The Partnership and Business Names (Amendment) Law, Law 54(I) of 2011 introduces new provisions to the Partnership and Business Names Law, Cap. 116 to facilitate the reorganisation and merger of partnerships and extends the favourable tax treatment of qualifying corporate reorganisations to partnerships.
Following the change in the law, when, in the context of a reorganisation, a partnership transfers its assets and liabilities to a company or companies registered under the Companies Law, Cap. 113 as amended, the provisions of Sections 198 to 201 of the Companies Law apply in the same way as they would to the reorganisation of a company. Sections 198(5) and 200(5) of the Companies Law, which restrict the application of the reorganisation provisions to companies, are explicitly excluded.
Subject to the partnership's records and financial statements being audited by an authorised independent auditor, reorganisations of partnerships are treated in the same way as qualifying reorganisations of companies. In particular, they are tax-neutral and exempt from all forms of taxation, stamp duty and land transfer fees, under the provisions of sections 26 to 30 of the Income Tax Law of 2002 as amended, section 1(h)(i) of the Capital Gains Tax Law of 1980 as amended, section 4A of the Stamp Law of 1963 as amended and section 7(d) of the Department of Lands Surveys (Fees and Charges) Law, Cap. 219.