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

CHAPTER 5 - COMPUTATION OF EFFECTIVE TAX RATE  

PART 5-1 - DETERMINATION OF EFFECTIVE TAX RATE  

Note:

In computing amounts under Parts 5-1 , 5-2 , 5-3 and 5-4 , special rules apply for MNE Groups which have any of the following:

(a) a Minority-Owned Constituent Entity: see sections 5-120 and 5-125 ;

(b) a Joint Venture (and any JV Subsidiaries): see section 6-75 ;

(c) an Investment Entity or Insurance Investment Entity: see sections 7-100 and 7-115 , and Parts 7-5 and 7-6 .

SECTION 5-5   MEANING OF EFFECTIVE TAX RATE  

5-5(1)    
Subsection (2) applies in relation to an MNE Group for a jurisdiction for a Fiscal Year if it has Net GloBE Income for the jurisdiction for the Fiscal Year.

5-5(2)    
The Effective Tax Rate of the MNE Group for the jurisdiction for the Fiscal Year is equal to:

(a)    the sum of the Adjusted Covered Taxes for the Fiscal Year of each Constituent Entity of the MNE Group located in the jurisdiction;

divided by:

(b)    the Net GloBE Income of the MNE Group for the jurisdiction for the Fiscal Year;

expressed as a percentage.

Note:

The sum of the Adjusted Covered Taxes for the Fiscal Year of each Constituent Entity of the MNE Group located in the jurisdiction may be modified by subsection 5-10(2) or 7-50(2) or paragraph 7-65(a) .

5-5(3)    
Subsection (4) applies if:

(a)    the sum of the Adjusted Covered Taxes mentioned in paragraph (2)(a) exceeds zero; and

(b)    there is an Excess Negative Tax Expense Carry-forward for the MNE Group for the jurisdiction with a balance that exceeds zero.

5-5(4)    
For the purposes of subsection (2) , apply that balance to reduce the sum of the Adjusted Covered Taxes mentioned in paragraph (2)(a) (but not below zero).

5-5(5)    
Reduce the balance of the Excess Negative Tax Expense Carry-forward to the extent that it is applied under subsection (4) .