Resurgence in Global M&A Expected for 2011 as New Fiscal Policies Implemented to Address Budget Deficits
Taxand, the world's largest global organisation of tax advisors to multinational businesses, predicts an increase in transaction volumes going into 2011. As governments across the globe introduce new tax legislation to cope with budget deficits, opportunities and pitfalls need to be considered to ensure maximum value from deals can be achieved.
The Global Guide to M&A Tax, launched by Taxand, identifies the key legislative changes to transaction taxes in over 30 countries across the globe, highlighting how to develop strategies to deal with this change and reminding multinationals of the importance of maximising tax opportunities in M&A.
By way of example the delay in forming a new government in the Netherlands has led to the introduction of anti-abuse legislation on interest deductibility being postponed. By refinancing now before the new rules are implemented, significant tax savings can be achieved. Another key legislative change in Germany introduces a relaxation in German loss trafficking rules which may benefit M&A deals with loss companies but further changes could result in loss carry-forwards being forfeited in particular circumstances of negative equity, without proper planning.
With M&A suffering in 2009 in the wake of the global financial crisis, the EUR384bn of transactions, predominantly in the financial services, energy, mining and utilities sectors, was down by 55% in value compared to 2008. However, 2010 has seen noteworthy movement in the pharmaceutical, energy, life science and healthcare sectors, which should flow through to 2011.
Ian Fleming, Taxand's Global Transaction Tax Leader, said:
"The rise in M&A activity, during a period where Governments are implementing new tax policies to deal with their budget deficits, has led to new opportunities and pitfalls which should be considered to get maximum value from deals.
"Current sentiment conveyed by the debt markets confirms the importance of leverage in transactions, yet a worrying number of companies often do not consider the tax strategies that can be implemented to positively impact this part of a deal.
"With an increase in M&A activity expected, multinationals should be thinking about strategies to structure debt in a tax-efficient manner. Every transaction has tax implications. Many create tax opportunities that companies overlook in the rush to get the deal done. We believe our guide, which answers the top tax treatment questions dealmakers need to consider when undertaking any buy or sale by country, provides some of the insight needed to identify these opportunities."
Also published in GT News - 4 November 2010
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