Tax planning: It refers to making a complete set of tax operation plan through planning tax related business to achieve the purpose of tax saving.
Tax planning has the characteristics of legality, planning, purpose, risk and professionalism 

Three types of tax planning： 
1. VAT tax planning: VAT is the largest tax category in China and the main tax burden of enterprises. Hence the enterprises should conduct the reasonable VAT tax planning to reduce the tax burden and improve the economic and competitiveness.
a. Trade discount: the deduction and discount excluding to the sales amount should be handled by means of commercial discount. If the amount of deduction, discount and sales amount are listed in the same VAT invoice, VAT output can be calculated according to the net invoice amount.
b. Simultaneously business and mixed sales: For taxpayers dealing in goods or providing taxable services with different tax rates shall be accounted for separately. If not,  the higher tax rates shall be dertermined.
c. Sales methods: For reputable customer, it plays the role of tax saving on Selling goods by means of credit sale and installment payment, and paying tax on Contracts date when received the payment of goods.
d. Export rebate: The VAT input for purchased goods can be returned and calculated by the rebate rate and export goods sale value in accordance with the State regulations.
e. Taxpayer category: according to the difference between general VAT taxpayer and small-scale VAT taxpayer for reasonable tax avoidance.
f. VAT tax rate: Based on the tax rate on VAT invoice to make tax avoidance by comparing with the deductible VAT input and the purchased goods cost to determine whether selecting the special VAT invoice with higher purchased price or Regular VAT invoice with the lower purchased price.
g. Tax preference : To reduce the tax burden in accordance with the Preferential tax policy related to value added tax, of which including VAT deduction, VAT exempt, VAT returned when paying it, VAT returned after paying it, VAT returned after paying it and receiving the government approval
 
2. Individual income tax (IIT) planning: Reasonable IIT planning can reduce the staff payroll tax, which improving the enthusiasm of staff work and reduce the enterprise operating cost
a. Yearly lump-sum bonus: A portion of the employee payroll package is paid by means of yearly lump-sum bonus to reduce the individual income tax rate to pay less tax
b. Housing fund: The housing fund , in the range of 12% of the average monthly salary of employees themselves in the previous year paid by the company and individual respectively, is permitted to be deducted from the individual taxable income.
c. Social security: The social security paid by the individual in accordance with the prescribed payment proportion or method is allowed to be deducted from the individual taxable income
d. The tax invoice of Communication and transportation fee etc. shall be collected by way of reimbursement to reduce employee’s payroll tax.
e. Improve employee welfare: Enterprises provide employees with shelter, food, holiday entertainment items to reduce tax
f. Foreigners: Individual income tax are exempt for the foreign individuals obtaining the expense in non -cash form or on a cost reimbursement basis. which including housing subsidy, food allowance and relocation expenses, laundry fee, home-leave expenses, language training fees, children's education fees, etc. 

3. Enterprise income tax planning: in the territory of the People's Republic of China, enterprises and other organizations that obtained income are taxpayers of enterprise income tax, who shall pay the tax in accordance with the provisions of the enterprise income tax law.
a. Preferential political strategy: There are kinds of preferential policies in different regions. The enterprises income tax rate for the small low-profit enterprises is deducted by 20%,
b. Promotion by discount: The discount amount and invoice amount are shown in the same VAT tax invoice
c. Depreciation of fixed assets adopting the accelerated depreciation
d. Pre-tax deductible items: The reasonable and legal arrangement for those expense exceed the tax deduction standard, such as Advertising fees, Business promotion fee, business entertainment, loan interest, taxable salary and wage etc.