Taxation (Multinational - Global and Domestic Minimum Tax) Rules 2024
A deduction/non-inclusion arrangement is an arrangement: (a) under which a Constituent Entity (the investor ) of an MNE Group directly or indirectly provides credit or otherwise makes an investment in another Constituent Entity of the MNE Group (the recipient ); and (b) the provision of the credit or making of the investment results in an expense or loss in the financial statements of the recipient;
to the extent that:
(c) there is no commensurate increase in the revenue or gain in the financial statements of the investor; or (d) the investor is not reasonably expected over the life of the arrangement to have a commensurate increase in its taxable income.8-120(2)
Despite subsection (1) , an arrangement is not a deduction/non-inclusion arrangement to the extent that the relevant expense or loss is solely with respect to Additional Tier One Capital.
8-120(3)
For the purposes of paragraph (1)(d) , the investor does not have a commensurate increase in its taxable income to the extent that: (a) if an amount is included in its taxable income - the amount included in its taxable income is offset by a tax attribute (such as a loss carry forward or an unused interest carry forward) with respect to which a valuation adjustment or accounting recognition adjustment:
(i) has been made; or
(b) the provision of the credit or making of the investment that results in the expense or loss of the recipient mentioned in paragraph (1)(b) :
(ii) would have been made if the adjustment determination were made without regard to the investor ' s ability to use the tax attribute with respect to any Hybrid Arbitrage Arrangement entered into after 15 December 2022; or
(i) gives rises to a taxable deduction or loss of a Constituent Entity of the MNE Group that is located in the same jurisdiction as the investor; and
(ii) is not included as an expense or loss in determining the MNE Group ' s Profit (Loss) before Income Tax for the jurisdiction (including as a result of being an expense or loss in the financial statements of a Flow-through Entity which is owned by a Constituent Entity of the MNE Group that is located in the jurisdiction of the investor).
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