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

CHAPTER 4 - COMPUTATION OF ADJUSTED COVERED TAXES  

PART 4-3 - ALLOCATION OF COVERED TAXES FROM ONE CONSTITUENT ENTITY TO ANOTHER CONSTITUENT ENTITY  

SECTION 4-56   MEANING OF GLOBE JURISDICTIONAL ETR  

4-56(1)    
The GloBE Jurisdictional ETR for an Entity or Permanent Establishment (the Tested Entity ) is:

(a)    if paragraph (c) does not apply and the Tested Entity is a Constituent Entity of an MNE Group that is required to compute an Effective Tax Rate under section 5-5 for the jurisdiction in which the Tested Entity is located for the Fiscal Year - the rate worked out under subsection (2) ; or

(b)    if paragraph (c) does not apply and the Tested Entity is a Constituent Entity of an MNE Group that is not required to compute an Effective Tax Rate under section 5-5 for the jurisdiction in which the Tested Entity is located for the Fiscal Year - the rate worked out under subsection (3) ; or

(c)    if the Tested Entity is treated as a Constituent Entity of an MNE Group under subparagraph 4-55(5)(b)(ii) - the rate worked out under subsection (4) .

4-56(2)    
The rate worked out under this subsection is the rate that would be the Effective Tax Rate for the Fiscal Year of the MNE Group for the jurisdiction in which the Constituent Entity is located, if the sum of the Adjusted Covered Taxes for the Fiscal Year of each Constituent Entity of the MNE Group located in that jurisdiction were:

(a)    computed without regard to any Covered Taxes imposed under a Controlled Foreign Company Tax Regime; and

(b)    if that jurisdiction imposes a Qualified Domestic Minimum Top-up Tax - increased by an amount equal to the tax payable under the Qualified Domestic Minimum Top-up Tax for the Fiscal Year, in respect of the Constituent Entities of the MNE Group that are located in that jurisdiction, to the extent the Blended CFC Tax Regime allows a foreign tax credit for that tax payable on the same terms as any other creditable Covered Tax.

4-56(3)    
The rate worked out under this subsection is whichever of the following applies:

(a)    if subsection 8-10(1) (Transitional CbCR Safe Harbour) applies to the MNE Group for the jurisdiction in which the Constituent Entity is located for the Fiscal Year - the Simplified ETR for the Fiscal Year of the MNE Group for the jurisdiction in which the Constituent Entity is located;

(b)    if subsection 8-200(1) (QDMTT Safe Harbour - general rule) or subsection 8-201(1) (QDMTT Safe Harbour - Stateless Constituent Entities) applies to the MNE Group for the jurisdiction in which the Constituent Entity is located for the Fiscal Year - the rate that would be the Effective Tax Rate for the Fiscal Year of the MNE Group for the jurisdiction in which the Constituent Entity is located if:

(i) the MNE Group was required to compute an effective tax rate under section 5-5 , or an equivalent law of a non-Australian jurisdiction, for the jurisdiction for the Fiscal Year; and

(ii) the sum of the Adjusted Covered Taxes for the Fiscal Year of each Constituent Entity of the MNE Group located in that jurisdiction were increased by an amount equal to the tax payable under the Qualified Domestic Minimum Top-up Tax for the Fiscal Year, in respect of the Constituent Entities of the MNE Group that are located in that jurisdiction, to the extent the Blended CFC Tax Regime allows a foreign tax credit for that tax payable on the same terms as any other creditable Covered Tax;

(c)    if the MNE group has a Constituent Entity in the jurisdiction for the Fiscal Year and neither of paragraphs (a) or (b) apply - the rate that would be the Simplified ETR for the Fiscal Year of the MNE Group for the jurisdiction in which the Constituent Entity is located, if the reference to the Group ' s Qualified CbC Report in section 8-30 was instead a reference to the Group ' s Qualified Financial Statements.

4-56(4)    
The rate worked out under this subsection is whichever of the following applies:

(a)    the rate worked out under subsection (2) or (3) for a Constituent Entity of the MNE Group, that is associated with the largest amount of Attributable Income of Entity (within the meaning of subsection 4-55(4) ) for the jurisdiction in which the Tested Entity is located for the Fiscal Year;

(b)    if paragraph (a) does not apply because the MNE group does not have a Constituent Entity in the jurisdiction in which the Tested Entity is located for the Fiscal Year - the rate that is:

(i) the sum of Covered Taxes for the Fiscal Year recorded in the financial accounts of each Entity or Permanent Establishment in the jurisdiction with respect to which the Constituent Entity-owner is subject to the Blended CFC Tax Regime;

divided by

(ii) the sum of the income recorded in the financial accounts of each such Entity or Permanent Establishment.