Research On Tax-free M&A Policy Of Chinese Enterprises

M&A is short for mergers and acquisitions and it is one kind of transfer of property rights in essence.From macro-perspective,it is not only resource of integration for the company,but one way to reduce the cost increasingly.Actually,M&A could help one company become bigger than before in a very limited time.Also in the micro-way,M&A is the excellent method for one country to change the model of economic development and achieve strategic adjustment of economic structure.As a matter of the fact,it is one powerful weapon for industry consolidation.At present,there are a lot of difficulties in the development of the economy and the structural overcapacity in some industries is the biggest concern.So our government has taken many policies to help the companies through the embarrassing situation and encourage industry consolidation and restructuring,improving the quality of the economic development.Taxation will be one cost burden when companies make the choice of M&A and,in some case,is the key factor determining the results of M&A.Although the taxation of M&A was established in 2009,still there are many problems in both theory and practice.Thus,in order to further cooperate with China's pace of economic structure,tax policies need to be further improved,promoting the enterprise resources integration.This paper consists of five parts.The first part focuses on the study of the background,introducing the relevant theories of both Chinese and foreign scholars on research results;The second part introduces the basic concepts and different kinds of tax free M&A and two main reason for which the Internal Revenue Service offers the delay of tax for M&A.According to the history of the establishment of American tax-free M&A,the paper then describes the basic principles for tax-free M&A,which are the basic stone of tax-free M&A;The third part introduces not only the China's M&A practice including the different stage of China's M&A development and the basic feature as well as the trend in the future,but also gives the description of the foundation of the M&A tax system according to the time,and the policies established since 2008 becomes a focus.The fourth part plays the most important role in this paper.This part mainly analyses all kinds of issues of the current tax-free M&A policies,including the regulation of the basic principles and the controversy in practice due to the fuzzy of the tax-free M&A policies.Meanwhile,there still exists mistakes in the payment of stock and the form of tax-free M&A in our country is relatively single.And the tax plan is quite easy for the company in the practice of M&A,which directly lead to the loss of the financial revenue.Furthermore,the unfair status between an institutional shareholder and a natural person shareholder does exists in the practical transaction processing;The fourth part not only introduces the China's M&A practice and the foundation of the M&A tax system according to the time,but mainly analyses the problems in the M&A tax system of both theory and practice;The last part offers the suggestions on perfecting the tax-free M&A policies.