Rigorous tax planning is essential at all stages of an M&A transaction. The desire to minimise tax costs and maximise value creation means the parties to a transaction must think carefully about the optimum deal structure to be employed and how integration is conducted. The insights in this guide highlight the approaches being adopted in various jurisdictions.
Regional experts from Deloitte emphasise the value of post-merger integration (PMI) planning in casting their spotlight on China, India, Japan, South Korea, New Zealand and Southeast Asia. Taxation has a critical role in PMI, at which stage the proposed benefits of achieving synergies and cost savings should become a reality.
Staying with the theme of value creation in M&A deals, the article from Deloitte Spanish Latin America highlights the strategic tax options that are available to companies after a transaction as shareholders seek early delivery on their expectations. Latin America represents significant opportunities for dealmakers, given its demographics and market potential, but an understanding of the local tax regulations is vital to the success of transactions.
Returning to Southeast Asia, KPMG China analyses the potential exit routes for domestic and international private equity funds as the country opens up. Regulatory updates are expected as the tax authorities aim to stay abreast of the latest developments and provide clarification in areas of uncertainty.
The authors from KNAV India note that changing paradigms in the way business is conducted have led to the adoption of aggressive tax strategies and the shifting of profits to jurisdictions with low or no tax. Tax authorities have responded with new measures and increased scrutiny, and buyers and sellers are therefore well advised to assess the estimated tax cost of deals in a booming M&A environment.
Our contributor from Deloitte Greece identifies several grey areas in M&A deals in the jurisdiction and the hot topics as the number of transactions remains high. The scope of due diligence, the VAT treatment of due diligence fees and transaction costs, and the corporate income tax deductibility of acquisition debt are considered, with a theoretical example of a carve-out to illustrate key points.
Herzog Fox & Neeman sets out the options available in structuring M&A deals in Israel as transactions involving a stock consideration become increasingly common in light of rising interest rates and cash being used for other purposes. The overriding message is that there is no ‘one size fits all’ approach, and the decision on a structure to maximise the tax benefits of a deal is driven by the aims and circumstances of each party.
The authors from burckhardt move a stage beyond M&A transactions and consider post-acquisition restructuring measures in Switzerland as the companies involved strive for efficiency. The article explains the tax implications of an intra-group restructuring and evaluates the different approaches.
With M&A deals on the rise and their structures reflecting changes in the business environment, strategic tax planning will continue to influence the success of transactions.
Click here to read all the articles from ITR’s M&A Guide 2023.
