Tax planning for cross-border M&A of “dual-tax” company

Abstract

When an enterprise cross-border mergers (M&A) and acquisitions, it is bound by two national tax laws at least, and directly affects cost in M&A and benefits after M&A. On the basis of reviewing past literature, after-tax income, M&A costs and income tax credit of both sides of M&A are analyzed in four kinds trading patterns of taxable M&A “dual-tax” company by comparative analysis, and found that taxable stock M&A with no incremental tax base more easily accepted by both sides of M&A. If the target company and its shareholders can make the acquirer pay in fair market value more than the target assets, which can accept taxable asset acquisitions with incremental tax base. If the acquirer can pay under their willing payment price, or the target company had a net operating loss, they are willing to choose taxable asset acquisition with incremental tax base.