Planning as a tool can be used by the administration, in companies, to optimize the taxes in which they are taxpayers. Through it, it is achieved:
Determine in the evaluation of investment projects, the possible effects of taxes in advance.
Consider alternatives for tax savings in investment projects or operations to be carried out.
Increase shareholder profitability.
Improve the cash flow of companies, scheduling adequate compliance with tax obligations in advance.
Factors that make Tax Planning necessary
The permanent changes in the tax legislation force companies to analyze their impact and seek immediate strategies to reduce it.
Pressure on company management to improve results.
Application of transfer prices in transactions with related companies abroad. The consequences of not doing the study and not having the supporting documentation is the rejection of the costs and deductions in these operations.
Organizations every day seek to reduce costs and improve profitability.
Planning Phases
Business knowledge:
- Company characteristics Capital composition (national or foreign) Corporate purpose (products or services sold) Strategic risks of the business Special regulations (exempt income Páez Law, Quimbaya Law) Current and budgeted financial information Investment plans - new products or services Transactions with related parties (products - services)
Study of the tax situation of years subject to review:
- Review of tax returns to determine tax contingencies, level of taxation: presumptive income or ordinary income Review of tax procedures and controls to identify risks of penalties or higher taxes Use or disposal of the balances in favor reflected in the returns. Identification of points of improvement and opportunity. Observe repetitive situations from one year to the next that have not been rectified. Review of areas that have to do with the tax process.
Planning Development:
Based on the first two phases, a company tax plan is defined in which the following aspects are covered:
- Analysis of projected financial information; Calculation of income tax for the years covered by the planning Alternatives Report presentation Periodic updating due to changes in legislation.
Aspects to consider in tax planning
Tax
deferral Opportunity cost / risk involved in an alternative
The changes introduced in a tax reform create opportunities that could be used by companies. New benefits, new deductions
What do shareholders want?
Distribution of cash dividends
Capitalize the company
Reduction of the tax in the company
Impact on minority shareholders
Subsidiaries of a company abroad in which, in the country of origin, the tax discount of taxes paid in Colombia is allowed (It would not have effect if the rate of the country of origin is equal to that of Colombia).
State objectives
Increase taxes
Decrease profits
Visits by tax authorities to companies are more frequent to review tax returns in which formal and substantive aspects are questioned, generating in some cases corrections to the returns filed.
Increase in penalties for non-compliance with obligations.
Taking into account the above, some Tax Planning strategies are proposed for companies with ordinary income:
Tax Planning Strategies for companies with ordinary income:
Efficient use of fiscal losses and excess presumptive income (Art. 147 and 191 ET)
Deductions for investments in scientific or technological research (Art. 158-1 ET)
Deductions for investments in Control and Improvement of the environment (Art. 158- 2 ET)
Deductions for investments in real productive fixed assets
(Art. 158-3 ET) Donations (Art. 125 ET)
Expenses abroad (Art. 122 ET)
Pension contributions made by the employer (Art. 126-1 ET)
Some strategies described below apply to companies that are taxed for presumptive income and ordinary income:
Penalties for provisioned inventories
Portfolio penalties
Changes in asset depreciation systems
Changes in asset depreciation systems
Tax Planning strategies directly affect the results of the company and therefore the profits to be distributed among investors. Therefore, it is important that in the evaluation of the planning strategies the decision of the investors is taken into account, such as that of receiving dividends or capitalizing profits.
Summary
Tax Planning Strategies for companies with ordinary income
Strategies that generate for:
Strategies that generate for:
