A Study On Corporation Tax Burden Of Mergers And Acquisitions

Mergers and acquisitions (M&A) is the most direct way for companies to achieve rapid expansion, increase productivity, boost profit, but it also includes financial risk, personnel risk, management risk. To make a merger or an acquisition decision, in addition to the achievement, the main considerations are financing risk, payment risk and financial tax risk. Among these,tax issue is especially important. In some cases,the impact on corporation tax burden could be the direct reason for a merger or an acquisition.The new accounting standards, the new enterprise income tax law, the new business tax regulations,the new value-added tax regulations have just launched.Under these new settings, there are some changes on corporation tax burden in M&A process which should be paid attention to,especially the significant changes caused by the abolishment of State Administration of Taxation on corporate equity investment business of the Income Tax Issues and the implementation of Business Enterprise Income Tax:on corporate restructuring a number of issues of notice.When arranging the M&A transaction,while minimizing the corporate tax burden,one should obey the follow principles:no violation of tax laws, careful advanced planning,analyzing specific issues, tax planning of minimum cost. This thesis, from the perspective of acquirers, has analized the impact on corporation tax burden caused by various M&A methods (including cross-item M&A, vertical M&A, mixed M&A) and different choices of payment ways (including the cash payment, stock payment, credit and debt carry-type).The analysis of M&A cases is closely combined with the existing tax policy,which is practical and effective.This thesis provides the Henan Jiuye vs.Jiuye Heavy Industry M&A case, which introduces the background and M&A process of the case. With consideration of M&A methods,timing, payment ways and other aspects, various M&A plans are proposed. Through comparing the corporation tax burden caused by different M&A plans, it demonstrates corresponding impacts of various M&A methods and payment ways on corporation tax.Such analysis of the case has reference value for a merger or an acquisition.