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

CHAPTER 5 - COMPUTATION OF EFFECTIVE TAX RATE  

PART 5-3 - SUBSTANCE-BASED INCOME EXCLUSION  

SECTION 5-80   ALLOCATION OF AMOUNTS BETWEEN A MAIN ENTITY AND A PERMANENT ESTABLISHMENT  

5-80(1)    
This section applies, in relation to a Fiscal Year, if a Constituent Entity of an MNE Group is a Permanent Establishment because of paragraph 19(1)(a) , (b) or (c) of the Act.

5-80(2)    
For the purposes of sections 5-50 , 5-55 and 5-65 :

(a)    treat the Eligible Payroll Costs accrued for the Fiscal Year of Eligible Employees of the Permanent Establishment as being those that are or would be included in the separate financial accounts used to compute the Permanent Establishment ' s Financial Accounting Net Income or Loss for the Fiscal Year mentioned in section 3-240 , as adjusted under section 3-245 ; and

(b)    treat the Eligible Tangible Assets of the Permanent Establishment as being those whose carrying values are or would be included in those financial accounts for the Fiscal Year; and

(c)    exclude those Eligible Payroll Costs and Eligible Tangible Assets from the Eligible Payroll Costs and Eligible Tangible Assets of the Main Entity of the Permanent Establishment for the Fiscal Year.

5-80(3)    
However, for the purposes of paragraphs (2)(a) and (b) :

(a)    treat Eligible Employees who are not located in the jurisdiction where the Permanent Establishment is located as not being Eligible Employees;

(b)    treat Eligible Tangible Assets that are not located in that jurisdiction as not being Eligible Tangible Assets of the Permanent Establishment.

5-80(4)    
Subsection (5) applies if:

(a)    a Flow-through Entity wholly or partly carries out its business through the Permanent Establishment; and

(b)    under paragraph 3-255(1)(a) or section 7-15 , the Permanent Establishment ' s Financial Accounting Net Income or Loss, GloBE Income or GloBE Loss (as the case may be) for the Fiscal Year has been reduced by an amount.

5-80(5)    
For the purposes of sections 5-50 , 5-55 and 5-65 :

(a)    reduce the Eligible Payroll Costs accrued for the Fiscal Year of Eligible Employees of the Permanent Establishment by multiplying it by the proportion the amount mentioned in paragraph (4)(b) bears to the Permanent Establishment ' s Financial Accounting Net Income or Loss, GloBE Income or GloBE Loss (as the case may be) for the Fiscal Year, before the reduction mentioned in that paragraph; and

(b)    reduce the carrying value for the Fiscal Year of the Eligible Tangible Assets of the Permanent Establishment by multiplying it by the same proportion.