Julian Lamb FCCA FSI International Relations Section Chair (Director Registry
Tax Aspects of Acquisitions in Russia How can Due Diligence help? American Chamber of Commerce Tax...
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Transcript of Tax Aspects of Acquisitions in Russia How can Due Diligence help? American Chamber of Commerce Tax...
Tax Aspects of Acquisitions in Russia How can Due Diligence help?
American Chamber of CommerceTax Conference – Oct. 23, 2009
Maxim Grishin, FCCASenior Audit Manager
Alinga Consulting Group
Contents
Tax Due Diligence: Risks and Opportunities
Onshore taxation:“Asset deal” vs. “Share deal”
Post acquisition:
Tax deductibility of Goodwill
Onshore mergers and acquisitions
Offshore deals
Corporate legislature Disclosure
Onshore deals
Gaining popularityTransparency
Tax Due Diligence - risks
Tax risks
Cash - Revenues and Costs
Social taxes – SPE
Relationship with a tax guy
Tax Due Diligence - opportunities
Underutilization of Tax benefits
Traditions
Conservative
Tax cushion
Tax risks- mitigation
Ways to mitigate
Declare and pay
Initiate a tax audit
Do an asset deal
Asset or share
Comparison table
Asset deal Share deal
Transaction price VAT and CIT Gains taxed
Tax risk Inheritance None Full
Asset deal = buy a property complex, Civil Code
Tax Deductibility of Goodwill
Assessment and deductibility
Asset deal Share deal
Assessed onAssets &Liabilities Investments
Recorded Investor Investor
Deductibility Yes, 5 yrs No
Goodwill = excess of payment over the Net Assets of the property complex
Taxes and deals
Asset deal
Surplus of Fair Value 200 over Carrying Value 100 100
VAT on sale (200 * 18%) 36
Income Tax on surplus (100*20%) 20
Tax deductions (5 yrs 10% discounted) (15)
Total consideration to be paid 141
Share deal Goodwill - surplus of FV over CV 100
Income tax for the Seller 20
Total consideration to be paid 120
Maximum tax provision to choose asset deal 21
Conclusion
On shore deals
- More expensive
- Transparent
- Less risk
Maxim Grishin, FCCASenior Audit Manager - IFRS
Chet BowlingManaging Partner
Galina KlimenkoSenior Audit Manager - RAS
Alinga Consulting GroupAudit & Taxation Department
www.acg.ru