With so many transactions, mergers, and acquisitions within companies, it is extremely
important to have adequate tax staff that carry the necessary skills and expertise to care
out the engagement successfully and efficiently. The tax staff must be familiar with the
industry to company operates in and all the facts about the company (Sawyers & Gill,
2020). They must consider all facts such as the type of entity to company is, where it
operates, its current and future goals, any special tax implications that affect the
company, etc. They must also be aware of any issues that relate to or may arise from
the company's transaction, merger, or acquisition. Lastly, they must be up to date with
all the tax laws, especially, as mentioned before, the ones that apply to the company.
Ensuring your tax staff have all the skills to gather and analyse this data, allows for them
to plan out the engagement, as well as, plan out any tax research that may be
conducted. With this they can thoroughly, smoothly, and efficiently complete the
project, which saves the staff time and stress, as well as, saves the company time and
money.
Tax planning is important during sales or acquisitions of a company for these reasons. It
is important to plan out the sale or acquisition and be familiar with the current tax laws
and market conditions, as these have an impact on things such as cash flows and closing
conditions (Sheffield, 2020). Planning out the tax project allows for a smooth process
that reduces costs and headaches for both parties. Additionally, tax planning helps the
company decide the treatment of the sale such as an equity or asset sale.
• In the prevailing business landscape, which is characterized by many transactions,
mergers, and acquisitions (M&A) within organizations, it is imperative for
companies to hire and maintain several tax staff members. The role of tax
professionals is of strategic importance when it comes to financial transactions
and the adoption of growth strategies like M&A. Each of the transactions can
lead to a distinctive tax-related implication. The staff from the tax department
can use their expertise, prowess, and knowledge in the area to highlight how the
tax position of the company may get affected by engaging in diverse financial
activities. Even after transactions come to an end, the role of tax professionals is
important since they can make computations to check that the appropriate
income tax considerations have been accounted for in M&A transactions.
The staff from the tax department can influence the financial performance of the
company by making sure that effective tax-related strategies are implemented when
companies merge with another entity or acquire another business. By having an
adequate number of staff in the tax department, it is possible to ensure that the
possibility of errors and mistakes can be minimized or eliminated. Some of the vital
activities that will be carried out by them are performing tax due diligence, tax
structuring, giving advice on the implementation of offshore and domestic funds,
ensuring compliance with relevant tax-related regulations, and harmonizing tax policies
and reporting processes and protocols (Deloitte India, n.d.)
• The role of tax planning during a sale or acquisition of another company is of
paramount importance. Robust planning can help to mitigate issues that may arise
due to tax liabilities. By emphasizing tax planning, professionals from the tax
department can carry out due diligence before making any attempts to structure
the asset of another entity. A robust tax plan will help a business entity not only
to identify tax liabilities but also quantify them (Cooper & Nguyen, 2020). A well-
defined tax-related plan can help a business to ensure that all the relevant tax-
related regulations have been met by the acquired firm and hence the possibility
of discrepancies and future tax-related complications can be averted. When tax
planning is done in a timely manner, it can help to minimize tax liability and
optimize the financial gains from a transaction involving the sale or acquisition of
another company. It will help to adopt a more focused approach by businesses to
reduce the tax burden in a professional and strategic manner (Cooper & Nguyen,
2020).
Reference
Cooper, M., & Nguyen, Q. T. (2020). Multinational enterprises and corporate tax
planning: A review of literature and suggestions for a future research agenda.
International Business Review, 29(3), 101692.
Mergers and acquisitions: Tax implications, Strategies, splanning. Deloitte India. (n.d.).
https://www2.deloitte.com/in/en/pages/tax/solutions/mergers-and-acquisitions-tax.html
Sawyers, R., & Gill, S. (2020). Federal Tax Research (12th ed.). Cengage Learning US.
https://mbsdirect.vitalsource.com/books/9780357366448
Sheffield, J. (2020). Tax Considerations for Today’s Mergers & Acquisitions. Bartlett, Pringle,
& Wolf, LLP. https://www.bpw.com/blog/2020/07/10/tax-considerations-for-todays-
mergers-acquisitions/
