Global Minimum Tax Act — G-3.3 18
quity of the constituent entity attributable to distributions received or receivable in respect of qualifying tier one capital held by the constituent entity, the amount is treated as income. Stock-based compensation expense — election (21) If a filing constituent entity elects under this subsection, in respect of the costs or expenses of the group entities that are located in a jurisdiction that were paid with stock-based compensation (each referred to in this subsection as a “stock-based compensation expense”), the following rules apply: (a) the election is a five-year election; (b) in computing the GloBE income or loss of each group entity that is located in that jurisdiction for a fiscal year to which the election applies, the amount allowed as a deduction in respect of any stock-based compensation expense in computing that entity’s income for tax purposes under the law of that jurisdiction for a local taxation year ending in the fiscal year is to be substituted for the amount of that stock-based compensation expense reflected as an expense in that entity’s financial accounting income for that fiscal year; (c) in computing the GloBE income or loss of each group entity that is located in that jurisdiction for any fiscal year to which the election applies, the group entity is to include as income an amount equal to the total of all amounts, each of which is a stock-based compensation expense that (i) arose in respect of an option that expires without exercise in the fiscal year, and (ii) was allowed as an expense in computing the GloBE income or loss of the group entity in accordance with the election for a prior fiscal year; (d) if the election applies with respect to stock-based compensation expenses arising from a transaction, and any amount in respect of the stock-based compensation expenses arising from that transaction was reflected in the financial accounting income of a group entity for a fiscal year preceding the first fiscal year to which the election applies, in computing GloBE income or loss of that group entity for that first fiscal year, the amount determined by the following formula is to be included as income: A − B where A is the total of all amounts, each of which is an amount in respect of stock-based compensation expenses arising from that transaction that was allowed as an expense in computing the group entity’s GloBE income or loss for a fiscal year preceding the first fiscal year, and B is the total of all amounts, each of which is the amount in respect of those stock-based compensation expenses that would have been allowed as an expense in computing the GloBE income or loss of the group entity for a fiscal year preceding the first fiscal year, if the election had applied to that preceding fiscal year; and (e) if the election is revoked, and any options in respect of any stock-based compensation to which the election applied have not been exercised — and the exercise period has not yet ended — before the revocation year, in computing GloBE income or loss of a group entity that is located in the jurisdiction for the revocation year, the amount determined by the following formula is to be included as income: A − B where A is the total of all amounts, each of which is an amount in respect of that stock-based compensation expense allowed as an expense in computing the GloBE income or loss of the group entity in accordance with the election for a fiscal year preceding the revocation year, and B is the total of all amounts, each of which is the amount in respect of that stock-based compensation that accrued as an expense in the group entity’s financial accounts, and would have been allowed as an expense in computing the group entity’s GloBE income or loss if the election had not applied, for a fiscal year preceding the revocation year. Fair value and impairment accounting — election (22) If a filing constituent entity elects under this subsection, in respect of a jurisdiction, to determine gains and losses u