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

CHAPTER 7 - TAX NEUTRALITY AND DISTRIBUTION REGIMES  

PART 7-4 - EFFECTIVE TAX RATE COMPUTATION FOR INVESTMENT ENTITIES  

Division 3 - Top-up Tax of Investment Entity etc.  

SECTION 7-100   TOP-UP TAX ETC. OF INVESTMENT ENTITY - PRIMARY DEEMING RULE  

7-100(1)    
Treat the Investment Entities as the only Constituent Entities of the MNE Group for the purposes of:

(a)    computing the Top-up Tax of each of the Investment Entities; and

(b)    computing the MNE Group ' s Allocable GloBE Income or Loss for each of the Investment Entities (see section 7-110 ); and

(c)    determining whether each of the Investment Entities is a Low-Taxed Constituent Entity.

Note 1:

To compute the Top-up Tax mentioned in paragraph (a) , it is necessary to compute various amounts on the assumption that the Investment Entities located in the jurisdiction in which the relevant Investment Entity is located are the only Constituent Entities of the MNE Group located in that jurisdiction, including the following:

(a) Jurisdictional Top-up Tax for the jurisdiction (see subsection 7-105(1) );

(b) Net GloBE Income or Net GloBE Loss for the jurisdiction (see subsection 7-105(2) );

(c) Substance-based Income Exclusion Amount for the jurisdiction (see subsection 7-105(3) ).

Note 2:

For paragraph (c) , to determine whether an Investment Entity 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 Investment Entities are the only Constituent Entities of the MNE Group located in the jurisdiction.

7-100(2)    
Paragraph (1)(a) does not affect the operation of Chapters 2 , 3 , 4 (other than sections 4-30 and 4-35 , and Parts 4-5 and 4-6 ), 6 , 8 and 9 to the extent that they affect the application of Chapter 5 for the purposes of computing the Top-up Tax of each of the Investment Entities. EXAMPLES

Example:

In computing the GloBE Income or Loss of one of the Investment Entities, do not treat the Investment Entities as the only Constituent Entities of the MNE Group. That GloBE Income or Loss will affect the computation of the Top-up Tax of the Investment Entity under Chapter 5 . In applying Chapter 5 to compute that Top-up Tax, treat the Investment Entities as the only Constituent Entities of the MNE Group.