Global Minimum Tax Act — G-3.3 48
puting the constituent entity’s GloBE income or loss for the GloBE transition year if the amount arose in the GloBE transition year, or (ii) an amount that (A) is not included in the constituent entity’s income or profits in respect of which an entity is subject to an income or profits tax imposed by the government of the jurisdiction in which the constituent entity is located, and (B) would be included in computing the constituent entity’s GloBE income or loss for the GloBE transition year if the amount arose in the GloBE transition year. Valuation adjustments and accounting recognition adjustments (3) In applying subsection (1), the impact of any valuation adjustment or accounting recognition adjustment with respect to the amount of a deferred tax asset is not to be taken into account. Asset transfers before transferor transition year — conditions (4) Subsection (5) applies in respect of an asset if (a) an entity (referred to in this section as the “transferor”) transfers the asset — on or after December 1, 2021, and before the earlier of the QDMTT transition year and the GloBE transition year (referred to in this section as the “transferor transition year”) of its MNE group in respect of the jurisdiction in which it is located — to another entity (referred to in this section as the “transferee”); (b) the asset is not manufactured, nor of a class or description sold, in the course of carrying on a trade by the transferor or the transferee; and (c) had this Act applied immediately before the transfer, the transferor and transferee would have been constituent entities of the same MNE group. Asset transfers before transferor transition year — consequences (5) Subject to subsection (9), if this subsection applies in respect of an asset (a) the carrying value of the asset at the beginning of the transferor transition year is deemed to be equal to the carrying value of the asset to the transferor immediately before the transfer referred to in paragraph (4)(a), adjusted for (i) any subsequent capitalized expenditure incurred in respect of the asset before the transferor transition year, and (ii) the portion of any amortization and depreciation of the asset that would have been recognized before the transferor transition year if any increase in the carrying value resulting from the transfer had not occurred; and (b) in applying subsection (1), (i) any deferred tax assets and deferred tax liabilities in respect of the asset that are reflected in any entity’s financial accounts and that result from the transfer are not to be taken into account in determining the total deferred tax adjustment amount of any constituent entity, except to the extent provided under subparagraph (ii), and (ii) a deferred tax asset of the transferee that is described in subparagraph (i) may be taken into account but, for this purpose, the amount of that deferred tax asset is deemed to be equal to the lesser of the amount actually recorded in the transferee’s financial accounts as a result of the transfer and the total of the following amounts, adjusted for any capitalized expenditure, amortization and depreciation in respect of the asset that are referred to in subparagraphs (a)(i) and (ii): (A) the portion of the current tax expense for a fiscal year of the transferor in respect of covered taxes that is demonstrated to have resulted from the transfer, and (B) the portion of the current tax expense for a fiscal year of any other entity in respect of covered taxes that is demonstrated to have resulted from the transfer and that would have been allocated to the transferor under section 24 if (I) the transfer had occurred in the transferor transition year, and (II) section 24 were read without reference to paragraph 24 (4)(c). Deemed transfer (6) For the purposes of subsection (4), an asset is deemed to be transferred by a transferor to a transferee on or after December 1, 2021, and before the transferor transition year, if a transaction or arrangement is enter