Research On Income Tax Policy Of Company’s M&A Deals

Merger, acquisition (M&A) and reorganization, which are effective means of market resources allocation, are important way of company’s capital operation. We can say the M&A and reorganization are often worked relevant to market. Since the reform and opening up, due to further development of market economy, national economic structure strategic adjustment and global financial crisis, the M&A and reorganization of enterprises become more and more activity. There is no denying that M&A and reorganization play important role in strengthening resources integration, adjusting the stock of capital, optimize the allocation of resources and improve the overall competitive ability. Although tax is not a main driving factors of M&A and reorganization, but all M&A and reorganization have to consider the effect of tax; on the other hand, the tax usually become the decisive factor of the success of M&A and reorganization. M&A and reorganization involve circulation tax, income tax and other taxes. Among them, the income tax is the most complex, and it has the most widespread impact on M&A and reorganization. Income tax cost is an important part of M&A and reorganization cost. It influences the M&A and reorganization decision and payment option. Therefore, income tax policies of M&A and reorganization become an important considerable factor when transaction occured.Preferential tax policies is an effect way of country which often used to express its intention. Our country encourage and support M&A and reorganization which are in favor of optimal allocation of resources from a series of income tax policy of M&A and reorganization issued by the state.Since the implementation of new enterprise income tax law, our country has successively promulgated [2009] No.59 files (issued by the ministry of finance and the state administration of taxation) and [2010], No.4 files (issued by the state administration of taxation), forming a relatively complete framework of income tax policy on M&A and reorganization. In recent years, with the introduction of [2014] No.109 and [2014] No.116 files (issued by the ministry of finance and the state administration of taxation), the income tax policy on M&A and reorganization has been further improved. The paper includes:what is the framework of income tax policy on M&A and reorganization, what is the difference compared with western developed countries, to what extent these policies promote the enterprise M&A and reorganization, etc.The analysis showed the current income tax policy on M&A and reorganization has not achieved the expected effect on promoting enterprise’s reorganization. Investigating the reason, we find that the current income tax policy on M&A and reorganization have some shortcomings. Such as low law level, lack of system, narrow scope of duty-free M&A, high proportion requirement of duty-free M&A, the regulations lack of operability, governments hindering the cross-regional M&A and reorganization, etc.To solve above problems, this paper puts forward the improvement advices: expanding the scope of the duty-free M&A transactions, improving the legal level of related policies and regulations of M&A and reorganization, properly decreasing the proportion requirement of share purchase and asset purchase, decreasing the proportion requirement of share-based payment, perfect the tax legislation of tax policy.Previous studies mostly stood on the position of enterprise to discuss how reduce the tax cost by using the tax planning in the process of M&A and reorganization. From the perspective of the government, this paper researches three important problems which are whether the income tax policy of M&A and reorganization is indeed promote the M&A transactions, the current problems of M&A and reorganization and how to perfect the relevant policy.