Allows an election to exclude debt-release income in qualifying insolvency, creditor-arrangement or distress cases.
What should you do now?Retain the court order, creditor agreement and financial analysis proving the qualifying condition.
What does the official Article provide?
The official source is Arabic. This English commentary is explanatory and is not presented as an official translation.
Allows an election to exclude debt-release income in qualifying insolvency, creditor-arrangement or distress cases.
This is a verified summary rather than a verbatim reproduction. Consult the official Arabic text, the Law and later decisions before making a final determination.
What does the Article mean in plain language?
Excluding debt-release income requires an annual election and a specified case: supervised insolvency/bankruptcy, an arrangement involving an independent creditor to avert insolvency reasonably expected within 12 months, or liabilities exceeding asset fair market value immediately before release. In the third case, only unrelated-creditor debt qualifies, capped at the lesser of that excess and the resulting reduction in tax attributes. An intra-group debt waiver is not automatically excluded merely because it is described as restructuring.
Financial reporting, tax, transfer-pricing and consolidation teams.
Retain the court order, creditor agreement and financial analysis proving the qualifying condition.
Excluding the entire debt in the third case without the cap or unrelated-creditor condition.
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Is this Article enough on its own?
Usually not. Read it with the connected Law Article, definitions, any effective election and current NBR guidance, especially for an amount or deadline.
Does NBR guidance replace the Regulations?
No. Guidance explains application and supports procedures and examples, but current legislation and decisions prevail in case of inconsistency.