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

CHAPTER 5 - COMPUTATION OF EFFECTIVE TAX RATE  

PART 5-2 - TOP-UP TAX  

Note:

The Jurisdictional Top-up Tax or the Top-up Tax Percentage of an MNE Group for a jurisdiction may be modified by Part 8-2 (Safe harbours).

SECTION 5-35   CERTAIN AMOUNTS OF DOMESTIC TOP-UP TAX DISREGARDED  

5-35(1)    
This section applies if either of the following applies to all or part of an amount payable (the disputed amount ) by a Constituent Entity of an MNE Group under a Qualified Domestic Minimum Top-up Tax of a jurisdiction for a Fiscal Year:

(a)    a Constituent Entity of the MNE Group objects to paying the disputed amount in judicial or administrative proceedings under a law of the jurisdiction on any of the grounds set out in subsection (2) ;

(b)    the tax authority of the jurisdiction has determined the disputed amount is not assessable or collectible on any of those grounds.

5-35(2)    
For the purposes of paragraphs (1)(a) and (b) , the grounds are the following:

(a)    the disputed amount is not payable on constitutional grounds or as a result of another superior law applying in the jurisdiction;

(b)    the disputed amount is not payable under a specific agreement with the government of the jurisdiction as to the tax liability of the Constituent Entity or the MNE Group;

(c)    the disputed amount is not payable because the Constituent Entity:

(i) is not liable for any tax in the jurisdiction; or

(ii) is entitled to compensation or reimbursement for any tax paid in the jurisdiction.

5-35(3)    
For the purposes of the definition of Domestic Top-up Tax in section 5-30 , treat the disputed amount as not being an amount payable by the Constituent Entity under a Qualified Domestic Minimum Top-up Tax of the jurisdiction for the Fiscal Year.

5-35(4)    
However, if subsequently:

(a)    the Constituent Entity has paid all or part of the disputed amount (the paid amount ); and

(b)    no Constituent Entity of the MNE Group objects to paying the disputed amount in judicial or administrative proceedings under a law of the jurisdiction; and

(c)    disregarding subsection (3) , the paid amount would be all or part of an amount payable in relation to the Fiscal Year mentioned in subsection (1) by the Constituent Entity under a Qualified Domestic Minimum Top-up Tax of the jurisdiction for the purposes of the definition of Domestic Top-up Tax in section 5-30 ;

for those purposes, treat the paid amount as an amount payable by the Constituent Entity under a Qualified Domestic Minimum Top-up Tax of the jurisdiction for that Fiscal Year.