2010
| In the last two years, we have seen unprecedented fluctuations in the market economies on a global scale. Whilst a level of uncertainty remains, it appears the concerted massive government interventions have averted a global financial meltdown. Confidence is starting to return, credit taps are unlocked and the stock market is in recovery mode. The road to recovery is likely to be long and bumpy, however the cautious optimism of the current markets is presenting opportunities for M&A, particularly in the Asia Pacific region which is still the fastest growing and most economically attractive region in the world. In addition, Asian banks, with relatively unimpaired balance sheets, are taking this opportunity to intermediate the massive capital needs of a growing Asia. |
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M&A activity in the Asia Pacific region is holding up well compared to that in Europe and the United States. While both the volume and deal size in the region fell steeply in 2008 and early 2009 in step with those in the West, markets across the Asia Pacific region have been lifted in the second half of the year by the remarkable resilience of the Chinese economy, which has been buoyed by a series of fiscal and monetary stimulus measures.
Our research indicates that despite a sharp falloff in the number of M&A activities, Asian financial institutions are actively exploring opportunities to expand. In this new environment however, firms are tending to adopt a more cautious approach, focusing on strengthening existing capabilities with attention to value drivers and operational details of the business being critical to success.
China, Indonesia, Australia, Korea and India have all recently taken a particularly aggressive stance towards tackling perceived tax avoidance arrangements with holding company structures seeking to take advantage of double tax treaties where there is no or little substance in the holding company. Indonesia and China have issued regulations to effectively prevent persons other than "beneficial owners" of the income from claiming treaty protection under their respective treaty
arrangements. It is becoming increasingly difficult to structure arrangements to take advantage of favourable treaty rates, unless there is genuine substance in the relevant treaty countries. Korea and India have also had notable recent court cases that have addressed this substance issue and the Australian Tax Office has also recently taken a very hard line on the perceived use of holding companies.
M&A transactions provide unique tax planning opportunities and it is also a time when potential tax risks need to be properly managed. In this "Mergers & Acquisitions Asian Taxation Guide 2010", our network of M&A tax professionals across Asia offer you valuable insights throughout the entire life cycle of the M&A process, from pre-deal negotiation, due diligence and tax structuring to post deal integration. We have prepared a summary of 15 jurisdictions across Asia, highlighting key tax issues relevant to both purchasers and sellers in an M&A deal. |
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PDF extracts of this Guide:
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Get Your Copy Here
Read more by downloading our Mergers & Acquisitions Asian Taxation Guide 2010 (revised on 26 May 2010) (pdf file, 1.4MB) for your reference. To view the excerpt for an individual section or jurisdiction, please select from the menu above.
