Transaction tax India - EY - United StatesFILE/... · analysis of exposure Transaction structuring to minimize costs Accounting ... 22 Transaction Tax – India Ranked #1 for service,

Transaction Tax India

Cont

ents Who we are

Our service offerings

Methodology

About Ernst & Young

3Transaction Tax – India

1. Who we area. Who we areb. The challenges we meet

4 Transaction Tax – India

Corporate reorganization

Promoter stake enhancement and delisting

Divestment advisory

Tax due diligence

Private equity/Venture capital

advisory

Financial structuring

Group restructuring

Acquisition structuring

Outbound structuring

A seamless team of professionals with multi-disciplinary skill sets consistently providing high-quality client services

Who we area.


b.

Practical, implementable advice with a commercial

business mindset

Tax

Direct and indirect tax structuring to minimize tax costs

Advisory and implementation support

Corporate laws

Corporate reorganization laws

SEBI /Capital market perspective

Competition/Intellectual property law – broad implications

Stamp duty

Computation and analysis of exposure

Transaction structuring to minimize costs

Accounting

Financial statement impact analysis

Advice on accounting issues arising due

to transactions

Industry-��

Highlighting transaction-��

Foreign exchange/FDI

Structuring to meet regulatory norms

Assistance in seeking approvals

The challenges we meetOur comprehensive analysis encapsulates a wide gamut of tax and regulatory aspects...


2. Our service offeringsa. Corporate reorganizationb. Group restructuringc. Acquisition structuringd. Outbound structuringe. Promoters’ stake enhancement and delistingf. Private equity/Venture capital advisoryg. Financial structuringh. Divestment advisoryi. Tax due diligence


Subsidiarization

Demergers/Spin-offs

Joint ventures Business/Asset sale

Expertise and experience in:

Mergers/Amalgamation

�� Designing alternative effective tax and regulatory structures

�� Meeting commercial objectives within regulatory constraints

�� Reviewing transaction documentation

�� Liaising with various stakeholders

�� Advising on integration

�� Resolving post-transaction issues

We assist in:

a.Corporate reorganization


Core competence ��

business

Structure in sync with

group’s plans

Holding structure to capture value

of operating companies

Structure amenable to raising funds (in India and/or overseas)

Enhancement/Unlocking of shareholder

value

Wealth management and

succession planning for stakeholders

Collapse of complex, multi-tier,

cross holding structure

The unique challenges we

meet

Group restructuringb.


Withholding of tax on dividends, interest, royalties, etc.

Tax treaty network of intermediary jurisdiction

Capital gains taxation on future divestment or exit

Capital market implications

Exchange control implications

Funding options

Acquisition structuring

Advise on domestic and inbound acquisition structuring for strategic acquirers – directly or through appropriate intermediary jurisdictions

We design structures, bearing in mind tax, regulatory and relevant commercial aspects and their implications.

Acquisition structuringc.


Outbound structuring

Evaluation of alternative entity, operating and investment structures of overseas operations and investments from international and Indian tax and regulatory perspective, including inter alia:

�� Choosing entity format for overseas operations

��

��

�� opportunities through the use of such entities and instruments

�� Providing advise on availing foreign tax credits

�� Leveraging targets through debt push-down

We assist in:

��

�� perspective with regard to the possibility of achieving a step up of underlying assets, preservation of tax attributes, taxability in the hands of the vendor and migration of intangibles to tax-friendly jurisdictions

d.


Conceptualization and evaluation of alternatives for wealth enhancement of various stakeholders encompassing:

�� Consolidation of stake and rationalization of ownership structure

�� Unlocking value in an appropriate jurisdiction

�� Wealth management and succession planning

��

�� !��

�� Ensuring timelines are adhered to

�� Identifying regulatory pressure points

�� Optimizing tax and other transaction costs

Promoters’ stake enhancement and delisting

Delisting is characterized by certain distinct challenges. We assist our clients to formulate strategies for their delisting process.

We follow the following broad methodology:

Reaching an understanding of

the ultimate objectives

Identifying alternatives

Evaluating alternatives

Providing assistance on implementation

Laying down implementation

roadmap

Formulating strategies based on preferred

alternatives

e.


Private equity/Venture capital advisory

We are aware that private equity (PE) and venture capital investors are driven by intricate considerations, which are critical to the success of transaction, while making investments. We adopt a two-fold transaction strategy in this scenario.

Transaction strategy

�� Investment and exit structuring through alternative mechanisms (IPO, MBO, LBO, stake sale, etc.)

�� "��#�$��tax and exchange control aspects

�� Comprehensive tax due diligence

�� Review of relevant transaction documentation from a tax and regulatory perspective while keeping commercial objectives in mind

�� Capital market perspective

�� Considerations relating to PEs during the holding period:

�� Investee restructuring for shareholder value enhancement/unlocking

�� Acquisition/Divestment by investee

�� Relevant tax and exchange control implications while structuring payouts

Transaction structuring Investee considerations

f.


�� Extensive analysis of each transaction, enabling conceptualization, selection and implementation of options from a tax and regulatory perspective

�� Structuring of transactions for entities in/levels at which funds should be raised or repatriated

�� IPO advisory for Indian/overseas listing

�� Instruments that should be used to raise or repatriate funds

�� "�� %��reduction, royalties and management fees

�� Designing of appropriate capital structure

�� Debt restructuring

Financial structuring

Capital structuring

Fund raising

��

g.


� �� unique challenges

Divestment advisory

Evaluating options – demerger, business/asset disposal, stock sale, etc.

h.

Divestment advisory

Analyzing and minimizing tax and regulatory implications:

Capital gains

Stamp duty

Exchange control

Capital market issues

Comprehensive vendor due diligence – evaluating existing structure and exit mechanics

Implementation assistance


Tax due diligence is much more than a mere administrative process. It impacts every aspect of and is integral to a business transaction. In this regard, we offer direct as well as indirect tax due diligence services. Our focus areas include the following:

Tax due diligencei.

Review of tax position adopted during prior years

Review of adequacy of tax provision made

Mitigate downside risk & identify opportunities for the acquirer

Review of compliance with tax withholding requirements

Review of deferred tax

Review of indirect tax positions/status

Review of compliance with various indirect taxes (service tax, customs, excise, VAT, etc.)

12

3

45

6

7

�� tax incentives and government subsidies enjoyed by a company


3. Methodologya. The transaction lifecycleb. Key differentiatorsc. Why choose Ernst & Young’s Transaction Tax professionals?


project management

Implementationconceptualization

The transaction lifecyclea.

About Transaction tax

The successful completion of any transaction lifecycle is achieved through careful planning and implementation. Ernst & Young utilizes its vast experience in providing tax and regulatory services to successfully conduct and complete transactions in one location.

�� Obtaining a clear understanding of the goals/objectives a transaction intends to accomplish

�� Understanding the business, strategic plans, growth imperatives, ��organization/investment structure, etc., of an organization

�� Taking into consideration a company’s overall risk appetite and its ability to manage/handle tax and regulatory risk

�� Assisting in formulating strategies

�� Identifying tax, regulatory and stamp duty exposures, and providing advise on their implications

�� Examining current tax holidays/��'��'��and exploring the possibility of their post-transaction continuity

�� Reviewing constitutional documents, pending litigation, etc.

�� Reviewing compliance with industry-/��regulations

�� Examining alternative transaction structures from a tax, stamp duty, company law, capital market, foreign exchange/ FDI, commercial objectives, etc., perspective

�� Conducting comparative analysis of each alternative in terms of time, costs, ease of implementation, and key tax, regulatory and commercial considerations

�� Approaching the relevant regulatory authorities and coordinating with various external agencies for assistance in smooth implementation

�� Monitoring ongoing acquisition issues and identifying the required post-acquisition steps

�� Ensuring adequate documentation to protect potential tax assets

�� Ensuring that time frames for implementation are complied with

�� Providing advise on post-implementation compliance required to ensure that objectives are met

�� Ensuring integration of tax and regulatory practices of the entities involved

�� Advising on minimization of post-transaction costs, and ongoing regulatory and compliance issues

Process

Service offerings

Understanding objectives

Transaction cost analysis

Option analysis

Transaction implementation

Post transaction Integration


Approach

�� Multi-disciplinary functionality combined with client-centric approach

�� !��

�� Innovative and implementable solutions provided through solution-driven approach

�� Single point of contact initiated for all tax and regulatory services

�� *��

�� +�� 0��8��

Critical mass

�� A focused team with an optimal mix of professionals who are dedicated to the Transaction Tax practice

�� "�9��9� ��$��0��

�� "�� $�� and share knowledge

Transactions experience

�� Proven capability in planning, execution and service delivery

�� %�$��

Global network

�� Seamless access to our Global Tax network

Key differentiatorsb.


�� Our experienced teams, with strong PE and corporate credentials, can provide proactive advice, e.g., on anticipation of potential pitfalls and guidance on key issues

�� Our access to a global network of transaction specialists to balance our global experience with detailed knowledge of domestic market

�� +��0��#��serving clients’ needs

�� Our successful teaming — liaising with and creating teams that include specialists

�� Our commitment to deals, bringing our knowledge of the acquisition process to bear throughout the entire transaction life cycle

Why choose Ernst & Young’s Transaction Tax professionals?

c.


4. About Ernst & Younga. A global organizationb. The leading professional service brand in Indiac. 9��;��


A global organizationa.

�� Ernst & Young is a global, multidisciplinary professional services organization. It is built on the knowledge base of 152,000 personnel in 750 locations spread across 140 countries.

�� It has strong national partnerships that focus on common goals and governance with a single global strategy, code of practice and communications platform.

�� Our integrity and professional competence form the cornerstones of our global organization. Our consistent high standards of global execution are supported by standardized methodologies, technologies and governance. Strong coordination and communication facilitate continuity in service delivery.

�� Ernst & Young is a leading provider of assurance/advisory, tax and transaction advisory services to international clients in a wide range of industries, as well as to government agencies and private individuals. Our industry focus includes provision of ��=��=��=��=��=��services to our clients.

Delhi

Chandigarh

NoidaGurgaon

Ahmedabad

Mumbai

Bengaluru

Kochi

Hyderabad

Chennai

Kolkata

Pune

People 6,600 + employees

Partner 198

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Ranked #1 for service, people, teams and relationships

@�%��HJ��of industry and insight on business issues

Ranked #1 for responsiveness — quick to market with solutions

Ranked #1 for global integration and promotion of entrepreneurship

N��Q��XZJJ��9[�=�results for India, based on 109 interviews with CFOs, other C-suite companies, audit committees and senior management

The leading professional services brand in India

b.

Market leadershipBrand

Reputation

Operational excellence

Account-centricity

Shared values

Exec

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Exec

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Global mindset

Peop

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Relationships


9��in India

c.

2010Ranked No. 1 on deal count

2009Ranked No. 1 in value and on deal count

2008Ranked No. 1 in deal count




2004Ranked No. 1 in value and deal count

2003Ranked No.1 on deal count

2002Ranked No. 1 on deal count

Source: Bloomberg league tablesNote: Includes merger, acquisition, divestiture, selftenders (excludes buy back transactions )


Notes


Notes


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Assurance, Tax, Transactions,Advisory^��of investors, manage your risk, strengthen your control and achieve your potential.

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AhmedabadX��#��%�;��Near CN VidhyalayaAmbawadiAhmedabad — 380 015Tel: +91 79 6608 3800Fax: +91 79 6608 3900

Bengaluru“UB City”, Canberra BlockJX��{�J|��#��No.24 Vittal Mallya RoadBengaluru — 560 001Tel: +91 80 4027 5000 +91 80 6727 5000}� ~�� J��Z�XXJZ��ZZZ��JX��#��}� ~�� J��Z�XXX��Z��J|��#��

Chennai2nd Floor,TPL House No. 3 Cenotaph RoadTeynampetChennai — 600 018Tel: +91 44 6632 8400Fax: +91 44 2431 1450

Hyderabad+��+��J��!��Hitech City, MadhapurHyderabad — 500081Tel: +91 40 6736 2000Fax: +91 40 6736 2200

Kochi9th Floor, Abad NucleusNH-49, Maradu POKochi, Kerala 682304, India+��~�� J��|Z��ZZZFax: +91 484 2705393

Kolkata22 Camac StreetQ��%��!8��|��#��Kolkata — 700 016Tel: +91 33 6615 3400Fax: +91 33 2281 7750

Mumbai��#�� 9�$��Nariman PointMumbai — 400 021Tel: +91 22 6192 0000 Fax: +91 22 6192 2000

The Ruby29 Senapati Bapat Marg,Dadar (W)Mumbai — 400028Tel: +91 22 6192 0000Fax: +91 22 6192 0030

��#��Q��%�Q�XNirlon Knowledge ParkOff Western Express HighwayGoregaon (E)Mumbai — 400 063Tel: +91 22 6192 0000Fax: +91 22 6192 3000

NCRGolf View Corporate Tower – BNear DLF Golf Course, Sector 42Gurgaon – 122 002Tel: +91 124 464 4000Fax: +91 124 464 4050

��#��9��18-20 Kasturba Gandhi MargNew Delhi – 110 001Tel: +91 11 4363 3000Fax: +91 11 4363 3200

4th & 5th Floor, Plot No 2B,Tower 2, Sector 126,NOIDA — 201 304Gautam Budh Nagar, U.P. IndiaTel: +91 120 671 7000Fax: +91 120 671 7171

Pune!��ZJ��#��Panchshil Tech ParkYerwada (Near Don Bosco School)Pune — 411 006Tel: +91 20 6603 6000Fax: +91 20 6601 5900

Ernst & Young Pvt. Ltd.

Assurance | Tax | Transactions | Advisory

About Ernst & YoungErnst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 152,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Ernst & Young Pvt. Ltd. is one of the Indian client serving member firms of EYGM Limited. For more information about our organization, please visit www.ey.com.

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© 2011 Ernst & Young Pvt. Ltd. All Rights Reserved.

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Transaction tax India - EY - United StatesFILE/... · analysis of exposure Transaction structuring to minimize costs Accounting ... 22 Transaction Tax – India Ranked #1 for service,