Research On The Tax Risks And Countermeasures Of The Spin-off Of W Enterprises

In recent years,China’s population structure has tended to age,and people are increasingly concerned about the medical and health care sector and are willing to increase their spending on medical and pharmaceutical products.In this environment,China’s medical and pharmaceutical industry has good prospects for development.High-technology is the hallmark of the medical device industry,which requires sufficient financial support to ensure that product development is carried out properly.At this time,financing is a good way to obtain investment.At present,there are three main financing modes in China: firstly,loans from financial institutions,secondly,issuing bonds to raise funds,and thirdly,financing through listing.However,it is not easy for medical device companies to obtain loans from financial institutions,mainly because banks have increased their control over risk,and because the medical device industry is difficult to obtain loan approval due to the long research time and the relatively difficult results.China has strict regulations and controls on the issuance of bonds by enterprises,which is not the best choice for medical device companies that need a constant flow of funds.In this context,raising capital in the public market is a good option for medical device companies.By going public,companies gain access to more capital and expand their business scale,helping them to pull ahead in the fierce market competition.There are three types of listing: initial public offering,shell listing and spin-off listing.Initial public offerings have a higher threshold and many companies have the will to do so for a long time,so it takes longer.The spin-off has just been opened up and many companies have been scrambling to take advantage of the policy benefits of listing on the STB.However,as the laws and regulations on spin-offs are not sound,many companies may overlook the tax risks involved in the process of spin-offs,plus the fact that spin-offs are usually subsidiaries or businesses of listed companies,which involve huge economic volumes and complex tax types.Therefore,the tax-related risks of a spin-off need to be given focused attention.This thesis takes the spin-off of W enterprise as a case study.Through reading domestic and international literature and theories,and summarising the tax laws and regulations related to spin-offs,it can be found that there are some hidden tax risks in W enterprise,such as the tax risks arising from connected transactions during the spin-off and the risks arising from the failure to establish a tax risk identification and assessment system.It can be concluded that W enterprise should build a good tax risk control environment,establish a tax risk management mechanism,identify,evaluate and analyse tax risks,and enhance tax information communication to prevent and warn against the tax risks of a spin-off.Finally,based on the case of W enterprise’s spin-off,this thesis proposes tax risk response measures for spin-off companies.