Taxation (Multinational - Global and Domestic Minimum Tax) Rules 2024

CHAPTER 4 - COMPUTATION OF ADJUSTED COVERED TAXES  

PART 4-6 - POST-FILING ADJUSTMENTS AND TAX RATE CHANGES  

SECTION 4-145   TAX RATE CHANGES AND UNPAID CURRENT TAX EXPENSE  

4-145(1)    
If:

(a)    there is an amount of deferred tax expense, recorded in the financial accounts, of a Constituent Entity, for a Fiscal Year resulting from a reduction to the applicable domestic tax rate; and

(b)    the reduction results in the application of a rate that is less than the Minimum Rate;

treat the amount as an adjustment to the Constituent Entity ' s liability for Covered Taxes for a prior Fiscal Year.

4-145(2)    
If:

(a)    there is an amount of deferred tax expense, recorded in the financial accounts, of a Constituent Entity, for a Fiscal Year resulting from an increase to the applicable domestic tax rate; and

(b)    that deferred tax expense has been reversed; and

(c)    before the increase, the amount was recorded at a rate less than the Minimum Rate;

treat the amount as an adjustment to the Constituent Entity ' s liability for Covered Taxes for a prior Fiscal Year. However, this adjustment is limited to an amount that is equal to an increase of deferred tax expense up to such deferred tax expense recast at the Minimum Rate.

4-145(3)    
If:

(a)    the amount of current tax expense recorded in the financial accounts of a Constituent Entity of an MNE Group for a Fiscal Year (the prior year ) is included in the Constituent Entity ' s Adjusted Covered Taxes for the prior year; and

(b)    that amount is not fully paid by the end of the third Fiscal Year after the prior year; and

(c)    the amount that remains unpaid exceeds 1 million Euros;

then:

(d)    recalculate in accordance with section 5-95 :

(i) the Effective Tax Rate of the MNE Group for the jurisdiction in which the Constituent Entity is located, for the prior year; and

(ii) the Jurisdictional Top-up Tax of the MNE Group for that jurisdiction for the prior year; and

(e)    for the purposes of that recalculation, exclude the amount that remains unpaid from the Constituent Entity ' s Adjusted Covered Taxes for the prior year.