Who is responsible for tax if a company is liquidated?

Article 13 – Liquidation Proceeds and Losses 1. For the purposes of Clause (8) of Article (23) of the Corporate Tax Law, a Participation shall be considered liquidated if it ceases to have legal existence. 2. A loss realised on the liquidation of a Participation for the purposes of Clause (8) of Article (23) of the Corporate Tax Law shall be calculated as the difference between the acquisition cost of the Participating Interest determined in accordance with Article (8) of this Decision and the fair value of the liquidation proceeds received by the Taxable Person. 3. The provisions under Articles (26) and (27) of the Corporate Tax Law shall not apply where assets or liabilities are transferred to the Taxable Person as a result of a liquidation as specified under Clause (1) of this Article. 4. A loss realised by the Taxable Person on the liquidation of a Participation as calculated under Clause (2) of this Article shall be reduced by the following in the relevant Tax Period and preceding (7) seven Tax Periods, as applicable: a. Tax Losses transferred by the Participation or its Participations to the Taxable Person or any of the Taxable Person’s Related Parties. b. Dividends or other profit distributions received by the Taxable Person from the Participation that are exempt under Article (22) or (23) of the Corporate Tax Law. c. The difference between the Market Value and the amount of consideration paid for an asset or liability which was transferred between the Taxable Person or the Taxable Person’s Related Parties and the Participation or its Participations where the Market Value exceeds the amount of consideration paid insofar such difference has not already been taken into account by the Taxable Person under paragraph (a) or (b) of this Clause or under Articles (20) and (34) of the Corporate Tax Law. d. Any adjustments taken into account under paragraph (a) or (c) of this Clause by the Participation being liquidated in determining losses realised on the liquidation of its Participations insofar such adjustment has not already been Ministerial Decision No. 302 of 2024 – As published by the Ministry of Finance 11 taken into account by the Taxable Person under paragraph (a), (b) or (c) of this Clause. 5. Without prejudice to Clause (4) of this Article, where the Participation was a member of a Tax Group, any liquidation loss recognised in relation to that Participation by the Tax Group or the Parent Company or any of its Related Parties shall be reduced by the following in the relevant Tax Period and preceding (7) seven Tax Periods, as applicable: a. Tax Losses attributable to the Participation while it was a member of the Tax Group calculated in accordance with Article (7) of Ministerial Decision No. [301] of 2024 which have been taken into account in determining the Taxable Income of the Tax Group. b. Dividends or other profit distributions made by the Participation while it was a member of the Tax Group that were eliminated for the purposes of determining the Taxable Income of the Tax Group under Article (42) of the Corporate Tax Law. 6. A loss cannot be realised by a Tax Group on the liquidation of a Participation where the Participation leaves the Tax Group due to the application of Article (10) of Ministerial Decision No. [301] of 2024.

Article 12 – Liquidation Proceeds and Losses 1. For the purposes of Clause 8 of Article 23 of the Corporate Tax Law, a Participation shall be considered liquidated if it ceases to have legal existence. 2. A liquidation loss shall be calculated as the difference between the acquisition cost of the Participating Interest, adjusted for any part disposals as per Clause 5 of Article 8 of this Decision, and the fair value of the liquidation proceeds received by the Taxable Person. 3. The provisions under Articles 26 and 27 of the Corporate Tax Law shall not apply where assets or liabilities are transferred to the Taxable Person as a result of a liquidation as specified under Clause 1 of this Article. 4. The liquidation loss under Clause 1 of this Article shall be adjusted for the following in the relevant Tax Period and the preceding Tax Period, as applicable: a. Tax Losses transferred by the Participation to the Taxable Person. b. Exempt Dividends or other profit distributions received by the Taxable Person from the Participation. c. Income or gains on the transfer of assets or liabilities between the Taxable Person and the Participation not taken into account under Article 26 or Article 27 of the Corporate Tax Law.

Article 2 – Conditions of Deeming the Person as an Exempt Person in Case of Liquidation or Termination 1. For the purposes of paragraph (a) of Clause 6 of Article 4 of the Corporate Tax Law, the Person may continue to be deemed as an Exempt Person from the date its liquidation or termination procedure starts until the date it is completed, provided that a notification has been submitted to the Authority within (20) twenty business days from the date of the beginning of the procedures. 2. Where Clause 1 of this Article applies, the Person shall cease to be deemed as an Exempt Person on the day following the date of the completion of the liquidation or termination procedure. 3. For the purposes of Clause 1 of this Article, the Person’s liquidation or termination procedure shall be applied as per the applicable legislations in the State.