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

CHAPTER 7 - TAX NEUTRALITY AND DISTRIBUTION REGIMES  

PART 7-5 - INVESTMENT ENTITY TAX TRANSPARENCY ELECTION  

SECTION 7-130   EFFECT OF ELECTION - INVESTMENT ENTITY TREATED AS TAX TRANSPARENT ENTITY  

7-130(1)    
This section applies if an election under subsection 7-125(1) applies to:

(a)    an Investment Entity that is a Constituent Entity of an MNE Group; and

(b)    a Constituent-Entity owner of the Investment Entity; and

(c)    a Fiscal Year.

7-130(2)    
For the purposes of this instrument, treat the Investment Entity as a Tax Transparent Entity for the Fiscal Year in respect of Ownership Interests held by the Constituent Entity-owner if, for the Fiscal Year:

(a)    the Constituent Entity-owner of the Investment Entity is subject to tax, in the jurisdiction in which the Constituent Entity-owner is located, under a mark-to-market or similar regime based on the annual changes in the fair value of its Ownership Interest in the Investment Entity; and

(b)    the tax rate applicable to the Constituent Entity-owner with respect to income arising from those annual changes equals or exceeds the Minimum Rate.

7-130(3)    
Subsection (4) applies if:

(a)    a Constituent Entity owns an Indirect Ownership Interest in an Investment Entity (the first Investment Entity ) through a Direct Ownership Interest in another Investment Entity (the other Investment Entity ); and

(b)    the Constituent Entity is subject to a mark-to-market or similar regime in the jurisdiction in which it is located based on the annual changes in the fair value of its Direct Ownership Interest in the other Investment Entity.

7-130(4)    
For the purposes of the subsection (2) , treat the Constituent Entity as being subject to tax under a mark-to-market or similar regime in the jurisdiction in which it is located based on the annual changes in the fair value of its Indirect Ownership Interest in the first Investment Entity.

7-130(5)    

If the Constituent Entity-owner mentioned in paragraph (1)(b) is a regulated mutual insurance company, paragraphs (2)(a) and (b) are taken to be satisfied in relation to the Constituent Entity-owner for the Fiscal Year.

7-130(6)    

A regulated mutual insurance company is an insurance company that is:

(a)    wholly owned by its policyholders; and

(b)    regulated by a regulatory authority in the jurisdiction in which it is located.