Tax planning and tax optimisation definitions
Questions regarding the reduction of the tax burden for a company have always been and will always be relevant. Today we will try to answer the following question: What is the difference between tax planning and tax optimisation?
Tax optimisation involves searching for and identifying the legal and organisational frameworks that provides the lowest possible level of taxation for a company.
Tax planning involves analysis of a company’s financial situation and plan to incorporate taxation in the most efficient way.
The difference between tax planning and tax optimisation
Tax optimization is not only a broader concept than tax planning, but it is also the next step. Initially a businessman looks at what kind of taxes and where he will need to pay, so he plans them, and afterward he or she optimizes them. When we talk about taxes, the optimization is minimization.
In the last five years the meaning of the term “tax optimization” has shifted significantly towards less honest behaviour perception. At the same time, “tax planning” is usually seen just as a part of the financial planning of a company. However if one looks at the history of the meaning of the two terms he will see that there is no big difference between the two.
Why is tax planning important for your business?
Without a sensible tax planning (and sometimes without optimization), certain types of business simply have no economic substance and simply would not stay competitive. A taxpayer in a business, which is responsible for the success of his company, investors’ funds and jobs of employees, has a right to deliberately take all the necessary steps to reduce the amount payable duties, taxes and fees. A businessman has many different legal methods and techniques at his disposal to serve that purpose.
Difference in legislation of every jurisdiction around the world provides business opportunities and options for tax planning. Moreover, there is so-called tax competition that exists between countries as each country is interested in attracting investments into its own economy.
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If you wish to register a company for tax optimisation our team will be happy to help you there and provide you with more detailed information, you can contact us at [email protected]
Tax Optimisation
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