An Analysis On The Source And Level Of Income Tax Synergies In M & A

M & A is a very important transaction mode in modern capital market.Enterprises can reach the goals of expanding enterprise scales,breaking industry barriers and raising profits in a relatively short time.Today,the form of M & A transactions are more complex,more attention to synergies.At the same time,with the gradual improvement of our tax system,enterprises in M & A transactions have paid more attention to the impact of tax on M & A decisions.Based on this background,this paper analyzes the synergy of Income tax from the theoretical and empirical aspects,and put forward some suggestions on M & A transaction decision.In the part of theory analysis,this paper firstly introduces the definition of M & A,and makes clear that the types of M & A in this paper mainly include stock acquisition,asset purchase and merger.Secondly,the definition of synergistic effect is also explained,synergies typically include operational synergies,managed synergies and financial synergies.The research direction is identified as the acquisition and the factors influencing the synergy of income tax.This paper elaborates the main forms of the synergistic effect of income tax,including the asymmetric effect,the tax shield effect of interest,the tax shield effect of depreciation,the tax preferential effect and the deferred tax effect.This paper explains the influence of different income tax synergies on M & A decision from three aspects including the target selection decision,the M & A transaction decision-making and the M & A integration decision-making.In the empirical research part,this paper is based on the listed companies data of M & A transactions completed in China in 2009-2013.In the descriptive statistical analysis,this paper makes a statistical analysis on the income tax synergistic effect of M & A enterprises.The results show that the proportion of enterprises that obtain the synergistic effect of income tax through M & A is low,and the level of income tax synergistic effect is low.The type of transaction and the mode of transaction will also affect the level of income tax synergies,and the study finds that the higher the income tax synergies can be obtained by adopting equity acquisition and tax free merger.In the regression analysis,we use the Variety of Effective Tax Rate as the dependent variable and set up explanatory variables according to the five synergy effects of income tax.In order to ensure the accuracy and completeness of the study,this paper also analyzes the synergistic effects of operational synergies and managed synergies respectively in the regression analysis.The results show that the relevant variables that have significant effects on the level of M & A income tax synergies in China include the Variety of ROA,the Variety of Total Assets Turnover,the Variety of Ratio of Profits to Costs,the Variety of ROE,the Variety of The Density of Fixed Assets,the Variety of The Level of Tax Incentives,the Variety of Inventory Turnover,the Variety of interest-bearing debt ratio and so on.The higher the profitability of the enterprise,the higher the turnover rate of fixed assets,the moderate density of fixed assets and the capital structure,the higher the level of income tax synergies obtained by company.At the same time,companies should also pay attention to tax incentives before and after the merger changes.On the basis of the theoretical analysis,this paper have summarized the results of the empirical analysis and compared with the related variables hypothesis.Finally,the paper gives some suggestions on the improvement of Income tax synergies on the basis of the correlation theory and empirical analysis.This paper suggests that the companies should focus on improving the profitability of enterprises and make full use of tax asymmetric effects;adjust the leverage ratio and asset structure,rationally use the tax shield effect of interest and depreciation;carefully select tax incentives to avoid the increase of the actual tax burden;rationally choose the type and mode of M & A to improve the level of corporate income tax synergies.