A Study on the Taxation for Corporate Division and the Suggestions for the Improvement
Asian Tax Journal Vol. 12 No. 2 (2011), pp. 75-104
Abstract
The purpose of this study is issuing the problems and suggesting the improvement by evaluating the taxation for corporate division amended at the end of 2009. The problems and improvements are shown below. First, the qualified physical division causes capital gains tax both in split corporate and a newly established corporate. So it is necessary that a newly established corporation's acquisition cost is going to fair value in case of the qualifyied division. Second, it is necessary to use non－current asset instead of fixed asset or fix the range of fixed assets in order to clarify the requirements of qualified division. Third, the period of 5 years which is continuity requirements of the three eligibility requirements in qualified division is too long compared to 1 year in qualified merger. Therefore, it is necessary to shorten a year from 5 years like qualified merger to facilitate restructuring and improve the competitiveness of the business. Anti－tax evasive clause is established to prevent tax avoidance.
Keywords
- Division
- Merger
- Anti－tax evasive clause
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