Year-End Tax Planning – Towards the end of the tax year, there are several obligations that must be fulfilled by the taxpayer. We will share how you should plan it here.
Review all taxes that will be owed, starting with Article 21 Income Tax, Withholding Tax, corporate income tax and VAT, and other taxes and future tax impacts. For example, the impact on Article 25 income tax installments and the impact of tax payments on transactions that can cause time differences.
Review the completeness of bookkeeping and tax obligation documents along with their supporting documents as preparation for tax audits, especially if it can be ascertained that the company will become priority to be audited.
Make bookkeeping corrections, if necessary correction of the Annual Tax Return, underpaid tax payments, and so on. Find as many tax-saving opportunities as possible.
Potential risk analysis (e.g. risk of loss due to tax administration sanctions) that may occur and determine how to minimize those risks.
Year-End Tax Planning
Implementation of the Plan of Action at the Fiscal Year End
- Conduct accounting review of current accounting and ensure accuracy in presentation and timeliness in reporting.
- Ensure the validation of supporting documents for tax returns, such as proofs of withholding tax collectors, input tax invoices, and SSP that become tax credits.
- Make fiscal adjustments (positive and negative corrections) on commercial financial statements.
Perform a Tax Diagnostic review of the Corporate Income Taxpayer / Personal Taxpayer at the end of the year
Make a transaction of corporate income tax / individual taxpayers owed for the current fiscal year and calculate the tax credit from income tax article 21 (specifically for individual taxpayers), income tax article 22, 23, 24, 25, and BPHTB.
- If the results of the transaction show that the corporate income tax is overpaid, it must be explored what factors cause the tax to become overpaid. The consequence of the overpayment of corporate income tax that is shown in the tax return is the tax inspection by the tax authorities.
- If the results of the transaction indicate the underpayment of corporate income tax; If the amount is significant enough, it’s better to just pay.
Strategies to avoid tax overload (If the company experiences Fiscal Profit)
- Increase cost recognition in the current tax year.
- Postpone the recognition of income the following year; increase promotional costs at the end of the year, realize employee upgrading programs by providing training / seminars, etc. to improve employee quality.
Strategies to avoid tax overload (If the company experiences Fiscal Loss)
- Postpone the recognition of costs to the following year and increase recognition of the current year’s income as long as it does comply with the tax regulations.
- Submission of application for Article 25 income tax installment reduction is possible earlier if after 3 months or more runs a taxpayer taxable year can show that the income tax that will be owed for the tax year is less than 75% of the income tax payable which is the basis for calculating the amount of income tax article 25.
Don’t miss the last chance for some tax savings opportunities towards the end of the financial year. In this case, the last few months of the corporate fiscal year are very important and is an appropriate time to examine the company’s income tax obligations while examining what we can do to minimize them.