Tax regulations in relation to M&A are complicated to determine tax treatments. Conceptually, non-tax treatment has to be applied when the one who has control over an
acquired entity is not changed.
Under the structure where a corporation transfers assets/liabilities as a result of merger, split-off, spin-off, share exchange or investment in kind, gain or loss
resulted from the transferred assets/liabilities is subject to M&A taxation to determine whether the transaction is qualified for deferment or not. Transactions meeting certain conditions,
such as certain reorganizations between corporations that are wholly owned/owning directly or indirectly in ownership or those between corporations that are owned/owning 50% directly or
indirectly in ownership, undertaken for the purpose of a joint venture, are treated as qualified, requiring buyers not to realize gains or losses and to keep the same amount of carrying value of
target company.
