Abstract
Globally, the transformations in the tax systems and accounting standards have been given the firms opportunities to manage their tax affairs for the advantage of their shareholders. Tax planning by companies is a highly important activity as one of many tools uses to manage companies’ tax affairs. The main purpose of this paper is to reviews the literature on various aspects of tax planning. This study goes on to review the literature on the concept of tax planning activities for companies. A review of literature on tax planning chances due to ‘gaps’ in the properties of the law and business taxes, and to discuss how tax planning is carried out with differing measurements and approaches from company to another. In the current setting, in which the tax burden is getting to be progressively important in companies' composition of costs, tax planning is a significant tool to increment competitiveness. However, a few is known about the full extent of consequences and results of tax planning. In this article, we contribute in this area by reviewing related literature to provide better understanding about tax planning. DOI: 10.5901/mjss.2015.v6n6s4p350
Highlights
Introduction and BackgroundTax is a significant cost for corporations
Tax planning is a procedure that organizations, individuals, and businesses utilize to evaluate their financial profile with the purpose of reducing the amount of taxes paid on business profit or personal income
Prior tax researchers looked at tax evasion and tax planning as a significant component in the process of tax planning in order to understand the concept of tax planning activities (Rego, 2003)
Summary
Tax is a significant cost for corporations. minimizing tax will enhance profitability. Tax liability is a manageable cost that can be decreased, like any operational costs (Garbarino, 2011) It is, a widely accepted practice in a company’s tax administration that, according to their duties of faithfulness and concern towards stakeholders, managers use a duty of care and a duty of loyalty to reduce the company’s tax burden. Prior tax researchers looked at tax evasion and tax planning as a significant component in the process of tax planning in order to understand the concept of tax planning activities (Rego, 2003) In another definition, Harvey (2011) stated that tax planning can be defined as drawing strategies throughout the year in order to reduce tax liability, for example, by choosing a tax filing status that is most helpful to the taxpayer.
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