M&A Tax
In the process of tax assessment and audit, taxpayers, whether they are individuals or enterprises, cannot avoid tax controversies or disputes over various matters with tax authorities. Challenges can arise from different understandings of tax regulations, or from intentional tax evasion or avoidance by taxpayers. Due to China’s evolving tax laws, the specific mechanisms for the projection of taxpayers’ rights and remedies are constantly evolving. The resolution of tax disputes within a legal framework is becoming a common issue faced by both taxpayers and tax authorities. JunHe has expertise and experience in appeals and litigation to bring disputes to a successful conclusion. We are adept at making the application of tax laws and regulations clear, enabling taxpayers to mitigate potential tax compliance risks during their business.
Our Team
JunHe’s taxation law team is comprised of senior practitioners and many promising rising stars. It includes a former official of the State Administration of Taxation, lawyers from a number of premier international and domestic law firms, and a researcher from a well-known finance and taxation institution. Together, they offer our clients unparalleled strength in interpreting the subtext of macro policies, finely honed skills in analyzing practical issues, solid theoretical knowledge, extensive experience, strong communication skills, and a solution-oriented approach. The team members have abundant theoretical and practical experience in corporate restructuring and M&A transactions. They have provided legal consultancy on tax law issues in areas such as restructuring under special tax treatments, the indirect transfer of Chinese taxable assets, the establishment/removal of red chip/VIE structures, and tax due diligence review.
Key Practice Areas
Framework design for inbound and outbound investments and M&A/restructuring: assisting enterprises in carrying out investment structure analysis, tax analysis on investment/financing arrangements and feasibility studies on bilateral tax agreements;
Establishment/removal of Red Chip/VIE structures: design acquisition/shareholding/financing structures for projects, conduct tax cost analysis under various schemes, and analyze the possibility of the application of special tax treatment;
Tax due diligence review: assist the buyer/seller in the overall review of tax compliance of the target company, including legal analysis and tax exposure estimation;
Assistance in indirect equity transfers: assist the buyer/seller in tax law analysis on the indirect transfer of Chinese taxable assets, and render professional legal advice on tax laws.
Recent Representative Cases
Provided legal advice to a well-known overseas financial institution regarding tax laws on its transfer of equity in a domestic company
A well-known overseas financial institution wanted to transfer its equity interest in a domestic company. JunHe assisted in reviewing and revising the tax-related clauses and analyzed the tax filing obligations and the tax costs involved in the transaction process. After the successful signing of the transaction documents, JunHe assisted the company in completing the tax reporting and filing procedures with relevant tax authorities, and successfully applied the tax treaty benefits which greatly reduced the overall transaction costs.
Legal advice on tax laws for a well-known domestic energy company in its offshore asset acquisition
A well-known Chinese energy company established a joint venture with a foreign energy company, intending to acquire foreign assets. JunHe assisted the buyer in the legal analysis of the tax cost and the taxpayer involved in the transaction, and drafted and reviewed the relevant transaction documents. JunHe assisted the client in the negotiation with the seller and their counsel, and clarified the tax liabilities of both sides and the tax payment method.
Legal advice on tax laws for a domestic fund in the issue of the indirect transfer of assets involved in its acquisition of a domestic hospital
A domestic fund, through its parallel funds both onshore and offshore, simultaneously acquired the onshore and offshore equity of a hospital related project. Part of the acquisition transaction of the offshore company triggered tax filing obligations in China, because it fitted in the definition of an indirect transfer of Chinese taxable assets under Chinese laws. Based on the information provided by the seller, JunHe assisted the buyer in the analysis of the relevant tax filing obligation and the possible taxation costs; and, per the request of the client, assisted the client in its preparation of the relevant filing materials and facilitated further communication with the tax authority.
Legal advice on tax laws for a well-known domestic chip manufacturer in its tax due diligence review for its potential investment in a domestic technology enterprise
A well-known Chinese chip company intended to acquire a Chinese technology enterprise, and JunHe assisted the buyer in the tax due diligence review. In conducting the due diligence, JunHe reviewed the tax profiles, historical compliance status, and tax preferential treatment enjoyed by the target company. It emphasised the tax compliance status of its affiliated transactions, and the historical tax-related risks involved in the establishment and removal of the red chip structures, and analyzed the impact of these risks on the contemplated transaction. In addition, JunHe analyzed the tax implications of the employee shareholding plans of the target company, and rendered legal advice.
Legal advice on tax laws for a domestic private group company in its group restructuring matters
A domestic private group intended to introduce investors to its education business sector. As is required by the regulatory body and requested by the investors, restructuring was necessary on its existing group structure. Based on the needs of the client and according to the provisions in the relevant tax laws, JunHe proposed several restructuring schemes and analyzed the respective tax implications. The team then assisted during communications with the local tax authority and applied for special tax treatment on the corporate restructuring.
Tax due diligence review on behalf of a Chinese subsidiary of a foreign company on its real estate investment in China
A Chinese subsidiary of a foreign company intended to acquire a property in China. JunHe assisted the client in the analysis and assessment of the tax obligation and tax cost arising from the transaction, and assisted in reviewing the relevant transaction documents. In addition, JunHe also provided the client with assistance in the deal negotiations.
