Taxation (Multinational - Global and Domestic Minimum Tax) Rules 2024
CHAPTER 7
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TAX NEUTRALITY AND DISTRIBUTION REGIMES
PART 7-3
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ELIGIBLE DISTRIBUTION TAX SYSTEMS
If the balance of a Deemed Distribution Tax Recapture Account for a jurisdiction for an MNE Group for a Fiscal Year (the original year ) is above zero at the end of the fourth subsequent Fiscal Year: (a) for the purposes of paragraph 5-5(2)(a) , in computing the Effective Tax Rate of the MNE Group for the jurisdiction for the original year, reduce the sum of the Adjusted Covered Taxes for the original year of each Constituent Entity of the MNE Group located in the jurisdiction by the amount of the balance; and (b) recalculate the Effective Tax Rate and Jurisdictional Top-up Tax for the original year of the MNE Group for the jurisdiction in accordance with section 5-95 ; and (c) reduce the balance of the Deemed Distribution Tax Recapture Account for the original year to zero.
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 7-65 7-65 EFFECT OF POSITIVE BALANCE OF DEEMED DISTRIBUTION TAX RECAPTURE ACCOUNT AFTER 4 FISCAL YEARS - REDUCE ADJUSTED COVERED TAXES FOR ORIGINAL YEARIf the balance of a Deemed Distribution Tax Recapture Account for a jurisdiction for an MNE Group for a Fiscal Year (the original year ) is above zero at the end of the fourth subsequent Fiscal Year: (a) for the purposes of paragraph 5-5(2)(a) , in computing the Effective Tax Rate of the MNE Group for the jurisdiction for the original year, reduce the sum of the Adjusted Covered Taxes for the original year of each Constituent Entity of the MNE Group located in the jurisdiction by the amount of the balance; and (b) recalculate the Effective Tax Rate and Jurisdictional Top-up Tax for the original year of the MNE Group for the jurisdiction in accordance with section 5-95 ; and (c) reduce the balance of the Deemed Distribution Tax Recapture Account for the original year to zero.
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