Richard Cornelisse

Indirect tax function effectiveness: Acquisition and Divestment Checklist

In Business Strategy, Indirect Tax Strategic Plan, VAT planning on 02/07/2014 at 12:00 pm

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  • Financing VAT in asset sales/purchase should not be overlooked by both seller and buyer (for the buyer recovery of input VAT on assets can be far longer than anticipated and need to be built into financial models)
  • What VAT exposures/practices are there which may impact the anticipated purchase price (including any subsequent purchase price adjustments), for either asset or stock/share transactions?
  • Can VAT financing be reduced by making use of reliefs for transfers of going concerns (mainly available in European jurisdictions) in respect of asset sale/purchase?
  • Set up tools that calculates VAT (and other transfer taxes) due on asset transactions
  • Review tax [VAT related] clauses to ensure beneficial position for seller/buyer
  • VAT registration locally of new corporations in helping buyers to meet compliance obligations from day 1, including arranging deferments, carry over of rulings etc, and sellers in meeting VAT invoicing and other practical aspects in completing deals, which if overlooked can reduce expected net proceeds
  • Where any closures take placeresultingin cessation ofVATable activities, businesses need to:
    • Ensure input VAT costs incurred by correct entity so as to recover this VAT
    • Plan for means of recovering input VAT incurred post closure/VAT registration
    • Build into financials need to account for VAT on any assets on hand i.e. those not disposed of

Via M&A Integration And Indirect Tax: Managing The Moving Parts Before, During, And After A Transaction / Richard Cornelisse

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