Tax Planning and Corporate Financial Management

Author: Song Xianzhong
Publisher:
Publish Date: 2002-06-01
Features: This book is the research outcome of the author's National Natural Science Foundation of China project, "Analysis of the Correlation between Tax Planning and Corporate Financial Management." Through more than three years of research, the author has proposed some valuable conclusions, which are mainly reflected in the following aspects:
(1) By analyzing the concepts of tax evasion, tax avoidance, and tax savings, the author proposes that tax planning is a financial planning activity. In contrast, tax evasion, tax avoidance, and tax savings are tax-related phenomena and belong to different levels of things. Tax planning refers to the financial planning activity of taxpayers in a given tax environment, who optimize and select various tax-related schemes to maximize their own value, fully enjoy and exercise their rights.
(2) The author proposes the characteristics and principles of tax planning, as well as the basic conditions for its implementation.
(3) The book systematically elaborates on the correlation between tax planning and financial management, exploring issues such as the goals of financial management, the functions, content, institutions, and environment of financial management. It theoretically clarifies the mutual relationship between tax planning and financial management.
(4) Through the analysis of capital structure theory under both taxed and untaxed conditions, the author demonstrates the impact of taxes on corporate financing decisions. Due to the existence of tax issues, corporate financing decisions can influence corporate value. Additionally, the author proves the effects of corporate tax and personal tax on equity and debt structures under the target capital structure, as well as the impact of value-added tax on the adjustment of short-term funding sources.
(5) By studying classical investment theory, the author reveals the relationship between taxes and capital costs. From the perspective of financial management's object—cash flow—the author analyzes the influence of investment behavior on cash flow and concludes that the amount of tax directly affects corporate value. The project also examines issues such as investment forms, corporate organizational forms, tax-deductible investments, and depreciation tax deductions.
(6) Through the analysis of dividend distribution policies, the author reveals the impact of taxes on corporate dividend distribution.
(7) Fully leveraging the role of corporate tax planning, the author studies how the government can correct enterprises' non-compliant tax behaviors from the perspectives of both taxpayers and tax authorities.
(8) Through field investigations, the author gains insights into the tax awareness of Chinese enterprises and the current tax status of enterprises in China. Based on this, the author emphasizes the importance of national macro-guidance, the establishment and improvement of tax laws, and the development of anti-avoidance mechanisms.