Article 92 - Acquirer's Basis Carrying Value

For the purposes of applying the provisions of Paragraph C of Article 42 of the Law, all of the following shall be considered:

1. The transferring Entity's carrying value shall be adjusted for capital expenditure, amortisation or depreciation after the transaction and before the beginning of the Transition Year.

2. Any capital expenditures, amortisation or depreciation will be calculated in accordance with the Acceptable Financial Accounting Standard or Authorised Financial Accounting Standard that is applied by the acquirer.

3. The relevant Transition Year is the Transition Year of the transferring Entity.

4. A transfer of assets shall include cross-border and domestic transfers of tangible or intangible property treated as a sale of assets from an accounting perspective.

The provisions of Paragraph C of Article 42 of the Law and the preceding Paragraph shall similarly apply to a transfer or a deemed transfer of assets within the same Entity, whereas that Entity shall be treated as both the transferring and acquiring Entity.

Where Paragraph C of Article 42 of the Law applies, deferred tax assets or liabilities with respect to the transferred assets that are recognised at the beginning of the Transition Year shall be those that existed in the financial accounts of the Multinational Enterprise Group prior to the transaction which triggered the application of Paragraph C of Article 42 of the Law and which shall be subject to all of the following:

1. An adjustment for subsequent capitalised expenditure, amortisation and depreciation.

2. Re-computation at the Minimum Rate, in accordance with Article 91 of these Regulations if the deferred tax assets or liabilities have been recorded at a rate lower than the Minimum Rate.

Any deferred tax asset or liability arising in the Multinational Enterprise Group's financial accounts as a result of the transfer of an asset shall be disregarded except as provided in Paragraph G of this Article.

An acquiring Entity may take into account a deferred tax asset in any the following cases:

1. The transferring Entity paid tax in respect to the transaction.

2. The deferred tax asset would have been taken into account in accordance with Article 91 of these Regulations but was reversed or not created by the transferring Entity because gain from the disposition was included in the income of the disposing Entity which was subjected to tax.

A deferred tax asset created by virtue of the preceding Paragraph shall not exceed the Minimum Rate multiplied by the difference in the local tax basis in the asset and the carrying value as determined under paragraph C of Article 42 of the Law and this Article.

The creation of a deferred tax asset by virtue of Paragraph E of this Article shall not reduce the Adjusted Covered Taxes of a Constituent Entity, Joint Venture or Joint Venture Subsidiary.

An acquiring Entity may take into account any Covered Taxes that are attributable to the transaction and that would have been allocated to the transferring Entity as per Article 29 of these Regulations.