Post on 13-Jun-2018
Transaction Tax India
Cont
ents Who we are
Our service offerings
Methodology
About Ernst & Young
3Transaction Tax – India
1. Who we area. Who we areb. The challenges we meet
4 Transaction Tax – India
Corporate reorganization
Promoter stake enhancement and delisting
Divestment advisory
Tax due diligence
Private equity/Venture capital
advisory
Financial structuring
Group restructuring
Acquisition structuring
Outbound structuring
A seamless team of professionals with multi-disciplinary skill sets consistently providing high-quality client services
Who we area.
5Transaction Tax – India
b.
Practical, implementable advice with a commercial
business mindset
Tax
Direct and indirect tax structuring to minimize tax costs
Advisory and implementation support
Corporate laws
Corporate reorganization laws
SEBI /Capital market perspective
Competition/Intellectual property law – broad implications
Stamp duty
Computation and analysis of exposure
Transaction structuring to minimize costs
Accounting
Financial statement impact analysis
Advice on accounting issues arising due
to transactions
Industry-����������
Highlighting transaction-��������������� ��
Foreign exchange/FDI
Structuring to meet regulatory norms
Assistance in seeking approvals
The challenges we meetOur comprehensive analysis encapsulates a wide gamut of tax and regulatory aspects...
6 Transaction Tax – India
2. Our service offeringsa. Corporate reorganizationb. Group restructuringc. Acquisition structuringd. Outbound structuringe. Promoters’ stake enhancement and delistingf. Private equity/Venture capital advisoryg. Financial structuringh. Divestment advisoryi. Tax due diligence
7Transaction Tax – India
Subsidiarization
Demergers/Spin-offs
Joint ventures Business/Asset sale
Expertise and experience in:
Mergers/Amalgamation
�� Designing alternative effective tax and regulatory structures
�� Meeting commercial objectives within regulatory constraints
�� Reviewing transaction documentation
�� Liaising with various stakeholders
�� Advising on integration
�� Resolving post-transaction issues
We assist in:
a.Corporate reorganization
8 Transaction Tax – India
Core competence ��������������
business
Structure in sync with
group’s plans
Holding structure to capture value
of operating companies
Structure amenable to raising funds (in India and/or overseas)
Enhancement/Unlocking of shareholder
value
Wealth management and
succession planning for stakeholders
Collapse of complex, multi-tier,
cross holding structure
The unique challenges we
meet
Group restructuringb.
9Transaction Tax – India
Withholding of tax on dividends, interest, royalties, etc.
Tax treaty network of intermediary jurisdiction
Capital gains taxation on future divestment or exit
Capital market implications
Exchange control implications
Funding options
Acquisition structuring
Advise on domestic and inbound acquisition structuring for strategic acquirers – directly or through appropriate intermediary jurisdictions
We design structures, bearing in mind tax, regulatory and relevant commercial aspects and their implications.
Acquisition structuringc.
10 Transaction Tax – India
Outbound structuring
Evaluation of alternative entity, operating and investment structures of overseas operations and investments from international and Indian tax and regulatory perspective, including inter alia:
�� Choosing entity format for overseas operations
�� ������������ ���������������������������������������������������
�� ������������ ���������������������� �����������
�� ��������������������������������������������� ��������������������� ����������������������opportunities through the use of such entities and instruments
�� Providing advise on availing foreign tax credits
�� Leveraging targets through debt push-down
We assist in:
�� ������������������������������������������������������������������������������������������������������ ��������������������
�� ��������������������������������������������������������������������������������� ���������perspective with regard to the possibility of achieving a step up of underlying assets, preservation of tax attributes, taxability in the hands of the vendor and migration of intangibles to tax-friendly jurisdictions
d.
11Transaction Tax – India
Conceptualization and evaluation of alternatives for wealth enhancement of various stakeholders encompassing:
�� Consolidation of stake and rationalization of ownership structure
�� Unlocking value in an appropriate jurisdiction
�� Wealth management and succession planning
����� ��������������������������� ���� �����
�� !���������������������������������������������
�� Ensuring timelines are adhered to
�� Identifying regulatory pressure points
�� Optimizing tax and other transaction costs
Promoters’ stake enhancement and delisting
Delisting is characterized by certain distinct challenges. We assist our clients to formulate strategies for their delisting process.
We follow the following broad methodology:
Reaching an understanding of
the ultimate objectives
Identifying alternatives
Evaluating alternatives
Providing assistance on implementation
Laying down implementation
roadmap
Formulating strategies based on preferred
alternatives
e.
12 Transaction Tax – India
Private equity/Venture capital advisory
We are aware that private equity (PE) and venture capital investors are driven by intricate considerations, which are critical to the success of transaction, while making investments. We adopt a two-fold transaction strategy in this scenario.
Transaction strategy
�� Investment and exit structuring through alternative mechanisms (IPO, MBO, LBO, stake sale, etc.)
�� "���������#�$��������������������������tax and exchange control aspects
�� Comprehensive tax due diligence
�� Review of relevant transaction documentation from a tax and regulatory perspective while keeping commercial objectives in mind
�� Capital market perspective
�� Considerations relating to PEs during the holding period:
�� Investee restructuring for shareholder value enhancement/unlocking
�� Acquisition/Divestment by investee
�� Relevant tax and exchange control implications while structuring payouts
Transaction structuring Investee considerations
f.
13Transaction Tax – India
�� Extensive analysis of each transaction, enabling conceptualization, selection and implementation of options from a tax and regulatory perspective
�� Structuring of transactions for entities in/levels at which funds should be raised or repatriated
�� IPO advisory for Indian/overseas listing
�� Instruments that should be used to raise or repatriate funds
�� "�������������� ������������������������������������%����������������������������������������reduction, royalties and management fees
�� Designing of appropriate capital structure
�� Debt restructuring
Financial structuring
Capital structuring
Fund raising
�� ����������� �
g.
14 Transaction Tax – India
� ��� ������ ���������� ����������� ���� ������������ ���unique challenges
Divestment advisory
Evaluating options – demerger, business/asset disposal, stock sale, etc.
h.
Divestment advisory
Analyzing and minimizing tax and regulatory implications:
Capital gains
Stamp duty
Exchange control
Capital market issues
Comprehensive vendor due diligence – evaluating existing structure and exit mechanics
Implementation assistance
15Transaction Tax – India
Tax due diligence is much more than a mere administrative process. It impacts every aspect of and is integral to a business transaction. In this regard, we offer direct as well as indirect tax due diligence services. Our focus areas include the following:
Tax due diligencei.
Review of tax position adopted during prior years
Review of adequacy of tax provision made
Mitigate downside risk & identify opportunities for the acquirer
Review of compliance with tax withholding requirements
Review of deferred tax
Review of indirect tax positions/status
Review of compliance with various indirect taxes (service tax, customs, excise, VAT, etc.)
12
3
45
6
7
������� �������������tax incentives and government subsidies enjoyed by a company
16 Transaction Tax – India
3. Methodologya. The transaction lifecycleb. Key differentiatorsc. Why choose Ernst & Young’s Transaction Tax professionals?
17Transaction Tax – India
project management
Implementationconceptualization
The transaction lifecyclea.
About Transaction tax
The successful completion of any transaction lifecycle is achieved through careful planning and implementation. Ernst & Young utilizes its vast experience in providing tax and regulatory services to successfully conduct and complete transactions in one location.
�� Obtaining a clear understanding of the goals/objectives a transaction intends to accomplish
�� Understanding the business, strategic plans, growth imperatives, ��������organization/investment structure, etc., of an organization
�� Taking into consideration a company’s overall risk appetite and its ability to manage/handle tax and regulatory risk
�� Assisting in formulating strategies
�� Identifying tax, regulatory and stamp duty exposures, and providing advise on their implications
�� Examining current tax holidays/������'������'�������������and exploring the possibility of their post-transaction continuity
�� Reviewing constitutional documents, pending litigation, etc.
�� Reviewing compliance with industry-/������������regulations
�� Examining alternative transaction structures from a tax, stamp duty, company law, capital market, foreign exchange/ FDI, commercial objectives, etc., perspective
�� Conducting comparative analysis of each alternative in terms of time, costs, ease of implementation, and key tax, regulatory and commercial considerations
�� Approaching the relevant regulatory authorities and coordinating with various external agencies for assistance in smooth implementation
�� Monitoring ongoing acquisition issues and identifying the required post-acquisition steps
�� Ensuring adequate documentation to protect potential tax assets
�� Ensuring that time frames for implementation are complied with
�� Providing advise on post-implementation compliance required to ensure that objectives are met
�� Ensuring integration of tax and regulatory practices of the entities involved
�� Advising on minimization of post-transaction costs, and ongoing regulatory and compliance issues
Process
Service offerings
Understanding objectives
Transaction cost analysis
Option analysis
Transaction implementation
Post transaction Integration
18 Transaction Tax – India
Approach
�� Multi-disciplinary functionality combined with client-centric approach
�� !�������� �����������������������������������������������������������
�� Innovative and implementable solutions provided through solution-driven approach
�� Single point of contact initiated for all tax and regulatory services
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�� �+���� ����������0��������������������������������������������8������������
Critical mass
�� A focused team with an optimal mix of professionals who are dedicated to the Transaction Tax practice
�� "�9��������9� ���������$�����������������������0�����������������
�� "����������� �������������������������$��������������������� �����������������������������and share knowledge
Transactions experience
�� Proven capability in planning, execution and service delivery
�� ������������������%�$���������� ���������������������������������
Global network
�� Seamless access to our Global Tax network
Key differentiatorsb.
19Transaction Tax – India
�� Our experienced teams, with strong PE and corporate credentials, can provide proactive advice, e.g., on anticipation of potential pitfalls and guidance on key issues
�� Our access to a global network of transaction specialists to balance our global experience with detailed knowledge of domestic market
�� +��������������������������0��������������������������������#���������������������serving clients’ needs
�� Our successful teaming — liaising with and creating teams that include specialists
�� Our commitment to deals, bringing our knowledge of the acquisition process to bear throughout the entire transaction life cycle
Why choose Ernst & Young’s Transaction Tax professionals?
c.
20 Transaction Tax – India
4. About Ernst & Younga. A global organizationb. The leading professional service brand in Indiac. 9�������������������������������;��
21Transaction Tax – India
A global organizationa.
�� Ernst & Young is a global, multidisciplinary professional services organization. It is built on the knowledge base of 152,000 personnel in 750 locations spread across 140 countries.
�� It has strong national partnerships that focus on common goals and governance with a single global strategy, code of practice and communications platform.
�� Our integrity and professional competence form the cornerstones of our global organization. Our consistent high standards of global execution are supported by standardized methodologies, technologies and governance. Strong coordination and communication facilitate continuity in service delivery.
�� Ernst & Young is a leading provider of assurance/advisory, tax and transaction advisory services to international clients in a wide range of industries, as well as to government agencies and private individuals. Our industry focus includes provision of �����=������������������������������=����������=�����������=����������=�����������������������������services to our clients.
Delhi
Chandigarh
NoidaGurgaon
Ahmedabad
Mumbai
Bengaluru
Kochi
Hyderabad
Chennai
Kolkata
Pune
People 6,600 + employees
Partner 198
����� 10
22 Transaction Tax – India
Ranked #1 for service, people, teams and relationships
@�%���HJ��������������������������������of industry and insight on business issues
Ranked #1 for responsiveness — quick to market with solutions
Ranked #1 for global integration and promotion of entrepreneurship
N������Q�����������XZJJ��������������9[�=�results for India, based on 109 interviews with CFOs, other C-suite companies, audit committees and senior management
The leading professional services brand in India
b.
Market leadershipBrand
Reputation
Operational excellence
Account-centricity
Shared values
Exec
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Exec
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Global mindset
Peop
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row
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Share
Relationships
23Transaction Tax – India
9������������������������������in India
c.
2010Ranked No. 1 on deal count
2009Ranked No. 1 in value and on deal count
2008Ranked No. 1 in deal count
2007Ranked No. 1 in deal count
2006Ranked No. 1 in deal count
2005Ranked No. 1 in deal count
2004Ranked No. 1 in value and deal count
2003Ranked No.1 on deal count
2002Ranked No. 1 on deal count
Source: Bloomberg league tablesNote: Includes merger, acquisition, divestiture, selftenders (excludes buy back transactions )
24 Transaction Tax – India
Notes
25Transaction Tax – India
Notes
26 Transaction Tax – India
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27Transaction Tax – India
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AhmedabadX��#����������%�;����Near CN VidhyalayaAmbawadiAhmedabad — 380 015Tel: +91 79 6608 3800Fax: +91 79 6608 3900
Bengaluru“UB City”, Canberra BlockJX���{�J|���#���No.24 Vittal Mallya RoadBengaluru — 560 001Tel: +91 80 4027 5000 +91 80 6727 5000}� ~�� ��J��Z�XXJZ��ZZZ��JX���#����}� ~�� ��J��Z�XXX��Z�����J|���#����
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Hyderabad+����+������J��������!����Hitech City, MadhapurHyderabad — 500081Tel: +91 40 6736 2000Fax: +91 40 6736 2200
Kochi9th Floor, Abad NucleusNH-49, Maradu POKochi, Kerala 682304, India+����~�� � ��J�����|Z��ZZZFax: +91 484 2705393
Kolkata22 Camac StreetQ���%��!8��|���#���Kolkata — 700 016Tel: +91 33 6615 3400Fax: +91 33 2281 7750
Mumbai����#������ ������9�$���Nariman PointMumbai — 400 021Tel: +91 22 6192 0000 Fax: +91 22 6192 2000
The Ruby29 Senapati Bapat Marg,Dadar (W)Mumbai — 400028Tel: +91 22 6192 0000Fax: +91 22 6192 0030
����#�����Q���%�Q�XNirlon Knowledge ParkOff Western Express HighwayGoregaon (E)Mumbai — 400 063Tel: +91 22 6192 0000Fax: +91 22 6192 3000
NCRGolf View Corporate Tower – BNear DLF Golf Course, Sector 42Gurgaon – 122 002Tel: +91 124 464 4000Fax: +91 124 464 4050
����#������9������18-20 Kasturba Gandhi MargNew Delhi – 110 001Tel: +91 11 4363 3000Fax: +91 11 4363 3200
4th & 5th Floor, Plot No 2B,Tower 2, Sector 126,NOIDA — 201 304Gautam Budh Nagar, U.P. IndiaTel: +91 120 671 7000Fax: +91 120 671 7171
Pune!��ZJ������#���Panchshil Tech ParkYerwada (Near Don Bosco School)Pune — 411 006Tel: +91 20 6603 6000Fax: +91 20 6601 5900
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