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Welcome to International Tax Review's M&A guide 2017. Transactional work is the bread and butter for many tax practices, and the market has bounced back strongly to near its pre-financial crisis levels, with 2016 being the third consecutive year in which overall transactional volume surpassed $2.5 billion.

However, 2016 was quieter than the record-breaking year of 2015. The overall number of deals worth more than $10 billion was around 35% lower than 2015, with the average deal size also lower at $115.4 million, but 'mega deals' such as the purchase of Time Warner by AT&T, Bayer's $66 billion purchase of Monsanto and the $52 billion merger between Sunoco Logistics Partners and Energy Transfer Partners. Qualcomm's purchase of NXP Semiconductors for around $47 billion became the largest semiconductor deal on record.

Moving into 2017, British American Tobacco's $49 billion deal to acquire the 57.8% of Reynolds Tobacco, which it did not already own, got the year off to a strong start when the deal was finally closed in January. The transaction made BAT the world's largest listed tobacco company.

However, while the market has picked up in recent years, the OECD's BEPS Project has brought new layers of complexity for taxpayers and their advisers to consider.

Permanent establishment (PE) is a key consideration in many of the jurisdictions covered in the M&A guide, as is the concept of state aid in the EU and surrounding countries. The UK's exit from the European Union has created shockwaves around the world, particularly in the UK itself and the EU, and the election of Donald Trump has thrown the long-awaited US tax reform into uncertainty, as companies are left to speculate on what form the new system will take.

There are also a multitude of domestic tax law changes, some influenced by BEPS, which are examined in the pages of this guide. I hope that you will find it informative to your decision-making when carrying out deals in the coming year.

Joe Stanley-Smith

Deputy editor

International Tax Review

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