Global Minimum Tax Act — G-3.3 18
Net tax expense 18 (1) An amount is included or excluded, as the case may be, in computing GloBE income or loss of a constituent entity for a fiscal year in order to reverse any debits or credits in the constituent entity’s financial accounting income in respect of (a) covered taxes (including, for greater certainty, any covered tax in respect of income that is excluded from the computation of GloBE income or loss); (b) to the extent it is not included in paragraph (a), any deferred tax asset attributable to a loss for the fiscal year; (c) any tax under an IIR or UTPR; (d) any tax under a qualified domestic minimum top-up tax; (e) any tax paid or accrued by an insurance company in respect of returns to policyholders; or (f) any disqualified refundable imputation tax. Purchase price accounting adjustments (2) GloBE income or loss, of a constituent entity for a fiscal year, excludes amounts in respect of any purchase price accounting adjustment reflected in the consolidated financial statements of the ultimate parent entity or the constituent entity’s financial accounts, arising as a result of an entity becoming a group entity because of the acquisition of ownership interests in that entity by an existing group entity, unless (a) the acquisition occurs before December 1, 2021; and (b) it is not reasonably practicable to determine the constituent entity’s financial accounting income in the absence of the adjustment. Excluded dividends (3) In computing the GloBE income or loss, of a constituent entity for a fiscal year, the following rules apply in respect of excluded dividends: (a) the constituent entity’s GloBE income or loss for the fiscal year excludes any excluded dividends received or accrued by the constituent entity in the fiscal year; and (b) if the filing constituent entity elects in respect of the constituent entity for a fiscal year, (i) for the purposes of this subsection and the definition excluded dividends in subsection 2 (1), all portfolio holdings of the constituent entity are deemed to be short-term portfolio holdings, and (ii) the election is a five-year election. Excluded equity gains and losses (4) In computing the GloBE income or loss of a constituent entity for a fiscal year, the constituent entity’s GloBE income or loss excludes any excluded equity gain or loss of the constituent entity for the fiscal year. Insurance reserves (5) If a constituent entity is an insurance company, any expense in respect of the movement of insurance reserves of the entity is excluded in computing that entity’s GloBE income or loss for the fiscal year to the extent that the movement is economically matched by (a) excluded dividends, net of any investment management fees, from a security held on behalf of a policyholder; or (b) excluded equity gains or losses from a security held on behalf of a policyholder. Hedging currency risk — election (6) If the filing constituent entity elects, in respect of a particular constituent entity for a fiscal year, the following rules apply: (a) any amount, in respect of a foreign exchange gain or loss, that is included in the particular constituent entity’s financial accounting income for a fiscal year is deemed to be an excluded equity gain or loss of the particular constituent entity for the year, to the extent that (i) the gain or loss is (A) in respect of a hedging instrument that hedges currency risk in respect of ownership interests (other than portfolio holdings) held by the particular constituent entity or another group entity, and (B) recognized in other comprehensive income in the consolidated financial statements, (ii) the hedging instrument is an effective hedge under the authorized financial accounting standard used in the preparation of the consolidated financial statements, and (iii) the economic and accounting effect of the hedging instrument (A) has not been transferred to another entity, if the particular constituent entity holds the hedging instrument, or (B) has been transfe