Mergers And Acquisitions, Tax Planning

Since mid-80s of last century, especially since the 90s, with more andmore clear trend of global economic integration, corporate merger waveworldwide is higher and higher. As an effective means to expand marketshare swiftly, build scale effect, save operating cost and optimize capitalcomposition, merger is more and more favored by multinationalcompanies. Currently, domestic merger business has already become onebeautiful landscape in capital operation field, bringing forth great effecton enterprises and the whole society and economy. It should be noted thatmerger is a rather complicated process; meanwhile, merger cost(including tax cost) has a direct influence on the success of merger.Therefore, tax planning in the process of corporate merger and reductionof merger cost from the angle of taxation as much as possible is of greatpractical significance. The thesis aims to summarize possible tax planningsteps and planning principle in corporate merger, so as to find the way forenterprises to realize the maximum economic benefit in corporate merger.Ⅰ. Main contents and viewpoint The thesis is divided into three parts, the main contents and viewpointare as follows: Chapter One: Theoretical background of tax planning in corporatemerger. It will be narrated in three sections. Firstly, it defines andanalyzes the denotation and cause of tax planning in corporate merger.Corporate merger is an investment behavior of an enterprise to controlanother enterprise through acquiring part or all of its property rights undermodern enterprise system. Merger is one of the most approaches forenterprises to obtain external resource and contrive expandeddevelopment. As an important economic factor to influence merger cost,taxation is an important elements that can't be neglected in the process ofmerger decision-making and execution. Tax planning in merger is that theconcerned enterprise makes coordinated arrangement by selecting mergermodes, so that the proposing enterprise, merged enterprise and theirshareholders can fully enjoy various taxation preference provided for bytaxation law. Active planning which aims to enable the enterprise to makeuse of taxation preference to the utmost to realize minimum taxationbecomes the motive of tax planning. There are essential differencesbetween tax planning, tax evasion and tax dodging in respects of lawbehavior, morality, legal consequence, presentation form and effect onnational economy. Secondly, it thoroughly analyzes the basic theory oftax planning in merger, finds the theoretical source of tax planning fromthe angle of economics. "Rational Person" theory, "Public Goods" theoryand Richard A.Musgrave taxation effect point theory become theoreticalsupport of tax planning in corporate merger. The body of tax planning iseconomic organization, which is a "Rational Person" and seeksmaximization of self-interest, and shows the nature of hastening towardinterest and avoiding harm. "Public Goods" theory tells us that spendingless or no expenses on tax will not influence the right of the enterprise onpublic goods. The quality of uncertainty, concealment and unparallel ofenterprise compensation asked by the government is the underlyingmotive for enterprises to make tax planning subjectively. Taxation effectpoint theory tells us that taxation influences various steps of corporateeconomic operation, and that tax planning is of great significance forenterprise financial management, specifies planning steps and directionfor enterprise tax planning, and offers theoretical basis for the necessityand practicability of tax planning once more. Based on above theoreticaldiscussion, the thesis finally focuses on current domestic merger-relatedtaxation policies, mainly on merger-related taxation preferential policies,shareholding equity investment taxation policies and corporate mergertaxation policies, specifying the reality and feasibility by which currentmerger-related taxation policies can offer planning for corporate mergertax planning. Chapter Two: The practice analysis of tax planning in corporat...