A more regular supply of credit since the end of the economic downturn means companies are looking at M&A opportunities again . The severity of the crisis in 2008 has made them more cautious than before, however there are more possibilities in the market now for those prepared to look.
Of course, where there is a deal, there is tax. And the tax affairs of multinational companies are under intense scrutiny from tax authorities under orders to contribute to cutting budget deficits.
Revenue authorities are gaining more knowledge of and expertise in tax planning of transactions, so companies need to be confident in the judgments of their tax departments and external tax advisers.
Some of the issues that are relevant to tax transactions include debt and equity financing, and how to deploy either effectively; capital gains tax liability; loss and interest carryforwards rules; the implications of deals for transfer pricing and where to locate holding companies. They are of just as much interest to tax authorities as they are to taxpayers and are topics that are covered in this guide to M&A around the world. These areas are not treated in the same way in every country.
The publication looks at jurisdictions from China and Russia in the east, to the US and Mexico in the west. It provides in-depth coverage of the issues that taxpayers have to have at the front of their minds when contemplating a merger or acquisition, giving advance notice of the priorities of the tax authorities in different countries.
Ernst & Young member firms supply articles about China, Germany, Israel, Italy, Kazakhstan, the Netherlands, Russia, Ukraine and the UK.
Eurofast Taxand and Eurofast Global write about the Balkans and why investors in the region like using Cyprus to make deals there.
Gowlings – Taxand comment on how non-residents should use corporations with high- paid-up capital to structure an acquisition in Canada.
The impact on M&A of the Direct Taxes Code, which is due to come into force in 2012, is the topic for PwC in India.
And using debt finance effectively can be the key to successful M&A in Mexico, PwC in Mexico believes.
In Switzerland, burckhardt comments on how tax efficiencies can be achieved in post-merger reorganisation through techniques such as recapitalisation.
Alston & Bird discusses how a taxpayer can qualify for a treaty-based exemption from US withholding tax on dividends.
We hope the examination of these issues can give you some valuable insights when dealing with M&A issues.
Ralph Cunningham,
Managing editor,
International Tax Review
