Global Minimum Tax Act — G-3.3 37
Deemed distribution tax — rules 37 (1) If the filing constituent entity of an MNE group elects, in respect of a jurisdiction that has an eligible distribution tax system, for a fiscal year (referred to in this subsection as the “election year”), (a) the jurisdictional adjusted covered taxes of the MNE group for the jurisdiction for the election year is deemed to be equal to the jurisdictional adjusted covered taxes determined without reference to this paragraph, plus an amount equal to the deemed distribution tax of the MNE group for the jurisdiction for the election year; (b) a deemed distribution tax recapture account of the MNE group must be established by the MNE group in respect of the jurisdiction for the election year, and (i) the account must be maintained and recorded by the MNE group, and (ii) a record of the account must be made available at the request of the Minister for examination or inspection by any person authorized by the Minister for that purpose; (c) subject to subsections (4) and (5), the outstanding balance of the deemed distribution tax recapture account is determined as follows: (i) at the end of the election year, the balance is increased by the amount of the deemed distribution tax of the MNE group for the jurisdiction for the election year, and (ii) at the end of each fiscal year (referred to in this paragraph as a “subsequent year”) following the election year, the outstanding balances of the deemed distribution tax recapture accounts in respect of the jurisdiction established for fiscal years preceding the subsequent year are reduced, but not below zero, in chronological order (A) first by the taxes recorded by any standard constituent entities of the MNE group that are located in the jurisdiction during the subsequent year in relation to an actual or deemed distribution of profits, (B) then by the amount of any net GloBE loss of the MNE group for the jurisdiction for the subsequent year multiplied by the minimum rate, and (C) then by the recapture account loss carry-forward of the MNE group for the jurisdiction for the subsequent year; and (d) any amount of tax recorded by a standard constituent entity of an MNE group in relation to an actual or deemed distribution of profits is not to be included in the adjusted covered taxes of that entity for any fiscal year to the extent that the amount is applied as a reduction under clause (c)(ii)(A) in determining the outstanding balance of any deemed distribution tax recapture account of the MNE group. Definition of deemed distribution tax (2) The deemed distribution tax , of an MNE group for a jurisdiction for a fiscal year, means the lesser of (a) the amount determined by the formula A × B − C × B where A is the minimum rate, B is the net GloBE income of the MNE group for the jurisdiction for the fiscal year, and C is the rate that would be the effective tax rate of the MNE group for the jurisdiction for the fiscal year if (i) it were determined without reference to this section, and (ii) paragraph 29 (1)(b) were read without reference to subparagraph (i) in the description of B in the formula in that paragraph and applied without reference to section 8 , and (b) the amount of tax that would be payable in respect of the standard constituent entities of the MNE group under the eligible distribution tax system of the jurisdiction for the fiscal year, if all the standard constituent entities of the MNE group that are located in the jurisdiction had distributed all of their income that was subject to the eligible distribution tax system during the fiscal year. Definition of recapture account loss carry-forward (3) The recapture account loss carry-forward , of an MNE group for a jurisdiction for a particular fiscal year, means the amount determined by the formula A − B where A is the total of all amounts each of which is determined by the formula C − D where C is the amount determined under clause (1)(c)(ii)(B) for the jurisdiction for any fiscal year preced