Legally speaking, subsidiaries are independent legal persons, and branches are not independent legal persons. The differences are as follows: First, the establishment procedures are different. Setting up a subsidiary in foreign countries or other places generally requires many procedures, and the establishment procedures are relatively complicated, and the establishment cost is bound to be large; Setting up branches is relatively simple and the cost is low. Second, the accounting methods are different. The subsidiary is an independent legal person, accounting independently for taxation; A branch is not an independent legal person, so it can be combined with the head office to pay taxes. Of course, when can we conclude that different countries and regions have different regulations. According to China's regulations, branches that can conduct independent accounting should pay taxes separately, not collectively. Third, tax incentives are different. Subsidiaries bear all tax obligations, and branches only bear limited tax obligations. Many countries levy enterprise income tax and so-called "branch tax" on foreign companies. Subsidiaries appear as independent legal persons abroad or in different places, and can enjoy tax benefits, while branches are non-independent legal persons and cannot enjoy these benefits. China's preferential policies such as "two exemptions and three reductions" and "reinvestment tax rebate" for foreign investors can only be applied to independent legal persons.

We can set up different forms in different periods. A branch was established in the early stage of production and operation, and it was changed into a subsidiary after the normalization of production and operation. In the early days of its establishment, it is very likely to produce losses. The huge investment in fixed assets and advertising expenses makes it impossible for startups to make a profit, even if there is a small profit. At this time, the daily business activities in the form of branches can be used to offset the profits of the head office, thus reducing the tax payable of the head office. When the production and operation are profitable, it will be changed to a subsidiary, so that we can make full use of the state's preferential tax policies for new enterprises to plan. If it is registered as a subsidiary in the early days of its establishment, the current losses can't be made up. Even if it is profitable, the actual preferential policies will be very limited because there is not much profit.

This phased planning can be arranged from the following two aspects: First, time arrangement. If the operating profit is big enough to change, you can make maximum use of tax incentives. However, if it is changed at the beginning of profit, the income it actually enjoys will be very limited because of the small profit. But if you change the design at the beginning of profit, you can use preferential policies to pay less taxes as soon as possible, and each product has a certain life cycle. If you change the design when the profit is high, the product may have entered a recession, and the benefits you enjoy will gradually decrease over time. Coupled with the constant adjustment of national policies and frequent changes in investment opportunities, the effectiveness of late income is challenged, which requires the introduction of the second arrangement. Second, capital investment arrangements. The core of this planning is to invest a lot in the early stage of production and operation, such as increasing advertising expenses and scientific research expenses, so as to minimize the profit of the head office. Once a subsidiary is established, the most profitable project will be located in the subsidiary. Because the profitability of the head office will not change greatly, it will not lead to transfer pricing and tax adjustment between the parent company and its subsidiaries. If the planning is reasonable, high investment in the early stage will generally bring high income in the later stage, and the high income of subsidiaries will be better because of preferential tax policies.