Study On The Legal Issues Of Tax Preference In Merger And Acquisition

Originated from the western country and as one of the important forms of optimization and integration of the existing assets, merger and acquisition (hereinafter referred to as"M&A") will optimize the resources allocation, form scale economy, lower the operation costs, adjust and optimize the industrial structure. Meanwhile it is also the efficient method employed by the enterprises to cope with the increasingly intense global competition. With the deepening reform and economic development in recent years of our country, M&A has become more frequent with various and complicated forms and is playing a more and more important role in the economic development in China.The relationship between M&A and taxation is very close in that the optimization and integration of the existing assets in M&A would lead to the flow of the assets. In general, the tax system in the field of M&A was formulated in the way of amendment or supplement from time to time with the specific problem in practice without overall consideration. Such system is stable enough but lack of flexibility and is difficult to fit and satisfy the severe changes in the business environment and the requirement for the enterprise capital operation and resources optimization. Therefore an improvement in M&A taxation system is much-needed.Based on the argument on the issue of why provide tax preference to M&A transaction and from the viewpoint of the tax preference, the purposes of this Article is to analyze relevant issues of M&A and provide feasible advices on the improvement of M&A tax law in consideration of the relevant legislative experience of other countries and regions with the expectations of promoting the development of M&A activities, realizing the optimization and integration of the capital, technology, human resources and the raw materials, and supporting the enterprises and economy of our country to obtain and maintain the international competitive ability through an exact and mature M&A tax system, and eventually to promote the comprehensive national strength and realize the macroscopic readjustment and control of taxation.This Article includes four parts except for the foreword and conclusion. Chapter I is mainly related to the fundamental tax issue in M&A which introduces the corresponding tax for different M&A model and analyzes the relationship between M&A and tax. Chapter II analyzed relevant theory of tax preference from the point of view of the value of M&A tax system, indicated that the provision of tax preference to M&A activities would not only be in compliance with the basic function of macroscopic readjustment and control of taxation, but also be in consistent with the fundamental principle of taxation, i.e. being taxable only for the realized profits. Chapter III conducted a practical analysis on M&A tax preference which advances the relevant problems such as the violation of the equal principle, the ambiguity of the tax aims, etc. while affirms the positive aspect of the present tax system. Chapter IV provided the improvement advices on the M&A tax system which including upgrade the legislative level, improvement the tax-exemption conditions and other aspects based on the relevant legislative experience of other countries and regions.The innovations of this Article embodied in three aspects. Firstly, it introduced relevant value analysis of tax preference into the field of M&A and conducted relatively deep analysis on the theory of tax preference application in M&A activities. Secondly the author provided her view on the tax principles based on the application of tax system. Finally, this Article probed the improvement plan of M&A tax system of our country in terms of the system originals, legislative value orientation and the specific national circumstances in accordance with the aforesaid principles.