Guides

As expected, the global economic crisis set off a tidal wave of austerity measures, with many countries reforming tax systems and devising plans to claw back revenue. Business growth stalled further as a result, leading to another slump in M&A activity. In a bid to redress imbalances and increase competitiveness, countries around the world have started implementing tax incentives to increase attractiveness and encourage further transactions. There’s been movement in the pharmaceutical, energy, life science, healthcare and technology sectors in particular; signs are M&A activity is on the up. Businesses are looking to join forces to better exploit economies of scale, driving M&A activity. So, despite a cautious mood, there are opportunities. Buyers are cash rich. The economy is stabilising. Now is the time to get back into the market. When considering M&A, there are three key areas of legislative change to bear in mind:
1) measures to increase attractiveness of regimes, e.g., Indonesia, Puerto Rico, Russia and Singapore,
2) tightening of tax rules surrounding the carry forward of tax losses, e.g., France and Italy, and
3) strengthening of regulations limiting the tax deduction of interest (i.e., thin capitalisation rules), e.g., Ireland, the Netherlands and Russia. As ever, multinationals should stick to key principles: remain sensitive to economic and market conditions; keep abreast of the latest tax rules and regulations; and do your homework to understand the opportunities your business presents to you and your stakeholders. Careful planning of your transactions across multiple jurisdictions will ensure you maximise your tax advantage throughout the life cycle of your investments.

Digital version of the guide.