§ 16 — Top‑up amounts of constituent entities other than special entities

16.—(1) In this Part, a constituent entity (not being a special entity) of an MNE group has a top‑up amount for a financial year if the amount determined under subsection (2) or (3) is a positive amount, and that positive amount is considered the top‑up amount of the constituent entity for the financial year.(2) If the sum of the GloBE income or loss for a financial year of all the constituent entities (not being special entities) of an MNE group located in a single jurisdiction is a positive amount, the top‑up amount for that financial year of each of those constituent entities is determined by the formula where —(a)

A is the jurisdictional top‑up amount (as determined in accordance with subsection (4)) for all of those constituent entities for that financial year;

(b)

B is the GloBE income or loss of the constituent entity for the financial year if the constituent entity has a positive amount of GloBE income or loss for that financial year, otherwise B is nil; and

(c)

C is the sum of the GloBE income or loss for the financial year of each of those constituent entities that has a positive amount of GloBE income or loss for that financial year.

(3) If the sum of the GloBE income or loss for a financial year of all the constituent entities (not being special entities) of an MNE group located in a single jurisdiction is nil or a negative amount, the top‑up amount for that financial year of each of those constituent entities is determined by any of the following formulae (whichever is applicable):(a)

if those constituent entities have an additional current top‑up amount under section 21(1) but not under section 21(4), for that financial year: where —(i)

A has the meaning given by subsection (2)(a);

(ii)

D is nil if the GloBE income or loss of the constituent entity for that financial year is a positive amount or the adjusted covered taxes for that constituent entity for that financial year is nil or a positive amount, otherwise D is the amount determined by multiplying the GloBE income or loss (being nil or a negative amount) of that constituent entity for that financial year by 15% and then deducting the adjusted covered taxes (being a negative amount) for that constituent entity for that financial year, except that if the resulting amount is negative, D is nil; and

(iii)

E is the sum of D for each of those constituent entities;

(b)

if those constituent entities have an additional current top‑up amount under section 21(4) but not under section 21(1), for that financial year, and the recalculation in section 21(4) is only made for one previous financial year: where —(i)

A has the meaning given by subsection (2)(a);

(ii)

F is the GloBE income or loss of the constituent entity for the previous financial year, except that if the GloBE income or loss for the previous financial year is a negative amount, F is nil; and

(iii)

G is the sum of F for each of those constituent entities;

(c)

in any other case, in accordance with the applicable formula prescribed in the regulations.

Jurisdictional Top‑Up Amount

(4) In subsection (2), the jurisdictional top‑up amount for the constituent entities (not being special entities) of an MNE group located in a jurisdiction for a financial year is determined by the formula (H × I) + J – K, where —(a)

H is the top‑up tax percentage for those constituent entities for that financial year as determined in accordance with subsection (5);

(b)

I is the excess profits of those constituent entities for that financial year as determined in accordance with subsection (6);

(c)

J is the additional current top‑up amount as determined in accordance with section 21 for those constituent entities for that financial year; and

(d)

K is the qualified domestic minimum top‑up tax imposed by the law of that jurisdiction in respect of those constituent entities for that financial year, but —(i)

excluding any amount —(A)

contested in any judicial or administrative proceedings in that jurisdiction; or

(B)

determined by the tax authority of that jurisdiction to be not assessable or collectible,

on constitutional or similar grounds in that jurisdiction or any specific agreement with the government of that jurisdiction limiting the tax liability of those constituent entities; and

(ii)

including any amount excluded by a previous application of sub‑paragraph (i) but determined to be payable for that financial year.

Top‑Up Tax Percentage

(5) In subsection (4), the top‑up tax percentage for the constituent entities (not being special entities) of an MNE group located in a jurisdiction for a financial year is determined by the formula L – M, where —(a)

L is the minimum rate; and

(b)

M is the effective tax rate for those constituent entities for that financial year as determined in accordance with section 17,

and if the percentage so determined is nil or less, the top‑up tax percentage for those constituent entities for that financial year is nil.

Excess Profits

(6) In subsection (4), the excess profits of the constituent entities (not being special entities) of an MNE group located in a jurisdiction for a financial year is determined by the formula N − O, where —(a)

N is the sum of the GloBE income or loss for that financial year of those constituent entities; and

(b)

O is the substance‑based income exclusion for those constituent entities for that financial year as determined in accordance with section 18,

and if the amount so determined is nil or less, the excess profits of those constituent entities for that financial year is nil.

Regulations

(7) The Minister may make regulations under section 84 to provide for —(a)

the recalculation, in a subsequent financial year, of the top‑up amounts of the constituent entities of an MNE group for a financial year in accordance with the GloBE rules; and

(b)

the determination of the top‑up amount of a constituent entity of an MNE group for a financial year in specified circumstances in accordance with the GloBE rules.

—(1) In this Part, a constituent entity (not being a special entity) of an MNE group has a top‑up amount for a financial year if the amount determined under subsection (2) or (3) is a positive amount, and that positive amount is considered the top‑up amount of the constituent entity for the financial year.

(2) If the sum of the GloBE income or loss for a financial year of all the constituent entities (not being special entities) of an MNE group located in a single jurisdiction is a positive amount, the top‑up amount for that financial year of each of those constituent entities is determined by the formula where —(a)

A is the jurisdictional top‑up amount (as determined in accordance with subsection (4)) for all of those constituent entities for that financial year;

(b)

B is the GloBE income or loss of the constituent entity for the financial year if the constituent entity has a positive amount of GloBE income or loss for that financial year, otherwise B is nil; and

(c)

C is the sum of the GloBE income or loss for the financial year of each of those constituent entities that has a positive amount of GloBE income or loss for that financial year.

(3) If the sum of the GloBE income or loss for a financial year of all the constituent entities (not being special entities) of an MNE group located in a single jurisdiction is nil or a negative amount, the top‑up amount for that financial year of each of those constituent entities is determined by any of the following formulae (whichever is applicable):(a)

if those constituent entities have an additional current top‑up amount under section 21(1) but not under section 21(4), for that financial year: where —(i)

A has the meaning given by subsection (2)(a);

(ii)

D is nil if the GloBE income or loss of the constituent entity for that financial year is a positive amount or the adjusted covered taxes for that constituent entity for that financial year is nil or a positive amount, otherwise D is the amount determined by multiplying the GloBE income or loss (being nil or a negative amount) of that constituent entity for that financial year by 15% and then deducting the adjusted covered taxes (being a negative amount) for that constituent entity for that financial year, except that if the resulting amount is negative, D is nil; and

(iii)

E is the sum of D for each of those constituent entities;

(b)

if those constituent entities have an additional current top‑up amount under section 21(4) but not under section 21(1), for that financial year, and the recalculation in section 21(4) is only made for one previous financial year: where —(i)

A has the meaning given by subsection (2)(a);

(ii)

F is the GloBE income or loss of the constituent entity for the previous financial year, except that if the GloBE income or loss for the previous financial year is a negative amount, F is nil; and

(iii)

G is the sum of F for each of those constituent entities;

(c)

in any other case, in accordance with the applicable formula prescribed in the regulations.

(4) In subsection (2), the jurisdictional top‑up amount for the constituent entities (not being special entities) of an MNE group located in a jurisdiction for a financial year is determined by the formula (H × I) + J – K, where —(a)

H is the top‑up tax percentage for those constituent entities for that financial year as determined in accordance with subsection (5);

(b)

I is the excess profits of those constituent entities for that financial year as determined in accordance with subsection (6);

(c)

J is the additional current top‑up amount as determined in accordance with section 21 for those constituent entities for that financial year; and

(d)

K is the qualified domestic minimum top‑up tax imposed by the law of that jurisdiction in respect of those constituent entities for that financial year, but —(i)

excluding any amount —(A)

contested in any judicial or administrative proceedings in that jurisdiction; or

(B)

determined by the tax authority of that jurisdiction to be not assessable or collectible,

on constitutional or similar grounds in that jurisdiction or any specific agreement with the government of that jurisdiction limiting the tax liability of those constituent entities; and

(ii)

including any amount excluded by a previous application of sub‑paragraph (i) but determined to be payable for that financial year.

(5) In subsection (4), the top‑up tax percentage for the constituent entities (not being special entities) of an MNE group located in a jurisdiction for a financial year is determined by the formula L – M, where —(a)

L is the minimum rate; and

(b)

M is the effective tax rate for those constituent entities for that financial year as determined in accordance with section 17,

and if the percentage so determined is nil or less, the top‑up tax percentage for those constituent entities for that financial year is nil.

(6) In subsection (4), the excess profits of the constituent entities (not being special entities) of an MNE group located in a jurisdiction for a financial year is determined by the formula N − O, where —(a)

N is the sum of the GloBE income or loss for that financial year of those constituent entities; and

(b)

O is the substance‑based income exclusion for those constituent entities for that financial year as determined in accordance with section 18,

and if the amount so determined is nil or less, the excess profits of those constituent entities for that financial year is nil.

(7) The Minister may make regulations under section 84 to provide for —(a)

the recalculation, in a subsequent financial year, of the top‑up amounts of the constituent entities of an MNE group for a financial year in accordance with the GloBE rules; and

(b)

the determination of the top‑up amount of a constituent entity of an MNE group for a financial year in specified circumstances in accordance with the GloBE rules.