Tax management. Topic: Corporate tax management
1. Concept, tasks and main forms of tax management. Tax management – a system of state and corporate management of tax flows through the use of scientifically based market forms and methods in decision-making in the field of managing tax revenues and tax expenses at the macro and micro levels in order to optimize tax flows by the state and enterprises and increase the efficiency of decisions on the selection and rationalization of forms and methods of taxation, tax planning, regulation and control. Subjects of tax management- the state represented by legislative and executive bodies authorities, as well as taxpayers themselves - legal entities(enterprises, organizations). Object of tax management are tax flows that make their movement as a result of taxes performing their functions (the total equivalent of the value of state services, fiscal, regulatory and control), as well as the tax process at the macro and micro levels. Tax management involves taking effective solutions, identifying ways to reduce risks. The state faces risks of not receiving planned tax revenues, and enterprises face risks of loss of income in the form of penalties tax sanctions as a result of adopting ineffective management decisions and actions.
Tax management in the context of the functioning of the state and enterprises in a market environment should be considered in two ways: as a process of making management decisions and as a management system.
Functions of the subject of tax management: organization of the tax process, tax planning (forecasting), tax regulation and motivation, tax control. Functions of a tax management object : total equivalent value of public goods, fiscal, regulatory and control.
Tax management tasks: providing tax revenue sources for the activities of the management entity; efficient use tax revenues and tax profits; optimization of incoming and outgoing tax flows; ensuring growth of tax profit (the difference between tax revenues and tax expenses) with acceptable level tax risks; minimizing tax risks for a given amount of tax profit; achieving financial stability and solvency of the management entity; introduction into management practice of a tax planning and budgeting system; increasing the efficiency of tax regulation and control measures.
Organizational principles of tax management: relationship with the general system of economic and financial management; complex and strategic nature of the management decisions taken tax decisions; dynamism of tax administration; multivariate approaches and management decisions; taking into account the risk factor when making decisions.
According to division common system finances for public finances and finances of enterprises (organizations or corporations) must be allocated two links (levels) of tax management:
– macro level – state tax management;
– micro level – tax management of enterprises (organizations) or corporate tax management.
2. Tax forecasting and planning. Planning is the process of developing development plans for objects at different levels. Forecasting, unlike planning, is a proactive reflection of the future. Forecasting - view cognitive activity, aimed at determining trends in the dynamics of a particular object or event based on an analysis of its state in the past and present. Tax forecasting – reasonable assumptions based on real calculations about the directions of development of the tax system, possible states of tax payments in the future, ways and timing of achieving these states. Tax forecasting is part of the budget process, the basis of tax and budget planning.
The forecast is based on: 1) careful study of information about the state of the tax system on this moment; 2) definitions in accordance with identified patterns different options achieving expected tax targets; 3) finding as a result of analysis the best option development of tax relations.
Tax forecasting focuses on the search for an optimistic solution to problems, on choosing the best possible options. In the process of tax forecasting, we consider various options state tax policy, different concepts for the development of the tax system, taking into account many economic and social, objective and subjective factors operating at different levels.
To make forecasts they are used two approaches:genetic and regulatory target. With the genetic approach, forecasting is carried out from the present to the future based on establishing cause-and-effect relationships; with normative-target - the future goal and guidelines for moving towards it according to standards are determined, possible events and measures that need to be taken to achieve a given result in the future are examined. The basis for tax forecasting is forecasts of the socio-economic development of the country, its regions for the corresponding period of time and statistical information on main macroeconomic indicators.
Analysis of options allows us to determine three possible models economic development: under the most favorable, average and worst conditions. These models are taken as the basis for forecasts, during the development of which the most likely option for the development of socio-economic processes in the forecast period is selected. At the same time, measures taken by the state to regulate the economy, stimulate production, etc. are taken into account. Forecasts make it possible to correctly assess the development trends actually emerging in society and possible consequences implementation of state target programs.
The main task of tax planning and forecasting– it is economically justified to ensure qualitative and quantitative parameters and the ratio of tax charges from the taxpayer and budget plans and long-term programs for the socio-economic development of the country based on the tax concept developed and adopted by law.
Forecasting is the first stage of planning. The approved forecast becomes a plan. Tax planning is carried out in order to focus on the maximum high level mobilization of taxes and fees in budget system and is carried out taking into account the strategic and short-term guidelines of budget and tax policy in accordance with the general goals and objectives of the state’s economic policy. Tax planning – a process based on forecast parameters for determining the most effective directions of movement and optimizing the volume, composition and structure of incoming and outgoing tax flows for the coming year and (or) the future by the state and economic entity. The state strives to plan as much tax revenue as possible for the budget and extra-budgetary funds, and the enterprise - already in the planning process, outline ways and methods for reducing tax liabilities. That's why the purpose of state tax planning is the optimal financial support in terms of volume, composition and structure for the expenditure powers of government bodies at all levels within the framework of the implementation of the concept of state economic, financial, social and tax policy. The purpose of corporate tax planning is the optimization of tax flows by an enterprise as part of the implementation of its economic, financial and tax policies.
Types of tax planning:
- With strategic – long-term planning for achieving strategic goals, i.e. planning tax flows for the long term based on the strategic parameters of tax policy;
– tactical (current or operational) – This is planning at the level of individual taxpayers.
Tax management processes:tax forecasting; strategic and tactical tax planning, consolidated tax planning (development of the tax policy concept); results-based tax budgeting; rational use income received to finance effective expenses.
Tax planning (forecasting) methods: balance sheet, coefficients, from achieved, normative, regression-correlation, forecast extrapolation using trend models.
Thus, planning and forecasting in taxation are special elements of the system for developing and making decisions in the field of tax relations between the state and taxpayers. On the one hand, forecasting and planning tax and fee revenues is one of the economic functions of the state. On the other hand, forecasting and planning of tax obligations by the taxpayer is an element of cash flow management when developing a financial strategy that ensures that the organization achieves a stable position in the market and financial stability.
3. Tax regulation and tax control. Tax regulation – component tax management process, the activities of people to use the regulatory capabilities of taxes, which can be used with varying efficiency within the framework of accepted tax tasks and tax concepts. This is the process of detailed development of methods for implementing tax plans, forming and introducing new and adjusting existing tax regimes aimed at implementing the pricing, fiscal, regulatory and control purposes of taxes, reflected in budgetary tax assignments, targets and tax concepts for a specific period of time. The main purpose of tax regulation – balancing public, corporate and personal economic interests. The practice of tax relations shows that today, among the functions of taxes, only the fiscal function is actually performed, while the regulatory one works poorly in practice.
Tax control– a process that ensures the achievement of set goals, objectives and planned parameters, including through the application of tax sanctions. Control involves identifying deviations in the results actually achieved over a certain period of time from the planned ones, as well as taking measures aimed at eliminating the identified deviations. The need for such a control function is due to the fact that the control object, due to unforeseen influences, external environment, failures within the object itself may deviate from the line of behavior (plan) intended for it. At the control stage one of possible solutions there may be a revision of the original goals and objectives due to the impossibility of their implementation due to changed circumstances.
Main tasks of tax control: correct guidance financial documents; timely and proper filling of tax reporting registers, declarations, intermediate calculations of tax payments; ensuring the reliability of accounting and tax accounting.
Types of tax control:
A) by direction :
– external(tax services exercise control over ensuring the completeness and timeliness of taxpayers’ payment of taxes and fees provided for by current legislation);
– internal (self-control)(tax managers monitor the correct and timely fulfillment of tax obligations by enterprises in order to minimize sanctions for tax violations);
b) by subjects of control :
– state tax control– state influence on business entities, obliging them to correctly form the tax base and calculate the payments due on it;
– corporate tax control– systematic activities of the taxpayer in organizing tax accounting at the enterprise, self-monitoring of the correctness of tax calculations, identifying and eliminating tax errors before inspection by the tax authorities.
Principles of tax control:
– compliance with the interests of the state and economic counterparties;
– availability of tax control results for analysis by state tax and customs administrations and banks;
– analytical and meaningful tax control report to establish patterns of cash flow.
4. State and corporate tax management. State tax management – organ management system state power tax flows within the framework of established procedures and elements of the tax process, market-oriented forms and methods in order to financially support production and provide the required volume and quality of public goods (benefits, services). Object of state tax management are incoming and outgoing tax flows that move within the established tax process from taxpayers to the budget system (the system of budgets and extra-budgetary funds of all levels) in order to fulfill tax obligations and are used to increase public goods, stimulate economic growth in the country and tax administration. Subjects of state tax management are the bodies of state legislative and executive power, directly managing potential and actual tax flows, i.e., involved in the tax process. The purpose of state tax management is to ensure sustainable tax balance, long-term balanced implementation by taxes of all their functions (monetary equivalent of the value of public goods, fiscal, regulatory and control) based on the rationalization of procedures and elements of the tax process, optimization of incoming and outgoing tax flows. The central place in the structure of state tax management is given to the optimization of tax flows by making effective management decisions in the field of tax revenues, tax expenses and use of tax profits.
Objectives of state tax management:
– analysis and assessment from a tax perspective of indicators of economic growth, financial condition of taxpayers, government revenues and expenses;
– ensuring an optimal balance of the total tax burden with the volume and quality of public goods provided, rationalizing the structure of the tax burden and government spending;
– development of a tax concept and tax policy priorities in fiscal, regulatory and control-fiscal areas, ensuring functional tax balance;
– making long-term, strategic tax decisions in the area of determining optimal parameters and the structure of the tax system, making decisions on replacing or changing individual types and (or) elements of taxation of individual taxes;
- Adoption strategic decisions by choice the most effective forms and methods of taxation and tax regulation that provide the necessary fiscal and regulatory effect;
– development of the medium-term and current tax budget on the revenue and expenditure side, management of its implementation and monitoring;
– other functions related to protecting against risks of tax revenues, reducing tax arrears, creating an internal control system and information support etc.
State tax management in general and tax decision-making is carried out within the framework of the established tax process and its elements (tax law, tax system, tax system, tax policy, tax mechanism).
Corporate tax management– a system for managing tax flows of a commercial organization through the use of scientifically based market forms and methods and making management decisions in the field of tax revenues and tax expenses at the micro level. Features of corporate tax management are: organizing the process of managing tax flows at the enterprise; corporate tax planning; corporate tax regulation; corporate tax control (self-control).
The management of tax payments at most enterprises is carried out either by a specialist finance department(services), or (which is undesirable) accounting. External tax administration is less common. It is rational when at an enterprise, in its financial service (and in large holding structures - in a specially created tax service) tax flows are handled by specialists - tax managers.
The processes of planning and regulation at an enterprise are very closely interrelated. Therefore the main methodological directions tax planning and regulation are considered together as a single whole, as tax optimization, i.e. optimization of corporate tax revenues, tax expenses and tax profits through tax budgeting and other forms and methods of corporate tax planning and regulation.
The organization and implementation of corporate tax management creates the opportunity for business entities to solve a number of problems:
– obtain additional tools for using current and future favorable tax, financial and other conditions;
– take into account changes in the external environment more fully;
– to stimulate participants in tax management, taking into account the results of management decisions made, to create prerequisites for improving the quality and qualifications of managers;
– ensure a more rational distribution and use of various types of resources of an economic entity;
– increase with minimum costs financial stability and enterprise value.
The criterion for deciding the need to organize corporate tax management is the level of the tax burden. If specific gravity taxes do not exceed 15% of the net added value of the enterprise, then the need for tax planning and optimization is minimal; at higher levels of tax burden, the organization of full-fledged tax management is necessary. The higher the tax burden, the more effective the costs of a business entity in organizing tax management will be, and the higher the price of management tax decisions made.
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Tax payments make up a significant share in the financial flows of organizations. Often from a competent, professional decision made taking into account tax consequences, depends on the fate of the business, the possibilities of its growth and development. Underestimation of this side financial activities organizations that make mistakes in tax calculations with the budget result in heavy financial losses. Russian realities are such (high taxation of business, instability of tax legislation, etc.) that the results of a clearly organized corporate management cannot be compared with the results of general economic and even financial management. Today, it is almost impossible to conduct business without calculating how much profit a particular transaction will bring and how much taxes will be required to be paid. The problems of taxation, accounting and tax management are comparable in importance, perhaps, only with problems that arise directly in the course of production or any other business activity. This significance is expressed in specific amounts that are given to the state. Tax payments, covering all production and economic activities of organizations, entering into all elements that determine the composition of the price, affect production efficiency, and are also the most important factor in making a business decision.
Taxes ideally should not influence the choice of economic decisions of an enterprise; they should not significantly change the business philosophy. In practice, taxes, being a powerful tool of economic regulation, invade the sphere of strategic decisions, often forcing a radical change in the company’s tactics. Major decisions are never made without considering taxes and their management. Enterprises should always have internal and external specialists, whose main functions are to analyze and support the activities of a given enterprise from a tax point of view. Even if taxes do not determine the main strategy of the enterprise, someone must calculate them in a timely and correct manner, as well as take measures to optimize them. The well-known position of taxpayers “if it becomes impossible not to pay taxes, then you should pay as little as possible” is based on the right of all business entities to reduce their tax obligations by any means not prohibited by law.
Corporate tax management as a type management activities at the enterprise, is increasingly becoming part of the practice of economic life in Russia, and the tax manager of the organization (expert, tax consultant) is becoming an increasingly significant figure. Recently in Russia, corporate tax management has become the subject of activity of many auditing and consulting firms working on a contractual basis with taxpayers.
Corporate tax management – This is a system for managing the tax flows of a commercial organization through the use of scientifically based market forms and methods and making management decisions in the field of tax revenues and tax expenses at the micro level.
Corporate tax management as a link whole system tax management has the same functional elements, but with its own characteristics:
organizing the process of managing tax flows at the enterprise;
corporate tax planning;
corporate tax regulation;
corporate tax control (self-control).
Organization of corporate tax management in in a broad sense is a collection organizational forms and methods of tax planning, tax optimization and tax self-control; in a narrow sense, it is the preparation and creation of conditions for optimizing tax flows. To organize the management of tax flows at enterprises, it is used organizational structure financial management.
Tax payment management on most Russian enterprises This is done either by a specialist in the financial department (service) or (which is undesirable) by the accounting department. Less common, but still encountered, is external tax management. It is rational when at an enterprise, in its financial service (and in large holding structures - in a specially created tax service), tax flows are handled by specialists - tax managers. Their responsibilities include: participation in the development of the company’s regulatory documents, charter and various regulations; development and justification for the application of an effective tax regime; creation and maintenance of an information base on tax legislation; participation in the justification of the system of agreements and contracts; development of corporate tax policy and tax budget; implementation of corporate tax planning, forecasting and budgeting; development of corporate tax regulation; implementation of internal tax control, analysis of company taxation; ensuring the implementation of external tax control (timely and complete submission of documentation to the tax authorities); implementation of tax proceedings: timely registration with the relevant authorities and re-registration, development of a tax calendar and regulation of payments for individual taxes, interaction with local tax and financial authorities on tax benefits and others tax issues; performing organizational and methodological work in the field of taxation in your organization; and other questions.
The processes of planning and regulation at an enterprise are very closely interrelated, intertwined, and when considering the processes of tax management at an enterprise, it is quite difficult to separate them. Therefore, the main methodological directions of tax planning and regulation are considered together as a single whole, as tax optimization, i.e. optimization of corporate tax revenues, tax expenses and tax profits through tax budgeting and other forms and methods of corporate tax planning and regulation.
Corporate tax control is a systematic activity aimed at organizing self-control (observation, verification by managers of the correctness of accrual and payment of taxes, the movement of incoming and outgoing tax flows, the efficiency of using tax profits, as well as identifying and eliminating tax errors before inspection by the tax authorities.
Organization and implementation of the elements of full-fledged corporate tax management creates the opportunity for business entities to solve a number of problems that cannot always be solved within the framework of other types of management and types of management:
– obtain additional tools for using current and future favorable tax, financial and other conditions,
– take into account changes in the external environment more fully,
– to stimulate tax management participants taking into account the results of management decisions made, to create prerequisites for improving the quality and qualifications of managers,
– ensure a more rational distribution and use of various types of resources of an economic entity,
– increase the financial stability and value of the enterprise at minimal cost.
An important criterion The solution to the question of the need for an economic entity to organize corporate tax management is the level of the tax burden. If the share of taxes does not exceed 15% of the enterprise’s net added value, then the need for tax planning and optimization is minimal; at higher levels of tax burden, the organization of full-fledged tax management is necessary. The higher the tax burden, the more effective the costs of a business entity in organizing tax management will be, the higher the price of management tax decisions made (provided they are effective).
Tax management of the taxpayer– this is the process of managing taxes of an enterprise, regulating the financial relationship of the taxpayer-enterprise with the state; This is an integral part of the enterprise financial management system.
State tax system is an external environmental factor for business entities. Its impact on the activities of the enterprise is that tax obligations lead to an increase in certain expenses of the enterprise and a reduction in its profits, as a result of which the efficiency of business activities decreases; in addition, an increase in expenses, tax obligations lead to higher prices and a decrease in consumer demand.
Classification of types of tax management of a taxpayer-organization:
1)depending on the scale of activity:
· National – within the borders of one state;
· International – when carried out externally economic activity.
2)depending on the tasks being solved:
· External – when concluding various transactions with partners and contractors;
· Internal – on-farm.
3)depending on the duration of the period:
· Tactical – everyday, operational management;
· Strategic – during development investment projects, expansion and diversification of business.
4) depending on the level of legal culture:
· Legal - in a business reflected in official reporting by fulfilled tax obligations;
· Shadow.
Ways to optimize tax management:
1)Illegal– tax evasion based on the deliberate use of punishable methods of accounting for income and property and deliberate distortion of reporting
2) Legal - based on adjusting business activities and accounting methods and using the opportunities provided by law
3) Semi-legal - uses shortcomings and contradictions in current laws and regulations.
Factors for optimizing tax management
· Internal
· External
External factors influencing corporate NM
1. Main directions of the budget, tax, investment policy of the state
2. The state of law and order in the state and the level of legal culture
3. Tax jurisdiction of the territory of registration of the taxpayer and place of business
4. Organizational and legal form of doing business
5. Composition of founders and formation procedure authorized capital
6. Type of economic activity of the taxpayer
7. System (regime) of taxation
Internal factors influencing corporate NM
1. Accounting policy organization, developed and adopted once a financial year
2. Development of contract schemes for transactions
3. Determination of the structure of assets subject to taxation and the procedure for using capital
4. Creation of a division (group, department) of tax management in the organization
5.Usage tax benefits for each of the taxes payable
NM includes the following types managerial work:
Ø Organization of tax and accounting at the enterprise (Involves knowledge and interpretation of tax legislation, response to constant changes in it, correct design primary documents and tax registers)
Ø Monitoring the correctness of tax calculations, deadlines for reporting and paying taxes (Eliminating arithmetic and counting errors, using a tax calendar to prevent delays in reporting and paying taxes)
Ø Minimization and optimization of taxation (Analysis of possible forms of transactions, contracts, taking into account their tax consequences)
In practical reality, NM is implemented through strategic and tactical measures:
1. Monitoring of legislative and regulatory legal acts, assessment of state tax policy and forecast on this basis of possible developments of events
2. Review and forecast of business practices and judicial practice
3. Development of an even enterprise policy, taking into account current legislation and the tax consequences of its implementation
4. Calculation of tax liabilities when developing specific schemes and managing cash flows
5. Risk assessment according to various types actions and tax obligations upon the occurrence of force majeure circumstances
6. Forecast of the effectiveness of the application of optimization measures
Operational activities of the NM
1. Weekly monitoring of regulations and comments from specialists
2. Development of a schedule for fulfilling tax obligations taking into account the established tax calendar and monitoring its implementation
3. Regular analysis and assessment of the effectiveness of tax minimization schemes
4. Protection of interests in the tax authorities, in arbitration court
The taxpayer’s NM consists of functional elements:
Ø Tax planning at the enterprise
Ø Organization of tax proceedings
Ø Tax regulation
Ø Intra-company tax control
Tax proceedings- this is legal established order voluntary fulfillment of a tax obligation by a taxpayer-organization, which involves two stages:
Tax calculation;
Paying taxes
The tax calculation process includes the following steps:
· Determination of tax object
· Tax base calculation
· Select tax rate
· Tax amount calculation
· Reflection of tax obligations in accounting and tax accounting
· Formation and presentation tax return to the tax authority within the prescribed period
(know 10 elements of tax)!!! there will be a test
Tax payment procedure- this is the payment of the tax amount in full, on time, to the budget system of the Russian Federation to the appropriate account of the Federal Treasury of the Russian Federation.
Specific order payment of taxes and fees is established by law in relation to each tax and fee.