Article 42 - Transitional Provisions

The Filing Constituent Entity shall take into account the deferred tax assets and deferred tax liabilities disclosed in the financial accounts of the Constituent Entities of Multinational Enterprise Groups, Joint Ventures, and Joint Venture subsidiaries, as relevant, to determine the Effective Tax Rate in the transition year and any subsequent year.

Deferred tax assets arising from items excluded from the computation of the Constituent Entity Income or Loss, in accordance with Article 6 of this Law, shall be excluded from the application of the provisions of Paragraph A of this Article when such deferred tax assets relate to transactions that took place after 30 November 2021.

For the purposes of this Law, the acquirer's basis in the acquired assets shall be equal to the transferring Entity's carrying value of the transferred assets at the time immediately prior to disposal with deferred tax assets and liabilities determined accordingly. This provision applies to the transfer of assets, other than inventory, between Constituent Entities of Multinational Enterprise Groups, Joint Ventures and Joint Venture Subsidiaries after 30 November 2021 and before the commencement of a transition year.

The Regulations shall prescribe the rules, conditions, and controls necessary to implement the provisions of this Article, including the rules for determining the treatment of deferred tax assets and liabilities and other related matters, in a manner consistent with the Model Rules, administrative guidance, and commentary issued by the Organisation for Economic Co-operation and Development (OECD).