In today’s evolving M&A landscape, dealmakers are operating in a more cautious and selective environment. While transaction activity remains resilient, there is increased scrutiny on risk, valuation and deal execution.
Against this backdrop, tax due diligence is no longer a routine compliance exercise. It plays a critical role in supporting negotiations, providing deal clarity, and safeguarding or even enhancing transaction value.
A Changing M&A Environment: Why Tax Due Diligence Matters More Than Ever
Recent market conditions have reinforced the importance of robust tax due diligence:
In this environment, tax due diligence serves not only as a defensive tool, but also as a key enabler of informed decision-making.
Key Areas of Focus in Tax Due Diligence
From a practical perspective, tax due diligence typically focuses on several key areas in transactions, including:
- Withholding tax considerations on cross-border payments
- Transfer pricing arrangements and documentation
- Tax incentives and exemption conditions
- Capital vs revenue classification affecting deductibility
- Historical tax positions and exposures not immediately apparent from financial statements
Understanding these areas early allows stakeholders to assess potential implications and address them proactively as part of the deal process.
Beyond Risk: How Tax Due Diligence Creates Value
Tax due diligence is not solely about identifying risks — it can also support value creation in a transaction.
It can:
When approached strategically, tax due diligence becomes a tool for value preservation and value enhancement.
Practical Considerations for Buyers and Sellers
Conclusion
In a market where execution risk and deal certainty are increasingly important, early visibility of tax matters can make a meaningful difference to transaction outcomes.
By providing clarity on risks and opportunities, tax due diligence supports better decision-making, smoother execution, and stronger deal outcomes.
Please feel free to reach out to us should you wish to discuss how tax due diligence may support your transaction.
View the full article in PDF here.
Contact Us
CLA Global TS Tax Advisory Specialists
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Edwin Leow Co- Advisory Leader Director, Head of Tax edwinleow@sg.cla-ts.com |
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John Chua Associate Director, Tax johnchua@sg.cla-ts.com |
