Tax season is still far off, but you can make doing your taxes much easier on yourself if you prepare properly for filing. Additionally, you still have time to integrate these tips into your current supply chain optimization plan and receive the full advantages. Here, we’ll discuss six tax tips that will make your supply chain tax preparation process much simpler – and potentially save you money in the process.
1. Use the Research & Development Tax Credit, the Largest Tax Credit Available for American Businesses
As of 2015, the federal Research & Development Credit has been permanent – and substantial. For example, a tool and die manufacturer received nearly $400,000 in tax credits for important projects undertaken in a three-year period. If you want to earn this tax credit, focus on improving products, processes, or production issues as part of your supply chain optimization plan for 2017– these are the best techniques to help you qualify for this tax break.
Pro tip: If you include a cyber security R&D component in your project, you may also qualify.
2. Remember Indirect Taxes When Preparing for Taxes on Your Global Supply Chain
As we know, only 60% of supply chain merchandise exports was represented by major markets in 2010; emerging markets made up a whopping 40% of supply chain marketplaces. With these changes in mind, considering international taxes will likely play an important role in your strategy. When preparing your tax plan, include some of the new international indirect tax considerations, like the following:
- The Free Trade and Preferential Trade agreements reduction in customs duties.
- Tax incentives that motivate job creation, especially in high-wage activities and sustainable supply chains.
- Green taxes in emerging markets designed to influence customer behavior.
- Increased VAT/GST and excise taxes.
3. Consider Implementing a Tax-Effective Supply Chain Management (TESCM) that Helps You Integrate Tax Preparation Into Your Daily Operations
TESCM helps you plan the steps you’ll need to file your taxes effectively. This approach to tax planning allows you to consider international tax structure. TESCM encourages you to consider where to locate functions and assets as well as focuses on centralized management and risk control. Additionally, it will help you to consider which entity will assume legal and economic risks. An operationally integrated tax-planning program like this one will help you to improve your supply chain optimization strategy by integrating tax preparations more seamlessly from the get go.
4. Make Sure to Map Ownership of the Transaction When Preparing to File Taxes for Procurement Functions
Ownership of transaction ensures that you – not your vendors – determine whether your transactions include services, tangible property, or intangible property, which, in turn, determines which entity imposes the tax. This jurisdictional consideration determines which level of tax your supply chain will pay. Take these factors into consideration when determining ownership of transaction:
- Intangible assets are not subject to property taxes in many states. However, at the same time, warranty costs might increase your property tax base.
- Electronically downloaded software is often not subject to sales tax.
- Purchasing underlying tangible personal property from vendors or contractors forces many supply chains to overstate income, sales tax, or property tax of these assets.
- Importing goods can lead to unduly high customs and duties.
5. Invest in Solar System Operations
One of the most popular ways to invest in sustainable supply chain management is by using green technologies, like zero-waste processes and solar energy. But along with the environmental benefits it provides, solar energy also gives you a hefty tax credit: the federal government offers a 30% investment tax credit on an operationally integrated solar system.
6. Customer Relationship Management (CRM) Infrastructure can Influence Your Tax Filing
More and more companies recognize the value of collecting and managing data from customer interactions and surveys. However, compiling and storing this information can lead to changes in taxes. These include the following potentialities:
- State income tax regulations on where CRM data is stored.
- Patenting and copyrighting intellectual property influencing taxation jurisdiction
- CRM software property tax implications.
- Telecommunication charges on excise tax amounts on tax refunds.
Knowing all of the tax credits available for research projects and environmental changes can save you money in the long run. But likely even more beneficial to your time – and sanity – is keeping tax season in mind all year long to maximize savings opportunities.