Research on Corporate Tax Issues in Overseas Mergers and Acquisitions by Chinese Enterprises

Abstract

As the international environment continues to evolve and enterprises' demand for expanding themselves through mergers and acquisitions (M&A) increases, companies must conscientiously carry out due diligence on target companies, seek consultations on relevant laws, plan M&A matters, and other preparatory work during the M&A transaction process to guard against tax risks that may arise from corporate M&A and restructuring. During the M&A process, companies should pay attention to selecting appropriate M&A methods and structuring the M&A framework reasonably. When uncertain matters are identified, they should make good use of supplementary agreements to prevent potential tax risks. After the completion of an M&A, when faced with multiple taxation, it is important to communicate promptly with government authorities to ensure their own rights and interests. When engaging in related-party transactions with subsidiaries, enterprises should adhere to the arm's length principle to prevent tax penalties that may arise from such transactions. Companies should also promptly monitor changes in the tax laws of relevant jurisdictions to prevent tax leakage. Moreover, with international anti-tax avoidance policies and tax supervision becoming increasingly stringent, Chinese enterprises still face the risks of tax audit and retrospect after M&A activities. Therefore, it is essential for enterprises to establish and improve mechanisms for preventing and controlling tax risks, ensuring the compliance of M&A transactions and maintaining control over tax risks.