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

CHAPTER 5 - COMPUTATION OF EFFECTIVE TAX RATE  

PART 5-3 - SUBSTANCE-BASED INCOME EXCLUSION  

SECTION 5-50   SUBSTANCE-BASED INCOME EXCLUSION AMOUNT  

5-50(1)    
The Substance-based Income Exclusion Amount of an MNE Group for a jurisdiction for a Fiscal Year is the sum of the following:

(a)    the sum of the Payroll Carve-out Amounts for each Constituent Entity of the MNE Group located in the jurisdiction, for the Fiscal Year;

(b)    the sum of the Tangible Asset Carve-out Amounts for each Constituent Entity of the MNE Group located in the jurisdiction, for the Fiscal Year.

Note:

In computing the Substance-based Income Exclusion Amount of an MNE Group, further special rules (in addition to those mentioned in the note to the heading to Part 5-1 ) apply if the MNE Group has any of the following:

(a) a Permanent Establishment: see section 5-80 ;

(b) a Flow-through Entity: see section 5-85 ;

(c) an Ultimate Parent Entity that is subject to a Deductible Dividend Regime: see section 5-90 and subsections 7-20(7) and 7-25(3) ;

(d) an Entity that becomes, or ceases to be, a Constituent Entity of the MNE Group during the Fiscal Year: section 6-35 .

5-50(2)    
However, the Substance-based Income Exclusion Amount of an MNE Group for a jurisdiction for a Fiscal Year is taken to be zero if an election for the MNE Group under subsection (3) applies to the jurisdiction and the Fiscal Year.

Election

5-50(3)    
A Filing Constituent Entity for the MNE Group may make an election for the MNE Group under this subsection that applies to a specified jurisdiction.

5-50(4)    
An election under subsection (3) is an Annual Election.

Deemed election

5-50(5)    
If the GloBE Information Return filed for a Fiscal Year for an MNE Group by a Filing Constituent Entity for the MNE Group:

(a)    does not compute the Substance-based Income Exclusion Amount for a jurisdiction; or

(b)    does not claim the Substance-based Income Exclusion Amount for a jurisdiction in the computation of Jurisdictional Top-up Tax for the jurisdiction;

the MNE Group is taken to have made an election under subsection (3) that applies to the jurisdiction and Fiscal Year.

5-50(6)    
If an MNE Group is taken, under subsection (5) , to have made an election, the election cannot be revoked.