Planning and tax optimization

By: Eli Doron, Adv; Yaron Tikotzky, Adv, (C.P.A); Dr.Slomo Nass, Adv, (C.P.A)

14/1/2016

Planning and tax optimization

methods of execution of the laws of the state, it is a creative individual approach, which allows to reduce the tax rate.  

In most cases, not every professional performing planning and tax optimization is an advisor on taxes. Reasons for deciding to refer to the adviser (lawyer specializing in taxation) number: the tax legislation in Israel dynamically changing, constantly updated several times a year, amend existing laws or adopting new standards. Professional lawyer - Adviser to taxation, suitable for the planning and optimization of taxation of integrated, comprehensive, strategic, given the new legal norms and regulations. The content of the laws is complicated by their tortuous formulation, entirely replete narrowly professional terminology, at times, even a certified lawyer is not easy to understand, if he does not specialize in taxes, not to mention the taxpayer or business owner.

The right to tax planning and the search for ways to optimize the benefit of the taxpayer, to find non-standard options to reduce individual tax enshrined in the tax laws of most civilized nations, especially in the Israeli law, the feature of which is a multi-stage tax system. A special place in it is given to the planning and optimization of international taxation. This is true for people with dual citizenship, profits abroad, for business and companies operating wholly or partly on the territory of Israel.

According to Supreme Court Justice Meir Shamgar, "the right tax optimization - the legitimate right and duty of the contracting parties, the fact that the latter is selected legal schemes lowering tax rates, indicating their choice of legal model, avoiding tax claims".

A further example of the promotion of the State of Israel to optimize taxes, serve as a precedent, arising from the decision of the Supreme Court in the case "Paromediko" where a judge was given a clear definition of tax optimization, in contrast to the evasion of their payment. Judge Ayala Frokachia was formulated, and subsequently became part of the law, the postulate that the optimization of taxation - it is a legitimate way, which is to represent the taxpayer in the state tax authorities, all necessary arguments and evidence, as opposed to tax evasion, which is a cover-up thereof.

Optimal program of taxation, provides professional lawyer - an adviser on taxation is made on several basic principles: long-term, including strategic planning, inclusive of all taxes that are required to pay as a consequence of the conclusion of certain transactions, taking into account all the financial implications of its findings, as well as possible additional transaction and the costs it will entail for themselves. This program is tailored to the relevant taxes, including international taxation, if necessary. Often, after informed expert opinion on the tax advisor, stakeholders find out for yourself what the deal is not so profitable, which seemed to detailed examination of all the circumstances. In such cases, the adviser can offer a more acceptable option for their business model, in terms of taxation or other forms of cooperation in the framework of the specific objectives of the parties. For example, there are many types of legal entities, corporate activity options that reduce the tax rate.

Strict adherence to a set of defined parameters, a comprehensive, professional approach to a deal or doing business in general, to avoid a situation where the tax authorities after detailed checks can recognize the transaction taxpayer fictitious, and the company - a legal person, intentionally created for the purpose of tax evasion. Such cases are not rare, and the consequences of such a decision - are obvious!