Global Minimum Tax Act — G-3.3 21
GloBE income — deductible dividend regime 21 (1) The GloBE income, for a fiscal year, of an ultimate parent entity that is subject to a deductible dividend regime and distributes a deductible dividend within 12 months of the end of the fiscal year excludes the amount of the dividend (except to the extent its exclusion would result in a GloBE loss for the year), if (a) one of the following conditions is met: (i) the dividend recipient is subject to tax, for a taxable period that ends within 12 months of the end of the fiscal year, on the full amount of the dividend at a nominal rate that is equal to, or exceeds, the minimum rate, (ii) it can reasonably be expected that (A + B) ≥ C × D where A is the amount that would, in the absence of this subsection and paragraph 22 (4)(b), be adjusted covered taxes payable by the ultimate parent entity in respect of the dividend or the profits out of which the dividend is paid, B is the tax payable in respect of the dividend by the dividend recipient for a taxable period ending within 12 months of the end of the fiscal year, C is the amount of the dividend, and D is the minimum rate, or (iii) it is the case that (A) the dividend recipient is a natural person, (B) the dividend recipient is subject to tax in respect of the dividend for a taxable period that ends within 12 months of the end of the fiscal year, and (C) the dividend is a patronage dividend from a supply cooperative; (b) the dividend recipient is a natural person who (i) is tax resident in the jurisdiction where the ultimate parent entity is located, and (ii) does not hold ownership interests that in the aggregate entitle the holder to more than 5% of the profits or assets of the ultimate parent entity; or (c) the dividend recipient is resident in the jurisdiction where the ultimate parent entity is located and is (i) a governmental entity, (ii) an international organization, (iii) a non-profit organization, or (iv) a pension fund that is not a pension services entity. Exclusion for covered taxes (2) If subsection (1) applies to exclude a particular amount from the GloBE income of an ultimate parent entity, the entity’s GloBE income also excludes the amount of the entity’s covered taxes that are, because of the exclusion of the particular amount from its GloBE income, excluded from the entity’s adjusted covered taxes under paragraph 22 (4)(b). Back-to-back deductible dividends (3) Subsections (1) and (2) apply, with such modifications as the context requires, to a group entity for a fiscal year in respect of a particular deductible dividend distributed by the group entity directly or indirectly to the ultimate parent entity, to the extent that (a) the group entity is located in the same jurisdiction as the ultimate parent entity; (b) the group entity is subject to the deductible dividend regime; (c) the ultimate parent entity’s ownership interests in the group entity are held directly or through a chain of group entities that meet the conditions in paragraphs (a) and (b); (d) the ultimate parent entity distributes, within 12 months of the end of the fiscal year, the amount it received in respect of the particular deductible dividend; and (e) the distribution by the ultimate parent entity is a deductible dividend in respect of which a condition in any of paragraphs (1)(a) to (c) is met. Deeming rule — patronage dividends (4) For the purposes of clause (1)(a)(iii)(B), a patronage dividend from a supply cooperative is deemed to be subject to tax to the extent that it reduces a cost or expense that is otherwise deductible in computing the recipient’s income for tax purposes.