Tax Consideration for MA in China.pptVIP

 CONTENTS Recent MA Trend Order No. 10 PRC Tax Implications for MA in China Tax Structuring of MA Deals in China Due Diligence Review on The Target Company SBASF MA / TSS Capabilities Our Track Record China = No 3 in Asia Pacific 2007 1H Vs. 2006 1H No. of deals: 1,063 Vs 879 Deals $: US$34B Vs $19B General Principles of Order No.10 Tightened control on anti-monopoly transactions Full remittance for equity or asset acquisition within 3 months after the business license is issued Endorsement for Share Swap The first PRC regulation to set out the regulatory framework for cross-border share swap as a form of payment for share acquisition of domestic enterprises The foreign investor (except for Special Purpose Vehicles) should be the overseas listed company Must engage an MA advisor. PRC Tax Implications for Equity Acquisition PRC Tax Implications for Asset Acquisition Significant MA Tax Considerations Whether the deal should be structured as an equity deal or an asset deal What type of acquisition vehicle should be used, and for cross-border deals, whether the acquisition vehicle should be formed in a tax treaty or non-tax treaty jurisdiction Whether the transaction can be consummated on a tax-free basis How old and new debt can be structured into the acquisition structure for tax objectives PRC Tax Considerations from A Holding Structure Perspective Withholding tax on capital gains derived from the disposal of the target company Withholding tax on repatriation of foreign investor’s income such as profits / dividends, interest, royalties Tax treaty protection Financial Due Diligence Typically Includes General questions, such as - corporate background - financial reporting and policies - corporate governance and controls - management and human resources - audit findings and opinion Tax position review - tax audit - review of inter-company transactions Financial Due Diligence Typically Includes (cont’d) Financ