Undistributed profit refers to the net profit realized by the enterprise, after deducting the losses of previous years, the withdrawal of statutory reserve fund and arbitrary provident fund, and the profit that is temporarily not distributed to investors by resolution of the shareholders' meeting or the general meeting of shareholders. Undistributed profit is the profit that the business retains for distribution in subsequent years.
The goal of tax planning for undistributed profits is to minimize the tax burden and maximize after-tax benefits of enterprises through reasonable arrangements for undistributed profits. Tax planning to reduce undistributed profits can start from the following aspects:
1. Control the distribution of dividends.
Dividends refer to the distribution of profits received by shareholders from the company in proportion to their shares. The level of dividend distribution depends on the company's profitability and investment decisions. If the company is in good profitability, it can reduce dividend distributions and increase undistributed profits, thereby reducing tax expenses. However, if the company is not in a good position to make profits, it will need to increase the dividend distribution to reduce the company's *** and tax burden.
2. Rational use of surplus reserves.
Surplus reserve refers to the accumulated funds withdrawn by the enterprise from the after-tax profits in accordance with the regulations. The surplus reserve can be used to make up for the losses of previous years, expand production and operation, increase registered capital, increase share capital, etc. Through the rational use of surplus reserves, the accumulation of funds can be increased, the solvency and risk resistance of enterprises can be improved, and tax expenditures can also be reduced.
3. Adjust the financial structure.
Enterprises can reduce the difficulty of tax planning for undistributed profits by adjusting their financial structure. For example, a company can reduce its equity ratio by increasing the debt ratio, thereby reducing the income tax burden of the enterprise. In addition, enterprises can also reduce current income tax expenses by reasonably arranging the accrual and allocation of expenses such as depreciation of fixed assets and amortization of intangible assets.
Fourth, the use of preferential tax policies.
*In order to encourage enterprises to invest in technological innovation, energy conservation and emission reduction, some preferential tax policies will be introduced. Enterprises can actively respond to the call of the first and make full use of these preferential tax policies to reduce the tax burden of enterprises. For example, for qualified high-tech enterprises, energy conservation and environmental protection enterprises, etc., certain income tax incentives will be given, and enterprises can choose the appropriate investment direction according to their own circumstances to obtain more tax incentives.
5. Rational planning of enterprise reorganization.
Enterprise restructuring refers to the reorganization of assets and liabilities between enterprises through merger, division, etc. In the restructuring process, enterprises need to consider the tax costs and restructuring benefits comprehensively. If the restructuring of enterprises can be reasonably planned, it can not only reduce the tax burden of enterprises, but also improve the market competitiveness of enterprises. For example, an enterprise can reduce its income tax burden by making reasonable arrangements for mergers or divisions.
6. Strengthen risk management.
The risks of tax planning for undistributed profits mainly come from two aspects: policy changes and market changes. In order to reduce risks, enterprises need to pay close attention to policy changes and market changes, and adjust the tax planning plan for undistributed profits in a timely manner. In addition, companies need to strengthen internal controls and risk management to ensure the smooth implementation of the tax planning plan for undistributed profits.
To sum up, tax planning to reduce undistributed profits requires a number of aspects. By controlling the distribution of dividends, making rational use of surplus reserves, adjusting the financial structure, making use of preferential tax policies, rationally planning enterprise reorganization, and strengthening risk management, we can effectively reduce the tax burden of enterprises and improve their economic efficiency and market competitiveness.