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

CHAPTER 7 - TAX NEUTRALITY AND DISTRIBUTION REGIMES  

PART 7-3 - ELIGIBLE DISTRIBUTION TAX SYSTEMS  

Note:

Taxes on distributed profits, deemed profit distributions and non-business expenses imposed under an Eligible Distribution Tax System are Covered Taxes (see paragraph 4-40(1)(b) ).

SECTION 7-55   DEEMED DISTRIBUTION TAX RECAPTURE ACCOUNT  

7-55(1)    
This section applies if, at the end of a Fiscal Year (the current year ), there are one or more Deemed Distribution Tax Recapture Accounts for a jurisdiction for an MNE Group for earlier Fiscal Years.

7-55(2)    
At the end of the current year, reduce the balance of the Deemed Distribution Tax Recapture Accounts in accordance with the following subsections.

7-55(3)    
Make reductions under subsection (4) to the balance of a Deemed Distribution Tax Recapture Account for an earlier Fiscal Year before making a reduction under subsection (4) to the balance of a Deemed Distribution Tax Recapture Account for a later Fiscal Year.

7-55(4)    
Reduce the balance of a Deemed Distribution Tax Recapture Account by applying amounts mentioned in paragraphs (a) , (b) and (c) as follows:

(a)    first, reduce that balance by applying the amount of Taxes mentioned in paragraph 4-40(1)(b) paid by the Constituent Entities of the MNE Group located in the jurisdiction during the current year in relation to actual or deemed distributions;

(b)    next, reduce that balance by applying the amount that is:

(i) the Net GloBE Loss (if any) for the current year of the MNE Group for the jurisdiction;

multiplied by:

(ii) the Minimum Rate;

(c)    next, if there are one or more Recapture Account Loss Carry-forwards for the jurisdiction for the MNE Group for earlier Fiscal Years, reduce that balance by applying the amount of those Recapture Account Loss Carry-forwards.

7-55(5)    
However, do not apply an amount mentioned in paragraph (4)(a) , (b) or (c) to the extent that doing so would reduce the balance of the Deemed Distribution Tax Recapture Account below zero.

7-55(6)    
For the purposes of paragraph (4)(c) , apply an amount of a Recapture Account Loss Carry-forward for an earlier Fiscal Year before applying an amount of a Recapture Account Loss Carry-forward for a later Fiscal Year.