How important are tax optimization and risk management?

Tax optimization and risk management are some key challenges that all entrepreneurs should not overlook. In this rapidly developing environment, Chinese business owners need to constantly meet legal requirements related to tax compliance to reduce tax risks, while striving to optimize their structure to achieve greater profit margins.

Simon can help you facilitate company operations by providing a one-stop tax business solution that covers various taxes in China, including income tax, indirect tax, and real estate related taxes.

Common tax risk factors for Chinese companies

Tax risk monitoring and management play an important role in regulating corporate behavior, reducing tax costs, improving operational efficiency, and avoiding tax risks. In daily operations, enterprises often involve value-added tax, corporate income tax, personal income tax, stamp duty, deed tax, and land value-added tax. Value added tax, corporate income tax, and personal income tax are the three most scrutinized types of taxes in tax audits.

Value added tax (VAT) risk

• Inaccurate or illegal invoices: The discrepancy between the invoicing entity and the consignee, or between the goods listed on the invoice and the actual received goods
• Unqualified deductions: Input tax deductions related to collective welfare and personal expenses, purchased loan services, catering services, residential daily services, entertainment services, or domestic passenger services that do not comply with regulations
• Unrecorded returns or sales discounts: Input tax cannot be transferred out when returns or sales discounts are received
• Incomplete or delayed income recording: Failure to record cash income as required, failure to issue invoices to customers and record corresponding income, or sales income recorded as long-term receivables but not transferred to income

Enterprise income tax risk

• Unrecorded rewards and subsidies: Failure to include various tax refunds, subsidies, and government incentives in taxable income as required
• Unadjusted deemed sales: No tax adjustments have been made to deemed sales activities
• Using non compliant invoices: List cost expenses using non compliant invoices and vouchers
• Inflation cost: Using fictitious invoices to inflate cost expenses
• Deduction criteria: Collecting and reimbursing various expenses that exceed the prescribed standards

Personal income tax risk

• Commercial insurance: Commercial insurance purchased for employees who exceed the standard does not deduct personal income tax
• Excess benefits: Excess payments for retirement, unemployment, and medical insurance, as well as excess contributions to housing funds, are not subject to personal income tax withholding
• Non monetary compensation: Non monetary compensation (such as goods or services) paid to employees without withholding personal income tax
• Employee stock options: According to the employee stock option plan, profits from exercising stock options are not taxed as salary income
• Gifts and bonuses: Gifts or cash bonuses given to individuals by other units are not subject to personal income tax withholding as required

What does Simon Tax Optimization Service include?

Corporate and enterprise tax consulting

• Seeking tax incentives: Identify and seek numerous tax incentives, reductions, or grants in various provinces and cities in China to maximize tax savings
• Structural Suggestions for Tax Efficiency: We provide recommendations on local and cross-border structures to achieve tax efficiency, while considering tax losses, group exemptions, and capital gains restrictions
• Risk management contract review: Review contracts to improve tax risk management
• Manage transaction taxes, such as stamp duty
• Bilateral tax treaty issues: Addressing the issues of bilateral tax treaties between China and other countries

Cross border tax consulting

As companies expand into international markets, they face complex and constantly evolving global tax regulations, increasing risks and costs. As an international tax advisor, we add value by collaborating with clients to develop global tax strategies, ensure compliance, and provide practical tax advice and solutions.

• Domestic investment tax consulting: providing advice on structure, financing, tax incentives, profit repatriation, and exit strategies
• Research on Foreign Investment Countries: Focusing on the Impact of Taxation
• Cross order mergers and acquisitions: pre acquisition tax due diligence, planning, structural recommendations, and post acquisition integration
• Support cross order transactions: including tax efficiency structure, permanent establishment issues, withholding tax impact, application of tax treaties, and contract review

Why choose Simon?

Rapid Processing

With experienced team members, we can handle your project faster than others.

Unsuccessful, no charge

Simon promises that we will only charge after your project is successfully completed.

Tailored services

We will provide the most suitable business plan based on your situation.

Traceable process

Simon has an online system for you to track any updates to the project.

Frequently Asked Questions

Do you have any further questions? don’t worry! We are happy to answer!