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Inter-Temporal Tax Planning using alternative tax vehicles

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Prepared By: i

Mohammad Tanvirur Rashid i i

ID No. 192004506
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Course: Corporate Tax Management

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Program: MBA i

Department of Business Administration

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East Delta University

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 Chapter-3 i

Inter-Temporal Tax Planning using alternative tax vehicles i i i i i i

Inter-Temporal Tax Planning: Intertemporal Tax planning refers a i i i i i i i i

circumstance in which different tax rates are applied to gains realized at

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one point in time versus some other point in time

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Constant tax rate: It refers the tax rate that remain unchanged in various
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economic condition
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Various Tax Rate for company:

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 Publicly Traded Company 25% i i i

 Non-publicly Traded Company 35% i i i

 Bank, Insurance & Financial institutions (Except Merchant bank):

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1. Publicly listed and 4th generation Banks & FI 40% i i i i i i i i

2. Other Banks & FI 42.5% i i i i

 Merchant bank 37.5% i i

 Cigarette manufacturing company/Others 45% i i i

 Mobile Phone Operator Company 45% i i i i

 Publicly traded mobile company 40% i i i i

If any non-publicly traded company transfers minimum of 20% shares of

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its paid-up capital through .IPO (Initial Public Offering) it would get 10%
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rebate on total tax in the year of transfer

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Saving vehicles: Saving Vehicles helps us to choose us the best option
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among the various option of investment for which we will get the
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maximum tax benefit.

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Various saving vehicles for various markets :

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 Format 1 (Money Market)

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ATA(After iTax iAccumulation) i= iInvestment i{1+interest(1-tax irate i) i}^n

ATR i(After iTax iReturn) i i= iInterest i(1-tax irate i)
 Format 2 (Common Stock/ deferred tax rate/single premium deferre
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annuity/land marke)
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ATA(After iTax iAccumulation)= iInvestment i(1+interest)^n i(1-Tr)+(Tr*Investment) i

After iTax iReturn iATR i i i i i= [(1+i)^n(1-Tr)+Tr]1/n i-1]
 Format 3 (Mutual Fund)
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ATA(After iTax iAccumulation)=I i{1+i(1-Tg)}^n

After iTax iReturn iATR= i(1-Tg)
 Format 4 (Foreign Corporation)
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ATA(After iTax iAccumulation)= iI(1+i)^n i(1-Tg)+(Tg*I)

After iTax iReturn iATR= [(1+i)^n i(1-Tg)+Tg]1/n i– i1
 Format 5 (Insurance Policy)
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ATA=I(1+i)^n

 Format 6 (Pension)
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ATA=I(1+i)*n

 Format 7 (pension but tax rate between the time of investment and return )
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ATA= I/(1-T0) *(1+i)n (1-T1)

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ATR={1/1-T0*(1+i)^n (1-T1)} i