Great Wall Film and Television's high valuation renewal company tax incentives have become a "springboard" for high valuation

Recently, Great Wall Film and Television recently disclosed its major asset purchase report (draft), which plans to acquire 30% of Dongfang Longhui and 25% of Jiuming Advertising's shares at an assessed value-added rate of 1,093.64% and 980.8%, respectively. It is worth noting that the corporate taxes assumed in the assessment are all in accordance with the preferential corporate tax policies of the Tibet Autonomous Region, i.e., corporate income tax is levied at 9% before 2017, and corporate income tax is levied at 15% from 2018 to 2020.

Original title: Great Wall Film and Television's high-value renewal company's target "profit-seeking and tax avoidance" boosts profit forecast

Tax incentives are becoming a high-value "springboard" for mergers and acquisitions of listed companies.

Recently, Great Wall Film and Television recently disclosed its major asset purchase report (draft), which plans to acquire 30% of Dongfang Longhui and 25% of Jiuming Advertising's shares at an assessed value-added rate of 1,093.64% and 980.8%, respectively. It is worth noting that the corporate taxes assumed in the assessment are all in accordance with the preferential corporate tax policies of the Tibet Autonomous Region, i.e., corporate income tax is levied at 9% before 2017, and corporate income tax is levied at 15% from 2018 to 2020.

According to relevant regulations, the national general corporate income tax rate is 25%.

"The tax incentives must be included in the evaluation value, because the tax incentives are directly reflected in the net profit, and the listed company has an assessment of the net profit of the acquisition target." On the afternoon of March 15, a person from Great Wall Film and Television told reporters.

The announcement of "tax avoidance" boosting profit forecast

shows that the evaluation values of 30% of Dongfang Longhui and 25% of Jiuming Advertising that Great Wall Film and Television plans to acquire this time are 206.0409 million yuan and 148.5151 million yuan respectively, and the corresponding net assets are 17.2616 million yuan and 13.7412 million yuan respectively.

What has attracted attention is that Dongfang Longhui, registered in Shannan Prefecture of the Tibet Autonomous Region, announced that according to the Tibetan Zheng Fa [2011] No. 114 and the Tibetan Zheng Fa [2014] No. 51, it will enjoy a preferential policy of collecting corporate income tax at a rate of 15% before 2020, and temporarily exempt 40% of the corporate income tax payable by the Tibet Autonomous Region from local shares from 2015 to 2017.

Therefore, the evaluation of Dongfang Longhui's corporate income tax in this major asset reorganization is divided into three gradients, namely, 9% from 2015 to 2017, 15% from 2018 to 2020, and 25% for the permanent year.

So, how much impact will the corporate income tax levied at 9%, 15% and 25% respectively have on Dongfang Longhui's performance?

According to the Great Wall Film and Television announcement forecast, Dongfang Longhui's total profits from 2016 to 2017 will be 68.3755 million yuan and 82.0742 million yuan respectively. From 2018 to 2020, they will be 94.7023 million yuan, 104.6947 million yuan and 112.9282 million yuan respectively. The sustainable year starting from 2021 will be 112.905 million yuan.

The income tax expenses of Dongfang Longhui corresponding to the above years are: 6.1538 million yuan and 7.3867 million yuan from 2016 to 2017, 14.2053 million yuan, 15.7042 million yuan and 16.9392 million yuan from 2018 to 2020, and 28.2263 million yuan for the sustainable year starting from 2021.

In addition, the announcement also predicted Dongfang Longhui's net profit from 2016 to 2021, which will be 62.2217 million yuan, 74.6875 million yuan, 80.4969 million yuan, 88.9905 million yuan, 95.9889 million yuan and 84.6787 million yuan respectively.

From this calculation, it can be seen that if Dongfang Longhui's corporate income tax is levied at the current national general level of 25%, its net profit from 2016 to 2017 will be reduced by 10.9401 million yuan and 13.1319 million yuan respectively, and from 2018 to 2020, it will be reduced by 9.4703 million yuan, 10.4695 million yuan and 11.2929 million yuan respectively.

Dongfang

Longhui has relied on tax incentives in Xizang to achieve a high valuation before moving. Jiuming Advertising is also not willing to lag behind, and is still planning to calculate based on tax incentives.

The announcement shows that after the evaluation benchmark date of this acquisition was September 30, 2015, Jiuming Advertising registered and established a wholly-owned subsidiary Changming Advertising in Qushui County, Lhasa City, Xizang on December 30, 2015, with a registered capital of 1 million yuan, but a paid-in capital of zero.

The announcement stated that Jiuming Advertising plans to gradually transfer its business to Changming Advertising from 2016 and fully transfer it in 2019, when the company may enjoy preferential tax policies in the Tibet Autonomous Region. The current income tax rate of Jiuming Advertising is 25%.

Therefore, the evaluation of Great Wall Film and Television's acquisition of Jiuming Advertising also imposes corporate income tax on Changming Advertising at 9% from 2016 to 2017, 15% from 2018 to 2020, and 25% for the perpetual year.

Not only that, after Jiuming Advertising gradually transfers its business to Changming Advertising, it should be paid based on the tax-inclusive income of advertising release minus 3% of the tax-inclusive expenditure of advertising release, and the river tax payable at 1% of the turnover tax payable., will no longer be calculated and paid.

"If there are tax incentives there (in Xizang), other subsidiaries of the listed company may also go (registration transfer), but the business transfer will not be so fast." The above-mentioned person from Great Wall Film and Television told reporters.

Prior to this acquisition, Great Wall Film and Television had acquired 60% equity of Dongfang Longhui and 51% equity of Jiuming Advertising in June and July 2015 respectively. However, compared with the evaluation value of the previous acquisition, Dongfang Longhui's promised performance remained unchanged. However, this evaluation value has increased by 11.73%. However, the consideration for Great Wall Film and Television to acquire 51% equity of Jiuming Advertising in July 2015 was 252.45 million yuan, and the purchase price this time also increased by 20%.

Editor: kong