8 Legal Ways to 'Avoid' Taxes

Legal Ways of 'Avoiding' Taxes that are often used by large companies and wealthy people. Currently, the government is intensively boosting state revenue from taxes. Paying taxes is of course the obligation of every citizen, although many consider paying taxes a burden that is quite burdensome.

Therefore, there are many naughty taxpayers who commit fraud in paying their taxes which in fact leads to greater tax sanctions, even to the point of entering the realm of crime. 

In fact, actually there are various legal ways that can be used by taxpayers to reduce the amount of tax, legally according to the law.

By implementing appropriate and legal tax strategies and planning, the company will get more net profit and lower tax obligations when compared to if the company does not carry out tax planning.

 

8 Legal Ways to 'Avoid' Taxes

The following are 8 (eight) ways that can be used:

1. Distribute Taxes to Others

Taxes for some assets such as motor vehicles are usually progressive. Therefore, if you have 3 personal cars, then the motor vehicle tax for the third car will be higher than the tax for your first car.

Therefore, you can distribute the tax burden among family members, for the new vehicle that you will buy. That way, the taxes will be distributed so that you can pay the lowest amount of taxes.

2. Maximizing Tax Deduction

In the Tax Law, there are many exceptions and reductions that are allowed. For example, towards the end of the year it is known that the amount of tax that will be owed is quite large. 

So to reduce this amount, companies can reduce it with deductible costs, such as research and development costs, employee education costs, office repair costs, marketing costs, and so on. -other.

The point of this expenditure is that instead of paying more taxes, the money can be used for the benefit of the company.

3. Selection of the Right Form of Business

When viewed from a taxation perspective, individual business forms, firms and partnerships are more profitable than limited liability companies.

In a limited liability company whose shareholders are individuals or entities but with share ownership of less than 25% will result in income tax on the company being imposed twice, namely when the income is received by the company and when the income is distributed as dividends to its shareholders.

4. Company Location Selection

For certain areas, the government provides tax incentives/tax facilities such as accelerated depreciation and amortization, compensation for losses that are longer than they should be, delays, and tax exemptions.

5. Tax Savings (Tax Saving)

Tax Saving is an effort to streamline the tax burden by selecting alternative tax impositions at lower rates.

For example, in-kind gifts to employees are generally not allowed to be charged as expenses in calculating Corporate Income Tax . 

Such in-kind gifts can be converted into gifts that are not in kind so that they can be deducted as expenses, but must be included as employee income. The effect of this treatment will cause corporate income tax to decrease.

The decrease in corporate income tax will be greater than the increase in income tax (assuming the company earns a taxable profit of over 100 million and the corporate income tax is not final).

6. Distribution of Income and Expenses

An example of extending the tax imposition period on income can be done through installment sales or sales on credit. Meanwhile, to shorten the time period, costs that can be deducted can be done through leasing and not ownership as long as the leasing costs are greater than the fiscal depreciation.

7. Selection of Accounting Methods

The choice of inventory valuation method and the choice of asset depreciation method can affect the amount of tax that must be paid. When inflation is high, inventory valuation using the average method will result in higher cost of goods sold compared to the first in first out method, so that taxable income will also be lower.

As for the depreciation method, if the company predicts a sizable profit, then the declining balance depreciation method can be used, so that the depreciation expense can reduce taxable profit.

 8. Avoiding Tax Audit

Tax audits by the Directorate General of Taxes are carried out on taxpayers whose SPT is overpaid, whose SPT is at a loss, does not include or is late in submitting the SPT, there is information on violations, or other criteria that the taxpayer can avoid.

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Conclusion

rich people or companies have certain schemes so that they don't have to pay too much tax or don't even have to pay tax at all. This sounds annoying, but what they are doing is legally permissible and legal. Of course we as ordinary people also have to try it.

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