M&A boomed tremendously throughout Asia in 2007 and this steady deal flow continued into the early part of 2008. Despite this robust performance, there is widespread concern over the impact of the credit crisis in the US on the global economy. The recent turmoil in global credit markets, sparked by losses on subprime mortgages, has made financing acquisitions more difficult and expensive. This has resulted in deal makers in developed markets becoming somewhat more conservative in identifying targets and making deals.
While we have seen the Asian economies go through an unprecedented period of economic development, led by the opening of China and India, there are significant risks behind the scene, particularly having regard to regulatory uncertainties and fundamental cultural differences.
Tax will typically be one of the major risks, which makes investment in Asia a complex challenge. Tax exposures may be significant enough to warrant an adjustment to the deal structure or even break the deal. On the other hand, proper planning can usually mitigate the tax cost of doing a deal and assist in maximising the overall value of the deal.
Tax is a critical part of the M&A process, which if managed properly will help to ensure a successful deal. In this 2008 Asia M&A Tax Guide, our network of M&A tax professionals across Asia offer you valuable insights throughout the entire M&A spectrum from pre-deal negotiation, due diligence and tax structuring to post deal integration. We have prepared a summary of 14 jurisdictions across Asia, highlighting key tax issues relevant to both purchasers and sellers in a deal.
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