Research On Income Tax In The Course Of Business Combination

Mergers and Acquisitions (M&A) is an important method to optimize industrial structure and enterprise structure. And it is also an effective approach for enterprises to expand rapidly and improve the economies of scale and international competitiveness. Since the late 19th century early 20th century, Western countries have experienced five big waves of mergers and acquisitions.The corporate restructuring is developing rapidly in our country, although it started late. In the new economic era with an obvious sign of internet and high-technology and an accelerated process of globalization, it is imperative to promote large-scale M&A. The global financial crisis in 2008 triggered by the U.S subprime mortgage crisis provided a good opportunity for some enterprises to carry out M&A. New phase of global M&A wave is on the rise.It is a basic work of development for large companies to do M&A successfully in western countries and areas where the market economy, especially the factor market, is highly developed. After long time of development, the Western countries have made nearly perfect M & A tax policies, which basically cover all aspects and subjects of the combination.At present, domestic corresponding research mainly focuses on the following three aspects:combination motive, accounting and tax planning for business combination. Overall, the research on income tax issues of business combination is in a stage of constant development, which needs to be deepened and improved both in theory and practice. How to learn from the successful experience abroad, and improve our business combination accounting rules and tax policies, becomes the current major issues academic circles face in both theoretical fields.Business combination is one of the common forms of enterprise M&A activities. This paper takes the income tax issues in business combination as the key problem, which include taxation principle on the business combination, economic significance and impact of income tax on the business combination, based on the research results in the previous analysis. On the basis of thorough analysis and research on the existing tax policies of business combination, there is a further discussion of tax planning space. Then the paper analyzes the differences between the choice of accounting methods and the income tax treatment in business combinations, and focuses on corresponding income tax issues in three aspects: theory, policy and practice. Specifically, there are the following five parts:The first part is an introduction, which mainly discusses the background and significance, research ideas and methods, the innovations and inadequacies of this paper.The second part is the general analysis of business combination and the income tax issues in business combinations.On comparison of the concept of business combination in company law, accounting standards and tax law and two assumptions, this paper gives the concept of the business combination. Also several discriminations are done on the basis of the related concepts. Then it describes the economic significance of business combination in enterprises'operation and management activities from both macro and micro levels, and explain the basis of taxation on business combination according to the theory of rent and, and explains corporate income tax impact of business combination based on game theory and economic theory.The third part reviews evolution of income tax policies and regulations on company combination business, analyzes and evaluates the existing income tax policies about business combination.The fourth part mainly describes the requirements in accounting standards on business combinations. And it manages to analyze the differences between accounting and tax treatment on business combinations.The fifth part is about the income tax control and management in business combinations---the elaboration on tax planning and relevant risk management in the process of business combination, which stands on the conclusions drawn in the fourth part. Tax planning is not the main purpose of combination, but the prominent role tax planning plays in process of business combination should be paid close attention. Tax risk management is an integral part of enterprise management activities, and forms a system together with operational management, financial management. Before, during and after the combination, enterprises should put operational management, financial management and tax management under the same framework, and coordinate the relationship between the three, so as to ensure a smooth combination and provide protections of the good functioning after the combination.