The research of tax preference in merger and acquisition in local enterprise

• Main Author: 林毓明
• Other Authors: 張文彥
• Format: Others
• Language: zh-TW
• Published: 2004
• Online Access: http://ndltd.ncl.edu.tw/handle/83591254323091065700

碩士 === 義守大學 === 管理科學研究所 === 92 === Increasing enterprise’s competitiveness, adapting the change of economic environment, enhancing enterprise growth and operation efficiency, restructuring organization by merger and acquisition, the government passed the law on merger and acquisition（M&A）in January 15, 2002. The government provides complete M&A plan template and eliminates the M&A tax barriers. Futhermore, the government acts as a propelling agent and grants special tax and financial incentives. The main purpose of enterprising M&A is to create synergy and increase profit, tax benefit is additional. But tax benefit promotes the M&A efficiently, i.e. The M&A of Acer saves one billion of tax, it caught mass attention. Unfortunately M&A of TECO and SAMPO happened before the new M&A legislation. It was a regret this merger could not enjoy the tax benefit. In the study, we focus on the argument between tax administration and taxpayers by the analysis of related provision and the discussion of cases. We find there are much debate existing in the complement of M&A in spite of it offers tax benefit for reducing the tax barrier. For example, the ration of the trade off in earnings and losses calculates from the ratio of share, the recognition principle and amortization of goodwill、the limitation of the amount of shareholder deductible tax in integration tax system、the recognition of tax evasion from non-arm’s-length transactions、the method of deduction of losses during the preceding years in the consolidated tax returns. All above may lead new argument. We suggest adopting a clear and rational legislation to obey for tax administration and taxpayers. The tax benefit plays different roles in the process of objective selection, negotiation and integration of M&A. In the stage of objective selection and negotiation, it gives the decision makers different direction of thinking, new way of evaluating the value of the enterprise and it now parts of the M&A strategy planning to avoid possible risk. In the integration stage, it supplies a tax plan for adapting tax benefit. The different accounting system applies to M&A has different tax saving effect. The purchase legislation adds the gain on revaluation of fixed assets and goodwill in the accounting system. After the M&A the profit and loss account would show more expense of depreciation and goodwill amortization. It achieves the purpose of saving tax. In addition, using debt instruments has financial leverage. The interest expense can reduce the tax burden. But over holding debt leads financial distress cost and agency cost. It must be used with caution. To maintain the optimal debt ration will help to attain the synergy of M&A.