We can conclude that the tax accountant has a key role in making the tax avoidance due to the fact that he knows the taxes and their form of application like nobody else.

What is the use of tax planning?

From the concept of what tax avoidance is, you can already see that this practice is very useful for companies, regardless of their size and segment. But to understand the true utility of tax management, we need to see what its objectives are. Are they:

Prevent a specific tax from being levied

The tax burden is quite high. According to the report on Tax Statistics in Latin America and the Caribbean, from the Organization for Economic Cooperation, the country has the highest tax burden in Latin America and even earns more than countries considered rich. Learn more information about how do i figure out sales tax

How does this impact a company? Simple. The high level of taxes applied harms finances and makes companies less competitive because they have to charge higher prices in order to survive.

With tax management, it is possible to avoid the incidence or recurrence of a tax. This means preventing the taxable event and not having to fulfill this specific tax obligation.

This analysis involves different factors, such as the place where the transaction is carried out or the type of company with which it is practiced.

Reduce the amount collected as taxes

When you open a business and run it, you know that you will need to pay taxes. That’s not news. But tax avoidance can help decrease the total to be collected. This can occur through a reduced rate or by changing the tax base. In fact, this is the most common way of planning.

Defer payment of some tax

Sometimes you try to avoid paying a tax obligation, but you can’t. In that case, the next alternative is to try to slow it down.

Deferment can be achieved through cash and accrual regimes.

The first assumes that the records are made on the date the payment or receipt was made.

The accrual basis, on the other hand, registers exactly on the day the event occurred, that is, on the date of the taxable event.

Regardless of the choice, the idea is that the organization’s cash is preserved, preventing the government from receiving the payment of the tax before the company receives the amount related to the commercial transaction.

What are the advantages and benefits?

We have already mentioned quickly that tax avoidance has many advantages and benefits for companies. But to exemplify more clearly, we need to divide them according to the tax regime.

In other words, depending on the tax regime your company is in, the benefits of tax management are different. This means that you need to know the schemes in order to understand the benefits you can get from tax avoidance.