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

CHAPTER 7 - TAX NEUTRALITY AND DISTRIBUTION REGIMES  

PART 7-6 - TAXABLE DISTRIBUTION METHOD ELECTION  

SECTION 7-155   EFFECT OF ELECTION - WHERE POSITIVE BALANCE OF UNDISTRIBUTED NET GloBE INCOME ACCOUNT AFTER 3 FISCAL YEARS, INCREASE TOP-UP TAX FOR TESTED YEAR  

7-155(1)    
This section applies if:

(a)    an election under subsection 7-145(1) applies to:

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

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

(iii) a Fiscal Year (the tested year ); and

(b)    there is an Undistributed Net GloBE Income Account for the Investment Entity for the tested year with a balance above zero at the end of the third subsequent Fiscal Year (the reporting year ).

7-155(2)    
In computing the Investment Entity ' s GloBE Income or Loss for the reporting year, include the Constituent Entity-owner ' s proportionate share of the Undistributed Net GloBE Income Account for the Investment Entity for the tested year (the Constituent Entity-owner ' s undistributed share ).

7-155(3)    
For purposes of Chapter 2 :

(a)    treat the Investment Entity as a Low-Taxed Constituent Entity of the MNE Group for the reporting year; and

(b)    increase the Top-up Tax of the Investment Entity for the reporting year by the amount that is:

(i) the Constituent Entity-owner ' s undistributed share; multiplied by:

(ii) the Minimum Rate.