Global Minimum Tax Act — G-3.3 22
Definition of adjusted covered taxes 22 (1) The adjusted covered taxes , of a constituent entity of an MNE group for a fiscal year, means the current tax expense, in respect of covered taxes, in the constituent entity’s financial accounts for the fiscal year, adjusted by the following: (a) the positive or negative amount determined by the formula A − B where A is the total of the additions to covered taxes, in respect of the constituent entity for the fiscal year, under subsection (2), and B is the total of the reductions to covered taxes, in respect of the constituent entity for the fiscal year, under subsection (3); (b) the total deferred tax adjustment amount of the constituent entity for the fiscal year, unless paragraph 26 (b) or (c) applies in respect of the year and the jurisdiction in which the constituent entity is located; and (c) each amount recorded in the equity or other comprehensive income of the constituent entity for the fiscal year that can reasonably be considered to relate to an increase or decrease in respect of covered taxes, if (i) the covered taxes are in respect of an amount (referred to in this paragraph as the “included amount”) included in the constituent entity’s GloBE income or loss for the fiscal year, and (ii) the included amount is subject to tax under the laws of the jurisdiction in which the constituent entity is located. Adjusted covered taxes — additions (2) For the purposes of subsection (1), each of the following amounts is an addition to covered taxes in respect of a constituent entity of an MNE group for a fiscal year: (a) an amount recorded as an expense, in respect of covered taxes, in profit before taxation in the constituent entity’s financial accounts for the fiscal year; (b) the constituent entity’s share of a GloBE loss deferred tax asset of the MNE group that is reversed in the fiscal year; (c) an amount paid, in respect of covered taxes, in the fiscal year to the extent that the amount (i) relates to an uncertain tax position, and (ii) was treated as a reduction to the constituent entity’s covered taxes for a preceding fiscal year under paragraph (3)(d); and (d) an amount of a credit or refund — or an amount in respect of a transfer — in respect of a qualified refundable tax credit or a marketable transferable tax credit, that is recorded as a reduction in the current tax expense, in respect of covered taxes, in the financial accounts of the constituent entity for the fiscal year. Adjusted covered taxes — reductions (3) For the purposes of subsection (1), each of the following amounts is a reduction to covered taxes in respect of a constituent entity for a fiscal year: (a) in respect of an amount of income that is not included in computing the constituent entity’s GloBE income or loss, (i) any portion of the constituent entity’s current tax expense, in respect of covered taxes, in its financial accounts (referred to in this subsection as “relevant current tax expense”) for the fiscal year that relates to the amount of income, or (ii) any portion of an addition to covered taxes, in respect of the constituent entity for the fiscal year under subsection (2), that relates to the amount of income; (b) in respect of a tax credit (other than a qualified refundable tax credit, marketable transferable tax credit or tax credit the tax benefit of which is a flow-through tax benefit) that is used to reduce the constituent entity’s liability for a covered tax, (i) if the tax credit is a non-marketable transferable tax credit that was purchased by the constituent entity, the amount by which the face value of the tax credit exceeds its purchase price in proportion to the amount of the tax credit used to reduce the constituent entity’s liability for a covered tax for a taxable period that ends during the fiscal year, except any amount that is recorded as a reduction to the constituent entity’s relevant current tax expense for the fiscal year, and (ii) in any other case, the portion of the tax