9H. Change of residence, ceasing to be controlled foreign company or becoming headquarter company.—(1) For the purposes of this section—
“asset” means an asset as defined in paragraph 1 of the Eighth Schedule; and
“market value”, in relation to an asset, means the price which could be obtained upon a sale of that asset between a willing buyer and a willing seller dealing at arm’s length in an open market.
(2) Subject to
subsection (4), where a person (other than a company) that is a resident ceases during any year of assessment of that person to be a resident—
(
a)
that person must be treated as having—
(i)
disposed of each of that person’s assets to a person that is a resident on the date immediately before the day on which that person so ceases to be a resident for an amount received or accrued equal to the market value of the asset on that date; and
[
Sub-para. (i) substituted by s. 14 (1) (
a) of Act No. 25 of 2015 deemed to have come into operation on 5 June, 2015 and applicable in respect of (
a) (i) any person that ceases to be a resident; or (ii) any controlled foreign company that ceases to be a controlled foreign company in relation to a resident, on or after that date; and (
b) any person that becomes a headquarter company during years of assessment commencing on or after that date.]
Wording of Sections
(ii)
reacquired each of those assets on the day on which that person so ceases to be a resident at an expenditure equal to the market value contemplated in
subparagraph (i);
(
b)
that year of assessment must be deemed to have ended on the date immediately before the day on which that person so ceases to be a resident; and
(
c)
the next succeeding year of assessment of that person must be deemed to have commenced on the day on which that person so ceases to be a resident.
(3) (
a) Where a company that is a resident ceases during any year of assessment of that company to be a resident or where a company that is a resident becomes a headquarter company in respect of a year of assessment, that company must be treated as having—
(i)
disposed of each of that company’s assets to a person that is a resident on the date immediately before the day on which that company so ceased to be a resident or became a headquarter company; and
(ii)
reacquired each of those assets on the day on which that company so ceased to be a resident or became a headquarter company,
for an amount equal to the market value of each of those assets.
[
Para. (a) substituted by s. 14 (1) (
b) of Act No. 25 of 2015 deemed to have come into operation on 5 June, 2015 and applicable in respect of (
a) (i) any person that ceases to be a resident; or (ii) any controlled foreign company that ceases to be a controlled foreign company in relation to a resident, on or after that date; and (
b) any person that becomes a headquarter company during years of assessment commencing on or after that date.]
Wording of Sections
(
b) Where a controlled foreign company ceases, otherwise than by way of becoming a resident, to be a controlled foreign company during any foreign tax year of that controlled foreign company, that controlled foreign company must be treated as having—
(i)
disposed of each of the assets of that controlled foreign company, to a person that is a resident, on the date immediately before the day on which that controlled foreign company so ceased to be a controlled foreign company; and
(ii)
reacquired each of the assets disposed of as contemplated in
subparagraph (i) on the day on which that controlled foreign company so ceased to be a controlled foreign company,
for an amount equal to the market value of each of those assets.
[
Para. (b) substituted by s. 14 (1) (
b) of Act No. 25 of 2015 deemed to have come into operation on 5 June, 2015 and applicable in respect of (
a) (i) any person that ceases to be a resident; or (ii) any controlled foreign company that ceases to be a controlled foreign company in relation to a resident, on or after that date; and (
b) any person that becomes a headquarter company during years of assessment commencing on or after that date.]
Wording of Sections
(
c) Where a company that is a resident ceases to be a resident or becomes a headquarter company during any year of assessment of that company as contemplated in
paragraph (a)—
(i)
that year of assessment must be deemed to have ended on the date immediately before the day on which that company so ceased to be a resident or became a headquarter company;
(ii)
the next succeeding year of assessment of that company must be deemed to have commenced on the day on which that company so ceased to be a resident or became a headquarter company; and
(iii)
that company must, on the date immediately before the day on which the company so ceased to be a resident or became a headquarter company and for the purposes of section 64EA (
b), be deemed to have declared and paid a dividend that consists solely of a distribution of an asset
in specie—
(
aa)
the amount of which must be deemed to be equal to the sum of the market values of all the shares in that company on that date less the sum of the contributed tax capital of all the classes of shares in the company as at that date; and
(
bb)
to the person or persons holding shares in that company in accordance with the effective interest of that person or those persons in the shares in the company as at that date.
