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A company has requested clarification on whether it can apply the double taxation relief provided in the 23rd Transitional Provision of the Corporate Income Tax Act after absorbing a subsidiary, by integrating distributable reserves into its own equity instead of distributing dividends. The Directorate General of Taxes (DGT) has ruled that it is indeed possible to apply this double taxation correction mechanism in the context of a merger.
The tax team reviews your specific situation.
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