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Document Type: BL - Bylaws
Law: Income Tax Law (Royal Decree No M/1 - 21 Feb 2004)
Decision Number: 1535-article-8
Year: 2019
Country: 🇸đŸ‡Ļ KSA
Official Name: Article 8 - Gains and Losses on Disposal of Assets

Ministerial Resolution No. 1535 of 2004 [Executive Bylaws]

Executive Regulations of the Income Tax System

Article 8 - Gains and Losses on Disposal of Assets

  1. [No gain or loss shall be recognized on disposal of a depreciable asset when such asset is disposed of. The impact resulting from the disposal of such assets shall be adjusted within the method of depreciation determined under the Income Tax Law.

  2. No gain or loss shall be calculated for a transfer of an asset from one capital company to another capital company within the same group of companies that represent a single economic unit. Similarly, no gain or loss shall be recognized for the recipient company, provided the following conditions are met:

    1. These companies are part of a group of capital companies wholly owned, directly or indirectly, by one capital company.

    2. The asset must not be disposed of to a company outside the group within two years from the date of transfer.

  3. The cost base of the transferred asset in the accounts of the transferee company shall be determined based on its book value in the accounts of the transferor company at the time of transfer, provided that the cost base does not exceed the market value of the asset at the time of transfer.

    4. The depreciation of the transferred asset shall continue in the accounts of the transferee company using the same method that was used by the transferor company.

    The cost base of the shares issued in lieu of the transferred asset shall be determined as equal to the net book value of that transferred asset.][9]

Footnotes

[9]Amended by MR No. 1727 dated 25/05/1439H (11 Feb 2018). Prior to the amendment, Article 8 read as follows:

"No gain or loss is taken into account on disposal of an asset that is depreciable under the Income Tax Law. The result of disposal of such assets is dealt with under deprecation method stipulated by the Income Tax Law"