Global Minimum Tax Act — G-3.3 24
ocation year, the amount in respect of the covered taxes applicable in respect of the constituent entity-owner’s share of the controlled foreign company’s income for the fiscal year is deemed to be equal to the amount determined by the formula A × B ÷ C where A is the total amount, in respect of covered taxes imposed under the blended controlled foreign company tax regime, that is recorded in the financial accounts of the constituent entity-owner for the fiscal year, B is the amount determined by the formula D × E where D is the constituent entity-owner’s share of the income of the controlled foreign company, as determined under the blended controlled foreign company tax regime in computing the covered taxes, and E is the result of the formula F − G where F is the lowest rate that, if it were the corporate tax rate applicable in the subsidiary jurisdiction, would result in the tax charge in the subsidiary jurisdiction in respect of the controlled foreign company being sufficient to prevent a tax charge on the constituent entity-owner under the blended controlled foreign company tax regime in respect of its share of the income of the controlled foreign company for the fiscal year, and G is the rate that would be the effective tax rate of the MNE group for the subsidiary jurisdiction for the fiscal year, if the jurisdictional adjusted covered taxes of the MNE group for the subsidiary jurisdiction were (i) determined without regard to any covered taxes imposed under a controlled foreign company tax regime, and (ii) increased by an amount equal to the tax payable for the fiscal year, in respect of the standard constituent entities of the MNE group that are located in the subsidiary jurisdiction, under a qualified domestic minimum top-up tax of the subsidiary jurisdiction, to the extent the blended controlled foreign company tax regime allows a foreign tax credit for that tax payable on the same terms as any other creditable covered tax, and C is the total of all amounts each of which is an amount that would be determined for B if (i) all references in the description of B to “the controlled foreign company” and “the subsidiary jurisdiction” were read as references to “an entity in which the constituent entity-owner holds an ownership interest” and “the jurisdiction where the entity is located”, respectively, and (ii) where an entity is located in a jurisdiction for which an effective tax rate of the MNE group is not determined for the fiscal year, the effective tax rate of the MNE group for that jurisdiction for the year were determined based on the aggregate income and taxes recorded in the financial accounts of all entities, that are located in the jurisdiction, in which the constituent entity-owner holds an ownership interest, and as if those entities were constituent entities of the MNE group; and (c) if the covered taxes, in respect of which an amount would, in the absence of this paragraph, be allocated from the constituent entity-owner to the controlled foreign company under paragraph (a), are applicable in whole or in part in respect of passive income of the controlled foreign company, the amount allocated under paragraph (a) in respect of the portion of the covered taxes that are applicable in respect of the passive income is not to exceed the lesser of (i) the amount that would, in the absence of this paragraph, be allocated under paragraph (a) in respect of the portion of the covered taxes that are applicable in respect of the passive income, and (ii) the amount determined by the formula A × B where A is the amount of the controlled foreign company’s passive income included under the controlled foreign company tax regime in computing the covered taxes, and B is the top-up percentage of the MNE group for the subsidiary jurisdiction, determined without regard to any amount that is described in subparagraph (i). Allocation — hybrid entities (5) The following rules apply for the purposes of allocating amounts in respect of