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 5-40   TOP-UP TAX OF A CONSTITUENT ENTITY  

5-40(1)    
Subsection (2) applies if an MNE Group has Net GloBE Income for a jurisdiction for a Fiscal Year.

5-40(2)    
The Top-up Tax of a Constituent Entity of the MNE Group, located in the jurisdiction, for a Fiscal Year is the amount computed in accordance with the following formula:

Jurisdictional Top-up Tax	×	GloBE Income of the CE
		Aggregate GloBE Income of all CEs

where:

Aggregate GloBE Income of all CEs
is the sum of the GloBE Income of all Constituent Entities of the MNE Group that have GloBE Income for the Fiscal Year included in the computation of Net GloBE Income of the MNE Group in accordance with section 5-15 for the jurisdiction for the Fiscal Year.

GloBE Income of the CE
is the GloBE Income of the Constituent Entity for the jurisdiction for the Fiscal Year.

Jurisdictional Top-up Tax
is the Jurisdictional Top-up Tax of the MNE Group for the jurisdiction for the Fiscal Year.

5-40(3)    
Subject to the following subsections, if an MNE Group does not have Net GloBE Income for a jurisdiction for a Fiscal Year, the Top-up Tax of a Constituent Entity of the MNE Group, located in the jurisdiction, for the Fiscal Year is zero.

5-40(4)    
Subsection (5) applies if:

(a)    an MNE Group does not have Net GloBE Income for a jurisdiction for a Fiscal Year (the current Fiscal Year ); and

(b)    there are one or more amounts of Additional Current Top-up Tax of the MNE Group for the jurisdiction for the current Fiscal Year, in respect of a prior Fiscal Year.

5-40(5)    
Increase the Top-up Tax of a Constituent Entity of the MNE Group, located in the jurisdiction, for the current Fiscal Year by the amount computed in accordance with the following formula:

Additional Current Top-up Tax in respect of prior year	×	GloBE Income of the CE for prior year
		Aggregate GloBE Income of all CEs for prior year

where:

Additional Current Top-up Tax in respect of prior year
is the sum of the amounts of Additional Current Top-up Tax mentioned in paragraph (4)(b) .

Aggregate GloBE Income of all CEs for prior year
is the sum of the GloBE Income of all Constituent Entities of the MNE Group that have GloBE Income for the prior Fiscal Year included in the computation of Net GloBE Income of the MNE Group in accordance with section 5-15 for the jurisdiction for the prior Fiscal Year.

GloBE Income of the CE for prior year
is the GloBE Income of the Constituent Entity for the jurisdiction for the prior Fiscal Year.

Note:

Subsection (5) may apply multiple times in relation to the current Fiscal Year if there are amounts of Additional Current Top-up Tax of the MNE Group for the jurisdiction for the current Fiscal Year, in respect of more than one prior Fiscal Year.

5-40(6)    
Subsection (7) applies if:

(a)    an MNE Group does not have Net GloBE Income for a jurisdiction for a Fiscal Year (the current Fiscal Year ); and

(b)    there is an amount of Additional Current Top-up Tax of the MNE Group for the jurisdiction for the current Fiscal Year, in respect of the current Fiscal Year, for the purposes of subsection 5-100(1) .

5-40(7)    
Increase the Top-up Tax of a Constituent Entity of the MNE Group, located in the jurisdiction, for the current Fiscal Year by the amount computed in accordance with the formula in subsection (5) , but in doing so:

(a)    treat all references in that subsection to the prior Fiscal Year as instead being references to the current Fiscal Year; and

(b)    treat the GloBE Income for the current Fiscal Year of a Constituent Entity of the MNE Group located in the jurisdiction as being increased by the amount computed under subsection 5-100(2) .