Analysis Of China’s A Share Market Taxing Issues In Backdoor Listing

Backdoor listing can broaden the financing channels for the development and growth of enterprises to provide a stable, long-term sources of funding. Companies can be listed in two ways, the first one is the initial public offering(IPO), the second is the backdoor listing. Companies listing through IPO usually have strict requirements. Because they can not comply with all conditions, so a lot of companies will give up this approach. Naturally, backdoor listing as an alternative way for enterprises to get listed qualifications, was favored by more and more companies. With the prosperity of China’s capital market and increase of corporate finance awareness, backdoor listing has been given a lot of attention by many companies. Studying of the issue of the shell companies appeared in stock market, mergers and acquisitions and backdoor listing has great significance for the health and sustainable development of China’s capital market. In the past instances of backdoor listing, companies consider more benefits in perspectives of financing, strategy and business, lack of consideration of tax problems. However, although the tax issue is not the key factor to the success of backdoor listing, but it is an important factor can not be ignored. When designing backdoor listing program, carry out a comprehensive and detailed analysis in tax can not only accurately measure restructuring income, you can also prevent the risk of tax after restructuring.Based on this, the paper comprehensively analyzes the tax treatment of the corporate income tax, value added tax, business tax, stamp duty, land tax and deed generated during the whole process of backdoor listing combined with a backdoor listing instance, and summarizes the shortcomings of mergers and acquisitions of tax law system and made a perfect proposal.In addition to the introduction and conclusion, the paper totally has four parts. In the first part, it describes the introduction of backdoor listing. The second part is to analyze the legal basis of the tax regulations of the backdoor listing as well as laws and regulations. The third part is to analyze the tax treatment of the corporate income tax, value added tax, business tax, stamp duty, land tax and deed generated during the whole process of backdoor listing combined with a backdoor listing instance. Finally, the paper summarizes the shortcomings of mergers and acquisitions of tax law system and made a perfect proposal.The first part describes the concepts of backdoor listing. Including two contents, the introduction of related concepts of backdoor listing and motivation of backdoor listing. The first content is the introduction of related concepts of backdoor listing, including the definition of backdoor listing, the mode of backdoor listing and the step of backdoor listing. The main mode of backdoor listing are group backdoor listing, forward merger backdoor listing and reverse merger backdoor listing. Steps of backdoor listing are four, the first is choosing an ideal shell company, the second is turning the shell company into a net shell and the last is putting the high-quality assets into the shell company. In the second content, the author analyzes the reasons of backdoor listing.The second part analyzes the legal basis of the tax regulations of the backdoor listing as well as laws and regulations. It is constituted by three contents, the analysis of the legal basis of the tax regulations of the backdoor listing, the analysis of laws and regulations of mergers and acquisitions in tax., the introduction of the conditions required for the special tax treatment and the Comparison of the different tax treatment of general tax treatment and special tax treatment. In the first section, the author based on two aspects, which is taxability theory and the principle of tax fairness theory, to analyze the legal basis of the tax regulations of the backdoor listing. Taxability theory include profitability, profit and nonprofit. In the discussion of whether backdoor listing need to be taxed, the author based on both three elements. In the discussion of the principle of tax fairness theory, the author analyzes the reasons of the taxpayer’s particular attention to tax fairness. Because backdoor listing is a double-edged sword, we should develop and improve the mergers and acquisitions tax laws and regulations on the basis of the principle of tax fairness theory. In the second section, the author summarizes the current effective tax laws and regulations based on the classification of income tax, turnover tax, property tax and act tax. In addition, the authors also elaborated on the tax treatment of all taxes generated in the process of backdoor listing, such as, corporate income tax, value added tax, business tax, deed tax, land tax and stamp duty. In the third section, the author introducts the conditions required for the special tax treatment and the comparison of the different tax treatment of general tax treatment and special tax treatment.The third part analyzes the tax treatment of the corporate income tax, value added tax, business tax, stamp duty, land tax and deed generated during the whole process of backdoor listing combined with a backdoor listing instance. In the first quarter from the two dimensions of restructuring background are introduced; in the second quarter from holding, net shell and into the shell three steps will give a detailed analysis and demonstration combining with the case of the backdoor listings process in the third quarter from holding, net shell and into the shell three steps, analysis of each step involved in tax details; the fourth section is combined with the case, the tax treatment of backdoor listing summary and prompt, mainly includes the following two aspects: the first one is about the question of whether equity transfer of the stamp duty tax. Controversy is the different understanding from the “Enterprise restructuring ” in the “Enterprises signed by restructuring based on property rights transfer from decals”, so some people think that stamp tax should be levied in the equity transfer, some people think that stamp tax should not be levied. After the analysis process, the author tends to be duty-free. In view of the above issues exist for a long time, has not been clear, the author suggested that the state administration of taxation, bureau of finance, accurate, clear policy as soon as possible, to regulate the tax treatment in the process of backdoor listings, make plans to backdoor listing enterprises in the tax laws when processing; the second is in the process of backdoor listings, companies in the equity acquisition, asset acquisition or merger, the payment will directly affect the way of enterprise can satisfy special tax treatment, and then have important influence on enterprise income tax of pay, this is the most can reflect tax flexibility and will be an important part of the tax planning by reasonable institutional arrangements. So the author suggested that before the restructuring behavior occurs, on the premise of reasonable business purpose, active learning and research the related provisions of the tax law, fully and correctly apply tax breaks, precise control and guard against tax risk.The fourth part summarizes the shortcomings of mergers and acquisitions of tax law system and made a perfect proposal. In the first section, the author summarizes the shortcomings of the mergers and acquisitions tax legal system, which are low potency, lack of systematic defects and incomplete. In the second section, the author made three suggestions. The first one is defining the legislative principles of Tax Laws of mergers and acquisitions and insisting the principles of tax regulation, the principle of tax neutrality and the substantive taxation principle. The second is improving the level of legislation of mergers and acquisitions in tax. The third is to improve the specific tax system of mergers and acquisitions.