Article 38 - Transfer of Tax Loss

A Tax Loss or a portion thereof may be offset against the Taxable Income of another Taxable Person where all of the following conditions are met:

1. Both Taxable Persons are juridical persons.

2. Both Taxable Persons are Resident Persons.

3. Either Taxable Person has a direct or indirect ownership interest of at least 75% (seventy-five percent) in the other, or a third Person has a direct or indirect ownership interest of at least 75% (seventy-five percent) in each of the Taxable Persons.

4. The common ownership under paragraph (c) of Clause 1 of this Article must exist from the start of the Tax Period in which the Tax Loss is incurred to the end of the Tax Period in which the other Taxable Person offsets the Tax Loss transferred against its Taxable Income.

5. None of the Persons are an Exempt Person.

6. None of the Persons are a Qualifying Free Zone Person.

7. The Financial Year of each of the Taxable Persons ends on the same date.

8. Both Taxable Persons prepare their financial statements using the same accounting standards.

Where a Taxable Person transfers its Tax Loss to another Taxable Person under Clause 1 of this Article:

1. the Taxable Person which the Tax Loss is transferred to shall reduce its Taxable Income for the relevant Tax Period;

2. the total Tax Loss offset shall not exceed the amount allowed under Clause 2 of Article 37 of this Decree-Law; and

3. the Taxable Person shall reduce its available Tax Losses by the amount of the Tax Loss transferred to the other Taxable Person for the relevant Tax Period.