

3. investment tax is good.

Due to the disconnection between the tax authorities and the real estate transaction authorities, not only the individual tax collection is blank, but also the business tax.

Relatively small private entrepreneurs and large business executives, the income of professional investors seems to be the most mysterious, and there are many loopholes in tax avoidance.

"The rich will certainly not let the money get out of there, and it is inevitable that they will invest and increase it." The general manager of the above tax office said, "now the channels for domestic investment are nothing more than investment enterprises, various financial products, securities and futures markets and real estate markets, and the personal income tax mechanisms of these channels are still being perfected."

In regard to individual investment enterprises, the State Administration of Taxation has stipulated in 2001 that the profit after the enterprise income tax of private limited liability companies should be made up according to the statute of the company law to make up for losses, to draw up the provident fund and the statutory public welfare fund, or to withdraw the surplus profits after the production of the development fund in accordance with the Provisional Regulations of the private enterprise. If it does not allocate, do not invest or account for 1 years, from the second year of the account, the remaining profits will be allocated to the individual investors according to the proportion of the investors' contribution, and the individual income tax shall be levied according to the dividend income.

However, this regulation has been abolished, and now only private enterprises pay their own funds and their long-term debts which are not related to the production and operation of enterprises and family members and their related personnel.

A local tax official told reporters that this is why this year's State Administration of Taxation issued the "notice on strengthening the Levy of personal income tax for high-income earners" in the formulation "become a continuous profit and dividend distribution, dividends or approved corporate income tax, and the income and dividends of individual investors should be followed up" instead of adopting compulsory taxation measures.

"This greatly limits the tax authorities' ability to collect taxes on private entrepreneurs." The above local tax officials said, "we can only" keep our eyes open "and others can't do anything. {page_break}

Reporters have learned that there are also a special group of individual investment enterprises, such as law firms, which adopt professional partnership system, and their tax avoidance is also quite serious.

The State Administration of Taxation has announced the criticism of the accounting expenses of the law firm for its confusion or serious impropriation, and has specifically promulgated the notice on the relevant business issues concerning the collection of personal income tax by practitioners of law firms, stipulating that employees' lawyers and firms should divide the income according to the prescribed proportion, and the monthly income is deducted from the expenses incurred after handling the cases. The balance is merged with the wages paid by the law firms, and the personal income tax is calculated according to the "taxable items" of "wages and salaries".

But in fact, a lawyer told a newspaper reporter that the monthly payroll issued to them now is 3000 yuan, and the rest of the remuneration is either reimbursed by invoices or directly transferred.

"Almost all law firms are like this." She emphasized.

In investing in the stock market, the Ministry of finance has stipulated in 2008 that the interest income from securities trading settlement funds acquired by individual investors in the securities market should be temporarily exempted from personal income tax. But in other equity trading, transfer and other investment behavior still need to levy personal tax, but there are all kinds of tax avoidance space.

A top four accounting firm auditor said, for example, the exercise of stock options, according to the provisions of the State Administration of Taxation, when the employees exercise their rights after taking the option, the difference between the right price and the market price of the exercise should be calculated according to the salaries and salaries. However, according to her understanding, in practice, they do not pay taxes according to the regulations. In general, they can avoid the past through the exercise of the tax free market in Hongkong.

There is also a problem of unclear definition in foreign investment in non monetary assets. An investment bank expert analysis pointed out that this part of the investment income was not collected according to the regulations of the State Administration of Taxation in 2005, and now the relevant documents have been abolished, indicating that the General Administration has implied that it can levy taxes on individuals' assessment of foreign investment by non monetary assets, but the Levy of individual tax on this income is still in the stage of no development.

"What is more blank is the collection of personal tax on real estate investment channels." The general manager of the office said.

It is understood that at present, the income earned by the seller in the transfer of housing is to pay the business tax on the one hand and the personal income tax on the other hand in accordance with the transfer of property. The State Administration of Taxation in 2006 also stipulates that when collecting personal income tax, the individual housing tax return or real estate transaction data should be filled out according to the "transfer of housing income". When the certificate is issued, it should also be specified in the details of the "transfer of housing income" under the "property transfer income".

But the problem now is that there is a disconnect between the tax authorities and the real estate department in this link. Generally speaking, the Housing Authority will only pay the duty paid certificate of the relevant contracts and business tax, and then give the transfer procedures for the transfer of the house without any duty paying certificate.

"In the process of housing transfer, business tax is a very convenient transfer tax, which is generally borne by the buyer of housing. In reality, it can not reflect the profit tax paid by the seller in real estate investment transactions." The general manager of the tax office, who does not want to be named, said.

It believes that if it is possible to produce a tax payment certificate at the same time as the transfer of shares, it can be blocked.

"This can only explain that many problems still lie in the communication and coordination of tax information between the departments concerned."