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

CHAPTER 5 - COMPUTATION OF EFFECTIVE TAX RATE  

PART 5-6 - MINORITY-OWNED CONSTITUENT ENTITIES  

SECTION 5-125   MINORITY-OWNED CONSTITUENT ENTITIES THAT ARE NOT PART OF A MINORITY-OWNED SUBGROUP  

5-125(1)    
This section applies if a Constituent Entity of an MNE Group is a Minority-Owned Constituent Entity (the MOCE ) that:

(a)    is not a part of a Minority-Owned Subgroup; and

(b)    is not an Investment Entity.

5-125(2)    
For the purposes mentioned in subsection (3) , treat the MOCE as the only Constituent Entity of the MNE Group located in the jurisdiction in which it is located.

5-125(3)    
The purposes are as follows:

(a)    computing the Top-up Tax of the MOCE;

(b)    determining whether the MOCE is a Low-Taxed Constituent Entity.

Note 1:

For paragraph (a) , to compute that Top-up Tax, it is necessary to compute the Effective Tax Rate and Jurisdictional Top-up Tax of the MNE Group for the jurisdiction in which it is located, on the assumption that the MOCE is the only Constituent Entity of the MNE Group located in the jurisdiction.

Note 2:

For paragraph (b) , to determine whether the MOCE is a Low-Taxed Constituent Entity, it is necessary to compute the Effective Tax Rate and Net GloBE Income of the MNE Group for the jurisdiction in which it is located (see section 3-195 ), on the assumption that the MOCE is the only Constituent Entity of the MNE Group located in the jurisdiction.

5-125(4)    
For the purposes mentioned in subsection (5) , treat the MOCE as not being a Constituent Entity of the MNE Group.

5-125(5)    
The purposes are as follows:

(a)    computing the Top-up Tax of each Constituent Entity of the MNE Group (other than the MOCE);

(b)    determining whether each Constituent Entity of the MNE Group (other than the MOCE) is a Low-Taxed Constituent Entity.

5-125(6)    
Subsections (2) and (4) do not apply for the purposes of Part 5-5 (De minimis exclusion).