Global Minimum Tax Act — G-3.3 38
Constituent entities joining and leaving MNE group 38 (1) Subject to subsection (2), if an entity (referred to in this subsection as the “transferred entity”) ceases to be a constituent entity of an MNE group (referred to in this subsection as the “MNE group” or the “disposing MNE group”), or becomes a constituent entity of an MNE group (referred to in this subsection as the “MNE group” or the “acquiring MNE group”) — including where the entity becomes the ultimate parent entity of an MNE group — as a result of a transfer, in a fiscal year (referred to in this section as the “transfer year”) of the MNE group, of ownership interests in the transferred entity or in another entity that holds, directly or indirectly, an ownership interest in the transferred entity, the following rules apply: (a) the transferred entity is to be treated as a constituent entity of the MNE group for the transfer year, if any portion of the transferred entity’s assets, liabilities, income, expenses or cash flows is included on a line-by-line basis in the consolidated financial statements of the ultimate parent entity of the MNE group for the fiscal year; (b) any portion of the transferred entity’s financial accounting income and adjusted covered taxes that is not taken into account in the consolidated financial statements of the ultimate parent entity of the MNE group for the transfer year is not to be taken into account in determining any amount under this Act in respect of the MNE group for the transfer year; (c) the transferred entity’s GloBE income or loss and adjusted covered taxes, for the transfer year and any subsequent fiscal years, is to be determined using its historical carrying value of its assets and liabilities; (d) in determining, under subsection 32 (1), the substance-based income exclusion amount of the MNE group for the jurisdiction in which the transferred entity is located for the transfer year, (i) any portion of the transferred entity’s eligible payroll costs that is not taken into account in the preparation of the consolidated financial statements of the ultimate parent entity of the MNE group for the transfer year is not to be taken into account, and (ii) the eligible tangible asset amount of the transferred entity for the transfer year is not to exceed the amount determined by the formula A × B ÷ C where A is the amount that would be the transferred entity’s eligible tangible asset amount for the transfer year as determined under subsection 32 (9) if that subsection were applied without reference to this subparagraph, B is (A) if the MNE group is an acquiring MNE group, the total number of days in the transfer year less the number of days in the transfer year preceding and including the day on which the disposition occurred, and (B) if the MNE group is a disposing MNE group, the total number of days in the transfer year less the number of days in the transfer year following the day on which the disposition occurred, and C is the total number of days in the transfer year; (e) deferred tax assets (other than GloBE loss deferred tax assets) and deferred tax liabilities of the transferred entity that arose, and did not reverse, before the transfer are to be taken into account, in the transfer year and any subsequent fiscal years, in determining amounts under this Act in respect of the acquiring MNE group, in the same manner and to the same extent as if the ultimate parent entity of the acquiring MNE group had a controlling interest in respect of the transferred entity in the period that (i) began with the time at which the deferred tax asset or deferred tax liability arose, and (ii) ended at the time of the transfer; (f) for the purposes of applying section 25 in determining the transferred entity’s total deferred tax adjustment amount, (i) any deferred tax liability (referred to in this paragraph as the “transferred deferred tax liability”) that was taken into account in determining the transferred entity’s total deferred tax adj