Income Tax Issues, Mergers And Acquisitions In China

M&A consists of Amalgamation and Acquisition,and refers to 'the activities concerning transaction of property rights that an enterprise conducts in order to acquire the masterdom of other enterprises under the market mechanism' in its nature. Via M&A the enterprise can effectively realize the rational configuration of resources, expand the scale of production and operation, accomplish the longitudinal integration and coordination effects, lower the transaction cost and achieve the target of profit maximization. The activities of M&A in western countries started as early as in the second half of 19th century and so far there have been five large-scale M&A tides successively. In China, although with a short history, M&A has developed at a quite rapid rate in recent years. In particular, with the requirement concerning 'driving the orderly circulation of property rights' advanced in the Third Session of the Sixteenth CPC Central Committee and the formulation of accession mechanism concerning 'M&A by foreign investors', it is foreseeable that there will be another new M&A tide appearing in China.Taxation plays an important role in activities concerning corporate M&A and the changes in taxation system will have a direct influence on the decision-making of related interests and determine the success or failure of M&A. While as a transaction activity of property rights, M&A mainly involves in the issue of income tax; thereby, to complete the M&A income tax system in China has a significance of importance for promoting the smooth progression of M&A and further accomplishing the virtuous interaction between taxation and M&A activities.This thesis has a comparatively complete and meticulous gathering of current M&A income tax system in China respectively from the angle of acquired enterprise and that of acquiring one, and puts forward complete suggestions in compliance with China's national conditions for problems existing in China's M&A income tax system via using the practices of foreign ones as reference.