MERGERS and acquisitions are like marriages. They are often characterized by two entities agreeing to pool their resources and, in one way or another, become one. As one entity’s liabilities become the liabilities of the other, so do the assets. While the possibility of absorbing liabilities often deters the faint-hearted, it should be noted that there are perks, too.
This is exemplified in Court of Tax Appeals (CTA) decision dated June 19, 2024, where the court held that in a merger, the surviving corporation is entitled to claim the unutilized input value-added tax (VAT) of the absorbed firm even if there is an ongoing tax investigation and a pending tax clearance.
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