Advance tax ruling

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Advance tax rulings are sometimes also known as 'tax clearance', 'pre-clearance', 'non-statutory business clearance' or 'clearance'.

They are designed to enable the parties to a proposed transaction to obtain reassurance (before committing to the transaction) about its tax effects.

An advance tax ruling or clearance is a written confirmation by a tax authority of its interpretation of the tax law applying to a proposed transaction.

In relation to major transactions, the parties may make the obtaining of a favourable advance tax ruling a precondition to completing the transaction.

The detailed process and its legal effects differ, depending on the tax jurisdiction and the nature of the transaction.

In all cases, the taxpayer must of course make full disclosure to the tax authority of all relevant information.

See also