Unlocking tax efficiency in cross-border M&A

In today's global business landscape, cross-border mergers and acquisitions (M&A) have become increasingly common. However, the complexities of international tax regulations can present significant challenges for companies engaged in these transactions. As organisations expand globally, whether through M&A or organic growth, optimising tax structures and unlocking value through tax efficiency are critical to long-term success.

The post-deal landscape

The period following a cross-border transaction is crucial for tax optimisation. Companies must navigate a complex environment of international tax laws, treaty provisions, and local regulations. Failure to address these issues promptly can lead to missed opportunities and potential compliance risks.

Key areas of focus in post-deal tax integration include:

• Legal entity rationalisation
• Intellectual property planning
• Global mobility planning
• Tax attribute utilisation
• Accessing available credits and incentives 
• Global tax structure optimisation
• Indirect tax considerations (VAT/GST)
• Customs and duties

Streamlining for success

One of the most impactful strategies in post-deal integration is legal entity rationalisation (LER). This process involves a comprehensive review of a company's global legal entity structure and available tax attributes to identify opportunities for streamlining and efficiency. 

Benefits of effective LER include:

• Reduced administrative burden
• Minimised tax liabilities
• Improved operational efficiency
• Enhanced transparency for stakeholders

Building a foundation for growth

For younger companies or those experiencing rapid expansion, post-transaction integration presents an opportunity to create a robust foundation for future growth. This may involve:

• Restructuring legal entities to attract investment
• Positioning the company for entry into new markets
• Developing scalable tax structures to support expansion

Holistic approach to tax planning

Successful post-deal tax integration requires a holistic approach that goes beyond income tax considerations. Companies must also address:

• Indirect taxes (VAT/GST)
• Customs and duties
• Transfer pricing
• Intellectual property management
• Global workforce mobility
• Available tax credits and incentives

By taking a comprehensive view, organisations can develop strategies that optimise their global tax position while ensuring compliance across all jurisdictions.

Leveraging technology and expertise

As the complexity of international tax regulations continues to grow, companies are increasingly turning to advanced tools and methodologies to support their tax integration efforts. These may include:

• Repeatable models for debt-to-equity analysis
• Streamlined workflows for legal entity rationalisation
• Data analytics for tax optimisation modelling

In an era of increased scrutiny on corporate tax practices, companies engaged in cross-border M&A must prioritise post-deal tax integration. By taking a proactive, holistic approach to tax planning, organisations can unlock significant value, reduce risks, and position themselves for long-term success in the global marketplace.

Partnering with experienced advisors who have a global network and deep technical expertise can help companies navigate these challenges more effectively. Reach out to RSM’s team of experts, we always welcome the opportunity to provide a personalised consultation to discuss your specific needs and challenges related to international tax and M&A.