The Resource Acquiring a host country business

Acquiring a host country business

Label
Acquiring a host country business
Title
Acquiring a host country business
Creator
Subject
Language
eng
Summary
QUESTIONS: 1. When a Foreign Country buyer (FCB) acquires a Host Country (HC) business from HC sellers, what are the tax differences between an acquisition of shares in a company, and an acquisition of business assets and assumption of liabilities? Please consider: -Gain or loss for sellers of shares or for sellers of assets and liabilities (amount to be recognized, nature, and in the case of loss, any restrictions on use of loss); -Advantages or disadvantages (either to the foreign buyer or the HC seller) in shares being issued rather than cash being used to pay the acquisition price; -Possible issues for sellers, if shares are used, if they dispose of the shares they receive shortly after the transaction; -Ability to use or restrictions on use of debt to finance the acquisition; -Ability of FCB to step up the tax cost (basis) in the HC target's business assets; -Depreciation of goodwill and other intangibles for tax purposes if the assets or shares of a company owning the assets are acquired; in the case of an asset acquisition or deemed asset acquisition, whether there rules for allocating purchase price among assets to determine goodwill; -Ability of the buyer to utilize preacquisition (current-year or prior-year) business losses of the HC target business; -Whether an acquisition vehicle is advisable or necessary, and whether there are advantages to using an HC vehicle rather than a foreign one. 2. If, rather than HC sellers, the sellers are foreign, how do these factors change?; -Gain or loss in the case of shares or assets and liabilities being sold (amount to be recognized, nature, and in the case of loss, any restrictions on use of loss.); -Advantages or disadvantages (either to the foreign buyer or the foreign seller) in shares being issued rather than cash being used to pay the acquisition price; -Differences in consequences to sellers disposing of shares received for the acquisition shortly after the transaction; -Ability to use or restrictions on use of debt to finance the acquisition; -Differences (if any) in ability of FCB to step up the tax cost (basis) in the HC target's business assets; -Differences (if any) in depreciation of goodwill and other intangibles for tax purposes if the assets or shares of a company owning the assets are acquired or a deemed asset acquisition occurs; differences (if any) in allocation of purchase price against assets to determine goodwill; -Whether this changes the ability of the buyer to utilize preacquisition (current-year or prior-year) business losses of the HC target business; -Whether this changes the considerations in using an acquisition vehicle, and whether this creates advantages to using an HC vehicle or a foreign one. 3. Do you see any notable changes in the answers that you have given to these questions that might come from the significant international tax changes from the OECD-driven BEPS actions or the exit of the United Kingdom from the European Union? What would those changes be, if so? 4. Are there particularly important non-tax factors that FCB should take account of? For example: -Would common agreements provide for tax representations, warranties, or indemnities that might survive through a statute of limitations (e.g., as a "fundamental representation")?; -Whose law would normally apply to the acquisition contract (e.g., it may be common to use U.S. or U.K. law in international M&A; might that be true here)?
Citation source
In: Tax management international forum. - London. - Vol. 38 (2017), no. 3 (September) ; 105 p
http://library.link/vocab/creatorName
Batista, M.A.
Geographic coverage
International
Language note
English
http://library.link/vocab/subjectName
  • acquisition
  • shares
  • sales tax
Label
Acquiring a host country business
Publication

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