(1)
The following rules shall apply in the event of restructuring of
(a)
in the case of a merger of two or more trades or businesses —
(i)
a new trade or business shall not be deemed to have commenced as a result of the merger, and the provisions of this Act as they relate to cessation of trade or business shall not apply to the trade or business that ceased as a result of the merger,
(ii)
the provisions of Part VIII of Chapter Two of this Act as they relate to chargeable gains shall not apply to the assets transferred to the new or surviving trade or business as a result of the merger,
(iii)
assets of the merging trades or businesses shall be deemed to have been transferred at the residue of the qualifying capital expenditure on the day following the merger,
(iv)
the provisions of the First Schedule to this Act shall apply on the remaining useful life of the asset transferred because of the merger,
(v)
unutilised capital allowance on the assets transferred shall be available for the use of the new or surviving trade or business,
(vi)
unabsorbed losses of the merging entities shall be available to the surviving trade or business provided that such losses were incurred by the merged trade or business, and
(vii)
taxes deducted at source in respect of the merged trades or businesses shall be available to the merged trade or business;
(b)
in the case of a sale or transfer of a trade or business which results into the cessation of a trade or business —
(i)
the provisions of Part V of Chapter Two of this Act as regards cessation of trade, business, profession or vocation shall apply to the trade or business that was sold or transferred,
(ii)
for the purposes of the First Schedule to this Act, the asset sold or transferred shall be recognised at the value of which they are sold or transferred,
(iii)
unutilised capital allowance on the assets sold or transferred shall not be available for use in the new or surviving trade or business,
(iv)
unabsorbed losses of the old business shall not be available for use in the new or surviving trade, business, profession or vocation, and
(v)
taxes deducted at source from the old trade or business, shall not be available for use by the new or surviving trade or business ;
(c)
in the case of a sale or transfer of a business asset which does not result into the cessation of the trade or business, and where the parties agreed to sell or transfer the asset for an amount not exceeding the sum of the residue of the qualifying capital expenditure and unutilised capital allowance of the asset –
(i)
capital allowance under the provisions of the First Schedule to this Act shall apply to the residue of the asset only,
(ii)
the unutilised capital allowance on the asset sold or transferred shall be available for use by the buying trade or business,
(iii)
the trade or business that sold or transferred the assets shall not claim any part of the unutilised capital allowance pertaining to the asset sold or transferred ;
(iv)
the provisions of Part VIII of Chapter Two of this Act as regards chargeable gains shall not apply to the asset sold or transferred under this paragraph.
(2)
Notwithstanding the provisions of subsection (1) in the case of companies engaged in upstream petroleum operations, where business restructuring results in the formation of a new company and cessation of the old business, the accounting period of the company acquiring that trade or business shall commence on —
(a)
the date on which the sale or transfer of the trade or business to the new company takes place ;
(b)
such date within the calendar month in which the sale or transfer takes place, as may be elected by the company with the approval of the Service, and end on 31st December of the same year, provided that any gap between the old and surviving business shall be treated as being part of the new or surviving company.
(3)
The period referred to in subsection (2) of this Section, shall constitute "Accounting Period" under Chapter Three of this Act.
(4)
The relevant tax authority shall be notified of any restructuring of a trade, business, profession or vocation prior to commencing such arrangement.
(5)
Reference to a trade or business in this section include references to any part of the trade or business.
(6)
VAT charged under Chapter Six of this Act shall not apply to business restructuring carried out in accordance with this Act.
(7)
Where a business, or a part of the business, which is capable of separate operation is transferred as a going concern and the purchaser uses the assets in the same kind of business, such transfer shall not be treated as a supply of goods or services for the purposes of VAT, provided that the purchaser is registered in accordance with Part II of the Nigeria Tax Administration Act or registerable as a result of the transfer.