M&A and Indirect Tax

M&A Integration And Indirect Tax: Managing The Moving Parts Before, During, And After A Transaction
BNA, Inc Daily Tax Report

With indirect taxes intertwining through the day- to-day operations of a company—raising sales invoices, moving inventory, paying suppliers, collecting cash—indirect tax risk can have a distinct and domino-like effect on the commerciality of an organization.
The impact can increase exponentially in the event of a merger or acquisition. But do these taxes and tax planning opportunities get the attention they need, especially in light of increasingly complicated and globalized business models?

An Indirect Tax and Acquisition Checklist

Indirect tax risks are prevalent throughout the entire M&A and integration process. Here are some of the leading practices, lessons learned, and perspectives to keep in mind so that they do not become stumbling blocks:

1. Set up a project charter that will take effect as of the very first due diligence activities.
2. Validate due diligence findings and define priorities.
3. Make an indirect tax integration plan and ensure that the right sponsors provide buy-in.
4. Map out the current state upon acquisition and identify key risk areas, opportunities, and people in the organization acquired.
5. Jointly validate and refine the integration plan and develop a road map to success.

A relevant indirect tax strategy—correctly implemented—will allow the new business to function effectively from go-live, from both a tax and commercial perspective, so that it can move inventory, generate sales and invoices, face fewer disputes with non-paying customers, remain tax compliant, and integrate the business on time and on budget.