[Taxation] Tax Incentives for Company Reorganization

The Business Mergers and Acquisitions Law (M&A Law) contains a number of tax incentives to encourage business reorganizations (including mergers, divisions and share exchanges) and improve operational efficiency. If a company acquires the assets or shares of another company and pays for the acquisition with its own voting shares, and if the total of such shares exceeds 65% of the value of the acquired shares, the following tax incentives are available:

•All deeds and certificates so created are exempt from Stamp Tax. •The title of acquired immovable property is exempt from Deed Tax. •Transferred securities are exempt from Securities Transaction Tax. •Any commodities or labor services transferred are deemed to be outside the scope of Business Tax. •If the company owns land after a transfer has been declared and the value has been confirmed, title should immediately be transferred and registered. The Land Value Increment Tax liability of the existing land title holder may be registered in the name of the company acquiring the land after the merger/consolidation and acquisition. If the land is further transferred, the Land Value Increment Tax must be paid on a priority basis over all liabilities and mortgages arising from proceedings relating to the disposition of the land.