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

CHAPTER 2 - LIABILITY AMOUNTS  

PART 2-2 - ALLOCATION OF TOP-UP TAX UNDER THE IIR  

SECTION 2-15   MEANING OF INCLUSION RATIO  

2-15(1)    
The Inclusion Ratio , of a Parent Entity of an MNE Group, for a Low-Taxed Constituent Entity for a Fiscal Year, is:

(a)    the GloBE Income of the Low-Taxed Constituent Entity for the Fiscal Year, reduced by the amount of that GloBE Income attributable to Ownership Interests held by other owners (see subsection (2) );

divided by:

(b)    the GloBE Income of the Low-Taxed Constituent Entity for the Fiscal Year.

Note:

2-15(2)    
For the purposes of paragraph (1)(a) , the amount of GloBE Income attributable to Ownership Interests in the Low-Taxed Constituent Entity held by other owners is the amount that would have been treated as attributable to such owners under the principles of the Acceptable Financial Accounting Standard used in the Consolidated Financial Statements of the Ultimate Parent Entity of the MNE Group on the following assumptions:

(a)    the Low-Taxed Constituent Entity ' s net income were equal to its GloBE Income;

(b)    the Parent Entity had prepared Consolidated Financial Statements in accordance with that Acceptable Financial Accounting Standard (the hypothetical Consolidated Financial Statements );

(c)    the Parent Entity held a Controlling Interest in the Low-Taxed Constituent Entity such that all of the income and expenses of the Low-Taxed Constituent Entity were consolidated on a line-by-line basis with those of the Parent Entity in the hypothetical Consolidated Financial Statements;

(d)    all of the Low-Taxed Constituent Entity ' s GloBE Income were attributable to transactions with persons that are not Group Entities of the MNE Group;

(e)    all Ownership Interests not held by the Parent Entity were held by owners that are not Group Entities of the MNE Group.

2-15(3)    
However, if the Low-Taxed Constituent Entity is a Flow-through Entity, treat references in this section to GloBE Income as not including any amount by which its Financial Accounting Net Income or Loss is reduced under paragraph 3-255(1)(a) (amounts attributable to an owner that is not a Group Entity of the MNE Group).