Japanese group AB set up a manufacturing enterprise A and another manufacturing enterprise B in the same city in Guangdong Province, respectively responsible for different products. From 2009, due to the increasing labor costs in China, the declining sales and other reasons, in order to integrate the business of the manufacturing enterprises A and B, to improve the rational allocation of personnel and to optimize the utilization of resources and other purposes, Japanese group AB decided to consolidate Company A and Company B.
In 2009, our team participated in the consolidation.
Tax analysis in the early stage, including the comparison between the consolidation and the merger, consideration of the surviving party; related problems during the consolidating process; the applicability of special tax treatment; possible issues that may be encountered during the cancellation of the consolidated enterprise; the transition stage of business, etc.;
Japanese group AB decided to conduct in the form of merger and choose Company A as the surviving company.
We made preliminary communications with the in-charge tax authorities of Company A and Company B respectively about the feasibility of special tax treatment and started the merger, including the approval of foreign trade and economy department and the filing of special tax treatment at the tax bureaus.
The merger of Company A and Company B was successfully approved by the foreign trade and economy department, and the tax bureaus also accepted the application materials of special tax treatment. However, due to the lack of experience in special tax treatment by the in-charge tax authorities, as of June 2013, the in-charge tax authorities were still in discussion about the operation method of special tax treatment, thus Company B also failed to carry out the cancellation procedures.