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 7-105   COMPUTING JURISDICTIONAL TOP-UP TAX FOR THE PURPOSES OF COMPUTING TOP-UP TAX OF INVESTMENT ENTITY  

7-105(1)    
For the purposes of computing the Top-up Tax mentioned in paragraph 7-100(1)(a) for a Fiscal Year of the Investment Entities that are located in a particular jurisdiction, compute the Jurisdictional Top-up Tax (see section 5-30 ) of the MNE Group for the jurisdiction for the Fiscal Year in accordance with this section.

Note:

For the purposes of this section, treat the Investment Entities as the only Constituent Entities of the MNE Group (see section 7-100 ).

7-105(2)    
In computing the Net GloBE Income or Net GloBE Loss of the MNE Group for the jurisdiction for the Fiscal Year under subsection 5-15(1) , treat the amount computed in accordance with the formula in subsection 5-15(2) as being the sum of the MNE Group ' s Allocable GloBE Income or Loss for the Fiscal Year for each of the Investment Entities mentioned in subsection (1) of this section.

Example 1:

That Net GloBE Income can be relevant to computing:

(a) the Effective Tax Rate of the MNE Group for the jurisdiction for a Fiscal Year; and

(b) the Excess Profit of the MNE Group for the jurisdiction for a Fiscal Year.

Example 2:

That Net GloBE Loss can be relevant to computing any Additional Current Top up Tax of the MNE Group for the jurisdiction for a Fiscal Year under sections 4-30 and 5-100 (Adjusted Covered Taxes less than expected amount).

7-105(3)    
For the purposes of computing the Substance-based Income Exclusion Amount (see section 5-50 ) of the MNE Group for the jurisdiction for the Fiscal Year:

(a)    take into account only Eligible Tangible Assets and Eligible Payroll Costs of Eligible Employees of the Investment Entities; and

(b)    reduce the Payroll Carve-out Amount and Tangible Asset Carve-out Amount for each Investment Entity by multiplying it by the Ultimate Parent Entity ' s Inclusion Ratio for the Investment Entity; and

(c)    for the purposes of computing that Inclusion Ratio, treat each Investment Entity as a Low-Taxed Constituent Entity.

Note:

That Substance-based Income Exclusion Amount is relevant to computing the Excess Profit of the MNE Group for the jurisdiction for a Fiscal Year.

7-105(4)    
If a Constituent Entity of the MNE Group that is not an Investment Entity has an amount payable for the Fiscal Year in respect of an Investment Entity under a Qualified Domestic Minimum Top-up Tax of the jurisdiction, treat it as an amount payable by the Investment Entity (see the definition of Domestic Top-up Tax in section 5-30 ).

Note:

The amount is also treated as not being an amount payable by the Constituent Entity: see subsection 7-115(4) .

7-105(5)    
Treat the Adjusted Covered Taxes of an Investment Entity for the Fiscal Year as being the sum of:

(a)    the Adjusted Covered Taxes for the Fiscal Year of the Investment Entity, to the extent that they are attributable to the MNE Group ' s Allocable GloBE Income or Loss for the Investment Entity for the Fiscal Year; and

(b)    any Covered Taxes for the Fiscal Year allocated to the Investment Entity under Part 4-3 .

Example:

Those Adjusted Covered Taxes can be relevant to computing the following:

(a) the Effective Tax Rate of the MNE Group for the jurisdiction for a Fiscal Year;

(b) any Additional Current Top-up Tax of the MNE Group for the jurisdiction for a Fiscal Year under sections 4-30 and 5-100 (Adjusted Covered Taxes less than expected amount).

7-105(6)    
To avoid doubt, the Adjusted Covered Taxes mentioned in subsection (5) do not include any Covered Taxes for the Fiscal Year accrued by the Investment Entity, to the extent that they are attributable to income that is not part of the MNE Group ' s Allocable Share for the Investment Entity for the Fiscal Year.

7-105(7)    
In computing any Additional Current Top-up Tax of the MNE Group for the jurisdiction for a Fiscal Year under section 5-100 (Adjusted Covered Taxes less than expected amount), treat the MNE Group ' s Allocable GloBE Income or Loss for an Investment Entity as the Investment Entity ' s GloBE Income or Loss.