Absorption merger refers to the merger of two or more companies, in which one company absorbs other companies and continues to exist, while the main qualifications of other companies are eliminated at the same time. The merged party obtains all the net assets of the merged party through business combination, and at the same time cancels the qualification of the merged person. After the merger, the original assets and liabilities of the merged party will become those of the merged party. To put it simply, there are two companies, A and B. A is the merging party and B is the merged party. After the merger, Company A survives, Company B cancels, and only Company A is a legal person.

The advantages of enterprise absorption and merger are as follows:

1. is conducive to integrating internal and external resources of enterprises and reducing horizontal competition. Through absorption and merger, we can better solve the problems of horizontal competition and resource integration within enterprises, reduce the management level of enterprises, give full play to the scale effect and synergy effect, improve the operational efficiency of enterprises and maximize the interests of shareholders.

2. It is conducive to the fairness of market competition and reduces unfair related transactions. Too many unfair related party transactions is a chronic disease of market economy. It is not uncommon for the controlling shareholders of a company to obtain income and convey profits through related parties, which not only violates the fairness of market pricing, but also seriously damages the interests of minority shareholders. By absorbing and merging, it is beneficial to reduce competitors and related parties, improve industry concentration and reduce related party transactions.

3. It is conducive to building a new capital operation platform and broadening financing channels. By absorbing and merging to improve the company's business development, enterprises can become bigger and stronger quickly, realize the smooth docking with China's capital market, and help enterprises make full use of the capital market to carry out direct financing and broaden financing channels.

4. It is conducive to improving the company's industrial chain and improving its core competitiveness. Most companies tend to focus on a single industry, and the company will face the risk of single product and single business. In order to extend the industrial chain and enhance the company's ability to resist risks, the integration of upstream and downstream industries can be solved through absorption and merger, and the company strategy of centralized and unified management and integrated operation can be realized, which is conducive to enhancing the company's core competitiveness.

Two. Preferential tax policies for absorption and merger

(1) Value-added tax: In the merger, the absorbed party can enjoy the preferential policy of not collecting value-added tax when transferring its physical assets. Policy basis: Announcement of State Taxation Administration of The People's Republic of China, People's Republic of China (PRC) on Value-added Tax Issues Related to Taxpayers' Assets Reorganization (People's Republic of China (PRC) State Taxation Administration of The People's Republic of China AnnouncementNo. 1 13) Main contents: Taxpayers' transfer of all or part of physical assets and their related claims, liabilities and services to other units and individuals through merger, division, sale and replacement in the process of assets reorganization does not belong to the scope of VAT taxation. This announcement shall be implemented as of March 65438, 20 1 year. If it is not handled before, it shall be implemented in accordance with the provisions of this announcement. Application analysis: 1. The above policies apply to the acquired party, but not to the acquired party; 2. The object of taxation without VAT is physical assets; 3. The merged enterprise should not only transfer its physical assets to the merging party, but also transfer its creditor's rights, liabilities and services at the same time; The above policies are not only applicable to mergers, but also to other forms of enterprise reorganization. 5. The above policy is not only to levy value-added tax, but not to levy all taxes.

(2) Business tax: In the merger, the absorbed party can enjoy the preferential policy of not collecting business tax when transferring its real estate and land use right, but collecting business tax when transferring intangible assets. Policy basis: 1, Announcement of State Taxation Administration of The People's Republic of China, People's Republic of China (PRC) on Business Tax Issues Related to Taxpayers' Asset Restructuring (Announcement No.201No.51of State Taxation Administration of The People's Republic of China, People's Republic of China (PRC)) 2. Notice of State Taxation Administration of The People's Republic of China, Ministry of Finance of People's Republic of China (PRC) on Business Tax Policy for the Transfer of Natural Resources Use Rights (Cai Shui [20] Kloc-0/2] No.6) Main contents Taxpayers transfer all or part of physical assets and their associated creditor's rights, debts and services to other units and individuals by means of merger, division, sale and replacement, which does not belong to the scope of business tax collection, and the transfer of real estate and land use rights involved is not subject to business tax. This announcement will be implemented from 20 1110/0/0/0/day. If it is not handled before, it shall be implemented in accordance with the provisions of this announcement. 2. Add the subtitle "Transfer of the Right to Use Natural Resources" to the notes of the tax item "Transfer of Intangible Assets" in Article 8 of the Notice of People's Republic of China (PRC) State Taxation Administration of The People's Republic of China on Printing and Distributing (Trial Draft) (Guo Shui Fa [1993] 149). The transfer of the right to use natural resources refers to the behavior of the obligee to transfer the right to explore, develop and use natural resources. The right to use natural resources refers to the right to use sea areas, exploration rights, mining rights, water intake rights and other natural resources (excluding land use rights). This notice shall be implemented as of February, 2065438 1 day.

Application analysis: 1. The above policies apply to the acquired party, but not to the acquired party; 2. The merged enterprise should not only transfer its real estate and land use rights to the merging party, but also transfer its creditor's rights, debts and labor force at the same time; 3. Business tax is not levied on the transfer of real estate and land use rights involved by the merged party, and business tax should be paid on the transfer of intangible assets; However, according to the spirit of enterprise reorganization, the transfer of "intangible assets" in the process of enterprise merger in State Taxation Administration of The People's Republic of China should be exempted or not levied, but the policy needs to be further clarified. The above policies are not only applicable to mergers, but also to other forms of enterprise reorganization. The above policy does not only levy business tax, but does not levy all taxes. (3) Land value-added tax: In the process of merger, the absorbed party can enjoy the preferential policy of temporarily exempting land value-added tax when transferring its real estate. Policy basis: Notice of State Taxation Administration of The People's Republic of China, Ministry of Finance of People's Republic of China (PRC) on Some Specific Issues Concerning Land Value-added Tax (Caishuizi [1995] No.48).

Main contents: In the process of enterprise merger, if the merged enterprise transfers real estate to the merged enterprise, the land value-added tax will be temporarily exempted. Application analysis: 1. The above policies apply to the acquired party, but not to the acquired party; 2. The "business combination" in the above policies includes the situation of merger; 3. The object of temporary exemption from land value-added tax is real estate; 4. The above policy emphasizes "temporary exemption from collection". If the merging party sells the merged real estate, the merging party shall be the taxpayer and pay the land value-added tax. 5. The above policies are not only applicable to merger, but also to other forms of enterprise merger, such as new merger. 6. The above policies are only temporary exemption of land value-added tax, not all taxes are exempted. Through the above analysis, it is not difficult to see that the comprehensive tax burden of enterprises in restructuring can be greatly reduced by choosing reasonable restructuring methods and correctly using national tax policies, thus greatly reducing the restructuring cost of enterprises. For this reason, lawyers suggest that before the enterprise restructuring, professional lawyers should be hired to review the planning strategy of the enterprise restructuring, or entrust professional lawyers to explain the enterprise restructuring plan in detail, which will not only be conducive to the smooth progress of the enterprise restructuring, but also greatly reduce the comprehensive tax burden in the enterprise restructuring, ranging from tens of millions to hundreds of millions of yuan. Therefore, enterprises should be cautious about the tax planning in reorganization, so as to plan ahead.