The Legislative Yuan passed the Enterprise Merger & Acquisition Law; enterprise merged / split enjoys preferential taxes

The Legislative Yuan passed the 3^rd reading of the Enterprise Merger & Acquisition Law yesterday (15^th).  There are provisions of the Law specifying that enterprises which proceed merger or split may enjoy exemption of stamp tax, deed tax and security exchange tax and be allowed to enjoy benefits such as postpone levy of land value tax. Meanwhile, Article 21 of the Statute for Upgrading Industries may apply to the enterprises. That is, if the enterprises do not have sufficient capital, they may apply with the Executive Yuan for low-interest finance in a special case about the development fund. A part of the incomes gained from merger of enterprises in deficit may have business income tax credit and be used in paying off bank debt by preference.

The Law was legislated for the following key points:

1.      to simplify procedures and facilitate merger & acquisition of enterprises;

2.      to offer diversified merger & acquisition to exclude obstacles resulted from current laws and regulations;

3.      to offer flexible legal system of labor; and4

4.      to offer appropriate tax measures to encourage enterprises to proceed merger & acquisition.

Source: Commercial Times 01/16/2002

 Translated by Joanne Lue