Tax Implications of Restructuring

Restructuring is an act of organizing a company, business, or system in a new way to make it operate more effectively. However, in undertaking restructuring, there are tax implications. Restructuring our company requires the right fundamental framework to achieve tax efficiency.

Undertaking restructuring in a tax-savvy approach allows our company to convert tax traps into enhanced reorganization returns. This article provides two fundamental frameworks that can serve as our strategic roadmap to efficient restructuring.

The 6 Critical Factors in Restructuring:

1. Entity form and ownership structure

2. Tax domicile, nexus, or footprint

3. Taxing system or regime

4. Tax base

5. Tax rates and incentives

6. Timing of liability

The 3 Approaches to Restructuring:

1. Optimize our company’s geographic footprint

2. Redesign our operating model to address where critical work gets done in our organization and to reorganize resources.

3. Shrink non-labor expenses through strategic supply management

Achieving growth potential requires combining restructuring efforts with right-minded tax strategies.

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