§ 15 — Top‑up tax for relevant entity other than investment entity or insurance investment entity

15.—(1) In this Part, the top‑up tax for a relevant entity (other than an investment entity or an insurance investment entity) of a chargeable entity for a financial year is the top‑up amount of the relevant entity for the financial year multiplied by the chargeable entity’s inclusion ratio for the entity for the financial year.(2) In this section, a chargeable entity’s inclusion ratio for a relevant entity for a financial year is determined by the formula where —(a)

A is the GloBE income or loss of the relevant entity for the financial year; and

(b)

B is the GloBE income or loss of the relevant entity for the financial year that is attributable to entities other than the chargeable entity as determined under subsection (3).

(3) In subsection (2), the GloBE income or loss of a relevant entity for a financial year that is attributable to entities other than the chargeable entity is the GloBE income or loss of the relevant entity that would have been treated in the chargeable entity’s consolidated financial statements as attributable to those other entities, if the chargeable entity had prepared consolidated financial statements on the bases specified in subsection (4) (whether or not the chargeable entity had actually prepared such consolidated financial statements).

(4) The bases mentioned in subsection (3) are as follows:(a)

the ultimate parent entity of the MNE group prepares its consolidated financial statements in accordance with an acceptable financial accounting standard, or an authorised financial accounting standard but only if adjustment is made to prevent any material competitive distortion from the application of such authorised standard;

(b)

the consolidated financial statements of the chargeable entity are prepared in accordance with the same accounting standards as the consolidated financial statements mentioned in paragraph (a);

(c)

the chargeable entity owns a controlling interest in the relevant entity such that the income and expenses of the relevant entity are consolidated on a line‑by‑line basis with those of the chargeable entity;

(d)

the relevant entity’s net income is the amount of its GloBE income or loss;

(e)

all of the relevant entity’s GloBE income or loss is attributable to transactions with persons that are not members of the MNE group;

(f)

any ownership interest in the relevant entity that is not held by the chargeable entity is held by persons that are not members of the MNE group.

(5) For the purpose of subsection (2), where the relevant entity is a flow‑through entity, the GloBE income or loss of the relevant entity excludes any amount that is allocated to an owner of the relevant entity who is not a member of the MNE group.

(6) Where a relevant entity has a top‑up amount for a financial year, but its GloBE income or loss for the financial year is nil or a negative amount, then, for the purpose of subsection (2), its GloBE income or loss for the financial year is deemed to be its top‑up amount for the financial year divided by 15%.

—(1) In this Part, the top‑up tax for a relevant entity (other than an investment entity or an insurance investment entity) of a chargeable entity for a financial year is the top‑up amount of the relevant entity for the financial year multiplied by the chargeable entity’s inclusion ratio for the entity for the financial year.

(2) In this section, a chargeable entity’s inclusion ratio for a relevant entity for a financial year is determined by the formula where —(a)

A is the GloBE income or loss of the relevant entity for the financial year; and

(b)

B is the GloBE income or loss of the relevant entity for the financial year that is attributable to entities other than the chargeable entity as determined under subsection (3).

(3) In subsection (2), the GloBE income or loss of a relevant entity for a financial year that is attributable to entities other than the chargeable entity is the GloBE income or loss of the relevant entity that would have been treated in the chargeable entity’s consolidated financial statements as attributable to those other entities, if the chargeable entity had prepared consolidated financial statements on the bases specified in subsection (4) (whether or not the chargeable entity had actually prepared such consolidated financial statements).

(4) The bases mentioned in subsection (3) are as follows:(a)

the ultimate parent entity of the MNE group prepares its consolidated financial statements in accordance with an acceptable financial accounting standard, or an authorised financial accounting standard but only if adjustment is made to prevent any material competitive distortion from the application of such authorised standard;

(b)

the consolidated financial statements of the chargeable entity are prepared in accordance with the same accounting standards as the consolidated financial statements mentioned in paragraph (a);

(c)

the chargeable entity owns a controlling interest in the relevant entity such that the income and expenses of the relevant entity are consolidated on a line‑by‑line basis with those of the chargeable entity;

(d)

the relevant entity’s net income is the amount of its GloBE income or loss;

(e)

all of the relevant entity’s GloBE income or loss is attributable to transactions with persons that are not members of the MNE group;

(f)

any ownership interest in the relevant entity that is not held by the chargeable entity is held by persons that are not members of the MNE group.

(5) For the purpose of subsection (2), where the relevant entity is a flow‑through entity, the GloBE income or loss of the relevant entity excludes any amount that is allocated to an owner of the relevant entity who is not a member of the MNE group.

(6) Where a relevant entity has a top‑up amount for a financial year, but its GloBE income or loss for the financial year is nil or a negative amount, then, for the purpose of subsection (2), its GloBE income or loss for the financial year is deemed to be its top‑up amount for the financial year divided by 15%.