Newsletter
DEED TAX EXEMPTION CER-TIFICATE NEEDED ON DEMERGER
Article 2 of the Deed Tax Statute provides that "the sale, pledge, exchange, gift, or partition of real property, or the acquisition of title thereto due to possession, shall all be reported for pay-ment of deed tax." Article 8 provides that "[with respect to] deed tax on partition, the partitioner shall estimate the property value and draw up a deed, and file for the payment of deed tax." Ar-ticle 15 further provides that in case of exemp-tion from deed tax under Article 14, the person entitled to such exemption should fill out a tax exemption application, and apply together with the deed and related documents to the competent tax authorities for the issuance of a deed tax exemption certificate, with which to register the change of rights over the property.
In an announcement dated 24 May 2002, the Ministry of Finance stated that when a company acquires ownership of realvable property through a demerger conducted in accordance with the Corporate Mergers and Acquisitions Law (CMAL), the transaction is exempt from deed tax under Article 34 Paragraph 1 Item 2 of the CMAL. However, the company should still apply to the competent tax authorities for a deed tax exemption certificate, with which to register the change of ownership. But if ownership of real property is acquired through a merger under the CMAL, rather than a demerger, it is not necessary to apply for a deed tax exemption cer-tificate, because mergers are not among the transactions on which deed tax is payable.