When navigating cross-border mergers and acquisitions (M&A) or restructuring transactions in China, Hong Kong, and beyond, tax planning is a crucial aspect that requires careful consideration. The choice of transaction model, eligibility for special tax treatments and the potential post-transaction tax implications are all important factors for the overall success and efficiency of the deal. We provide the following tax advisory services to our clients:

Tax advisory on deal structure and arrangements

There could be complex tax risks in the M&A and restructuring activities. Properly planning and control of such potential tax risks is crucial for the success of the M&A or restructuring. We are experienced to provide tax advisory services to our clients regarding the deal structure and arrangements, including negotiation support from the finance and tax perspectives. For example, we advise on whether “asset deal” or “equity deal” model should be adopted. Generally, an asset deal can better shelter the buyer from the historical exposures of the target company, compared with an equity deal (e.g. share transfer and merger, etc.).  However, the tax cost under an asset deal is usually higher than an equity deal. We will advise the model based on our client’s objectives and needs. We will also provide advices relevant post-deal tax implications upon the completion of the M&A and restructuring.

Tax due diligence and internal tax health check

Generally, tax authorities will strictly scrutinize the relevant companies’ previous tax compliance status, especially for the companies that will be de-registered, merged or relocated during the M&A or restructuring process.  On the other hand, the relevant companies’ financial status and tax treatment in relation to their previous operations may also affect the tax treatment of the M&A and restructuring transactions.  Therefore, it is recommended to conduct a systematic tax due diligence or internal tax health check on the corresponding companies before implementing the M&A or restructuring transactions. We have the expertise in these areas.

Improvement of tax internal controls

An effective tax internal control system can facilitate a company’s tax compliance, minimize potential tax risks and identify possible tax planning opportunities on a timely basis.  We are able to provide various advisory and implementation assistance services to our clients, based on our in-depth analysis of tax regulations, timely understanding of tax authorities’ detailed requirements and practice, as well as the “best practice” of other companies.