Draft law amending the rules on mergers, divisions and transfers of assets for consultation
The Minister of Taxation has sent draft bills amending the provisions on merger, division and asset allocation for consultation. The bill may affect companies with merger plans and with financial years from 1 April onwards and which have realised losses under the Share Advancement Taxation Act, the Stock Gains Act and the Property Loss Taxation Act.
No succession in realized losses
The draft bill provides that unused tax losses under the Share Advancement Taxation Act, Stock Gains Act and Property Loss Tax Act in the event of a tax-free merger must not be transferable to the receiving company. At the same time, it is proposed to cut off the access of the receiving company to exploit its own realized losses.
The proposal would include both merger, division and asset injection.
The current rules do not cut off access to carry forward realised losses under the three laws mentioned, but rather cut off access to transfer tax losses.
Merger, demerger or addition of assets in the pipeline
The proposal submitted for consultation assumes that the amendment to the law must have effect for mergers, divisions and asset disposals agreed on or after the date of the proposal. The draft proposal also states that it is expected to be submitted on 7 October 1999.
Thus, until 6 October 1999, it seems possible to adopt mergers, etc., in which realised losses are transferred in accordance with the Stock Advancement Taxation Act, the Stock Gains Act or the Property Income Tax Act.
Disclaimer
The above information is for guidance purposes only, and we accept no responsibility for decisions made based on this information without prior individual advice. We accept no responsibility for errors or omissions.
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