Merger of Companies under Section 146: Rollover Transfer and the Difference from a Demerger

Introduction

Section 146 of the ACP 1967 provides tax relief for the merger of companies. This article explains the principle of transfer at book/tax value (rollover), the condition of the Minister of Finance's approval, and the difference from a demerger.

The rollover principle under section 146

When a company transfers its business or assets to another company under a merger plan approved by the Minister of Finance, the transfer may be treated as taking place at book/tax value (rollover) rather than at market value, so that no capital/business gain arises immediately.

Approval of the Minister of Finance

A merger plan must be approved by the Minister of Finance.

Demerger: no comparable relief

A demerger, by contrast, has no comparable relief provision in the ACP (taxed under general principles).

Effect on losses and capital allowances

FAQ

Q. What is the effect of a transfer under an approved merger plan? A. The transfer may be treated as taking place at book/tax value (rollover) rather than market value, so that no capital/business gain arises immediately.

Q. Who approves the merger plan? A. The Minister of Finance — detailed approval conditions (form, period, documents) this item still awaits official confirmation from HASiL — check again with HASiL before deciding.

Q. Does a demerger get the same relief? A. No — there is no comparable relief provision in the ACP; it is taxed under general principles. Further review this item still awaits official confirmation from HASiL — check again with HASiL before deciding.