S.L. 123.27 чл. 5ATransfer of value.

(1) (i) Where as a result of a change in the issued share capital of a company or a change in voting rights attached to such shares, (hereinafter referred to as the

"change"), a transfer of value as provided for in article 5(13)(b)(ii) of the Act is deemed to have taken place, the value transferred or acquired by a person shall be determined in accordance with the following formula: Y = (A – B) + C – D where -

(a) 'Y' represents the amount to be determined;

(b) 'A' is the market value of the shares held in the company immediately before the change;

(c) 'B' is the market value of the shares held in the company immediately after the change;

(d) 'C' is the consideration paid for the acquisition of shares or additional shares issued by the company, where the change consists of an issue of share capital for consideration;

(e) 'D' is the amount paid by the company in respect of a cancellation of shares, where the change consists of a reduction of share capital of the company: Provided that where the market value of the company immediately before the change does not exceed the value of the paid up share capital of such company, the value of 'Y' shall be taken as zero: Provided further that where such person does not hold any shares in the company immediately before or after the change, the value of 'A' or 'B' in the said formula, as the case may be, shall be taken as zero: Provided also that, where the change in the issued share capital consists of a conversion of securities, for the purpose of paragraphs (b) and (c) the market value of shares not being securities as defined in article 5(1)(b) of the Act shall be taken as zero.

(ii) Where the amount determined in accordance with the said formula is a positive amount, such person ("the transferor") shall be deemed for the purposes of article 5(13)(b)(ii) of the Act to have made a transfer of value equal to the said amount and such value shall be deemed for the purposes of the said article to have passed into other shares in or rights over the company held by any other person or persons. The amount so determined shall be the gains or profits referred to in the said article.

(iii) Where the amount determined in accordance with the said formula is a negative amount, such person ("the transferee") shall be deemed to have acquired value equal to the said amount and such value shall be deemed to have passed into shares in or rights over the company held by him.

(2) For the purpose of sub-rule (1):

(i) the market value of shares held in a company is a percentage of the market value of the said company corresponding to the percentage of the issued share capital represented by the nominal value of those shares;

(ii) where the issued share capital of the company is made up of different classes of shares (whether before or after the change in the issued share capital) or where the change consists of an alteration of voting rights, the market value of shares held in the company shall, notwithstanding paragraph (i), be the percentage of the market value of the said company corresponding to the percentage of the total voting rights in the company represented by the total voting rights attached to those shares;

(iii) notwithstanding paragraph (ii), where the value of 'Y' as determined by the application of paragraph (i) is higher than the value of 'Y' as determined by the application of paragraph (ii), the value of 'Y' is to be determined by the application of paragraph (i).

(3) The market value of a company shall, for the purpose of sub-rule (2), be determined in accordance with rules 5(6) and (7): Provided that in determining the market value of the company the total net asset value referred to in rule 5(6) shall be that resulting from an accounting statement prepared by a certified public accountant holding a practicing certificate in auditing, to be drawn up as at the date of the deemed transfer of value. The accounting statement shall consist of two balance sheets showing the position of the company immediately before and after the change and shall be drawn up using the same methods and the same layout as used for its financial statements for the financial year preceding that in which the change takes place.

(4) (i) For the purpose of determining the chargeable gain there shall be allowed as a deduction against the gains or profits determined in accordance with sub-rule (1) of this rule, a portion of the cost of acquisition of the shares held by the transferor immediately before the change in the issued share capital or voting rights (hereinafter referred to as the "change"), to be determined in accordance with the following formula -Z = ((A – B) / A) x E where -

(a) 'Z' represents the amount to be determined;

(b) 'A' is the market value of the shares held by the transferor immediately before the change as determined in sub-rule (1);

(c) 'B' is the market value of the shares held by the transferor immediately after the change as determined in sub-rule (1); and

(d) 'E' is the cost of acquisition of the shares held by the transferor immediately before the change: Provided that the deduction to be allowed against the said gains or profits, shall in no case exceed such gains or profits: Provided further that where the amount determined in accordance with the said formula is a negative amount, such amount shall be taken to be zero: Provided also that no such deduction shall be allowed where the gains or profits determined in accordance with sub-rule (1) of this rule arise as a result of a change in the issued share capital consisting of a reduction of share capital.

(ii) On a subsequent transfer of the shares held by the transferor immediately before the change, the cost of acquisition shall be deemed to be the portion of the cost of acquisition not taken into account in determining the chargeable gain referred to in paragraph (i) of this subrule, and proviso (ii) of rule 5(5) shall not apply to the said transfer.

(iii) The acquisition cost of shares held by the transferee acquiring value referred to in subrule (1)(iii) shall be increased by the amount referred to in the said paragraph, which shall for such purpose be treated as a positive amount, and the aggregate amount so obtained shall, for the purpose of determining the chargeable gain on a subsequent transfer, be the cost of acquisition of the said shares: Provided that where the said transferee, held shares in the company immediately before the change in the issued share capital and acquired further shares as a result of a change in the issued share capital consisting of an increase in the share capital of the company, the acquisition cost of the shares held and acquired shall be increased by the said amount: pro rata Provided further that the acquisition cost of shares, not being securities as defined in article 5(1)(b) of the Act, held by the transferee immediately before the change in the issued share capital shall, for the purpose of determining the aggregate amount referred to in this paragraph, be taken to be zero: Provided also that this paragraph shall only apply where the said transferee acquiring value has paid the relative duty as determined in accordance with article 42 of the Duty on Documents and Transfers Act in respect of the value so acquired.

(iv) On a subsequent transfer of the shares held by the transferor and transferee immediately after the change, made before the end of the financial year in which the change took place, the market value taken into account in determining the chargeable gain shall, notwithstanding the provisions of rule 5, not be lower than the value of 'B' referred to in sub-rule (1)(i)(c) of this rule, being the value that was taken into account in determining the value transferred or acquired, as the case may be.

(5) The transferor in any transfer of value referred to in this rule shall submit to the Commissioner a computation of the market value of the shares, made on the form prescribed in Schedule F, accompanied, where applicable, by the accounting statement referred to in sub-rule (3) and by a Perit’s valuation of the market value of the immovable property taken into account in determining the value of the company, together with a site plan issued by Land Registry, signed and stamped by a Perit.

(6) The form referred to in sub-rule (5) shall be delivered in triplicate to the Commissioner and the transferor shall, together with the delivery, pay to the Commissioner the provisional tax due on the transfer in accordance with article 43 of the Income Tax Management Act.

(7) The Commissioner shall stamp one of the copies of the form submitted in accordance with sub-rule (5) in acknowledgement of the receipt of same and return it to the person who submitted it.

(8) For the purposes of this rule, the term "shares" or "share capital" shall exclude shares which do not participate in any way in the profits of a company other than by way of a fixed rate of return.