Research On Taxation In Mergers And Acquisitions

Mergers and acquisitions (M&A), as forms of equity transaction, involves a series of tax law issues, including income tax and use of target's tax attributes, etc. Generally, our current tax policy regarding M&A is compatible with our economic condition and is in accordance with the international trend. However, in terms of structure and details, we need to better out tax law in many aspects. A better tax law regarding M&A will standardize transactions between economic entities and guarantee our fiscal revenue.This article will center on the establishment and perfection of our tax law regarding M&A. First of all, the article will define M&A, reorganization and other meaningful factors under tax law for further discussion. Moreover, as to income tax, through introduction of US tax law regarding taxable M&A, tax-free reorganization, their application rules and general anti-avoidance rules, some suggestions will be provided for bettering our corresponding tax law including specific rules regarding indirect tax and the use of target's tax attribute. Finally, to improve the whole tax law regarding M&A, efforts should be exerted both on basic principles and specific rules.To promote the future legislation in this area, the principles of tax neutrality and anti-avoidance should be adopted, which will keep a balance between healthy development and national fiscal revenue. In addition, some detailed rules need to be established to accomplish the purpose mentioned above.