Study On M&A Tax Planning Of Listed Companies

As an important way to optimize the allocation of resources，M&A is beingwidely used more and more in modern economic society, while the rising of capitalmarket in China. Tax cost is a key factor to influence the merger cost, so how couldwe do better on tax cost in the business, which is a major research in industry.The M&A has nearly30years history from buds to today, and the tax planningresearch’s depth and extent has been improved constantly. However, the system of taxplanning is still not perfect yet. This paper starts from the definition and history ofM&A; it analyzes the M&A in China since1980s, and, shows the present situationwith data chart of M&A through2007to2013. Secondly, the paper analysis the M&Ain Chinese capital market through the merger industry, the different opinions andtypes about M&A; including the common way of cash acquisitions, equity acquisition,asset restructuring, backdoor listing, management buy outs and so onThe reasonable tax planning reduces both tax costs and risks of the taxpayer inM&A. IT achieves win-win situation between the government and taxpayers;therefore it helps the government encourages M&A in capital market. The primarytask of tax planning is figuring out what kinds of taxes involve M&A, and, what thepreferential tax is. These are the key factors before tax planning. Therefore, the fourthpart of paper shows all kinds of taxes and preferential taxes about M&A in China’scapital market. And it analyses five kinds of tax payments such as value added tax,business tax, land value-added tax, deed tax, Corporate income tax. We analysis theM&A’s taxes through three typical cases which have occurred through the capitalmarket: X company equity acquisition, asset acquisition of different tax case in Tcompany and ZN company’s backdoor listing case. How to choose the acquisitiontarget, ways of merger, the payment of those factors decided the cost of M&A inactual practice. It analysis and clarifies features of tax planning through the typicalcase.In the end, the essay thinks that the tax planning is not tax evasion, hysteresis,illegal, or just details without benefit interesting; however, tax planning is necessary,advance, and legitimate. The reasonable tax planning not only reduces the tax burden,but also recognized by tax authorities.