Chapter 9 - Transitional Provisions
Article 91 - Deferred Tax Assets or Liabilities in the Transition Year
For the purposes of calculating the Effective Tax Rate for Entities referred to in Paragraph A of Article 42 of the Law which are located in the Kingdom, deferred tax assets or deferred tax liabilities shall be taken into account at the lower of the Minimum Rate or the rate at which an item of deferred tax expense has been recorded in the financial accounts.
Where the rate used to determine the deferred tax asset is higher than the Minimum Rate, deferred tax assets shall be calculated in accordance with the formula :
((A ÷ B) x C))
whereby:A: Is the amount of deferred tax assets reflected in the financial accounts.
B: Is the tax rate used to determine the deferred tax asset in the Fiscal Year preceding the Transition Year.
C: Is the Minimum Rate.
Notwithstanding Paragraph A of this Article, deferred tax assets in respect of Constituent Entity Losses that have been recorded at a rate lower than the Minimum Rate may be recomputed at the Minimum Rate if the Filing Constituent Entity demonstrates that the deferred tax asset is attributable to a loss that would have been a Constituent Entity Loss had the Multinational Enterprise Group been in scope of the Law in the year in which the loss arose.
For the purpose of applying the provisions of this Article, the impact of any valuation adjustment, or accounting recognition adjustment with respect to a deferred tax asset shall be disregarded.