Global Minimum Tax Act — G-3.3 32
Definition of substance-based income exclusion amount 32 (1) Subject to subsection (16), the substance-based income exclusion amount of an MNE group for a jurisdiction for a fiscal year means the lesser of (a) the total of all amounts each of which is determined by the formula A + B where A is, subject to subsection 49 (1), 5% of the eligible payroll costs of a standard constituent entity of the MNE group that is located in the jurisdiction for the fiscal year, and B is, subject to subsection 49 (2), 5% of the eligible tangible asset amount of the standard constituent entity for the fiscal year, and (b) the portion of the amount described in paragraph (a) that the filing constituent entity of the MNE group specifies as the substance-based income exclusion amount of the MNE group for the jurisdiction in the GIR in respect of the MNE group for the fiscal year. Definition of eligible payroll costs (2) Subject to subsections (5) to (7) and subparagraph 38 (1)(d)(i), the eligible payroll costs of a particular standard constituent entity of an MNE group for a fiscal year, means all payroll costs (other than excluded costs of the particular standard constituent entity) in respect of eligible employees of any standard constituent entity of the MNE group, incurred (a) if the particular standard constituent entity is a permanent establishment, by the main entity in respect of the permanent establishment and reflected in the separate financial accounts for the fiscal year of the permanent establishment, as adjusted in accordance with clause 17 (1)(b)(ii)(B) or subsection 17 (2); and (b) in any other case, by the particular standard constituent entity and reflected in the particular standard constituent entity’s financial accounts for the fiscal year. Definition of excluded costs (3) Excluded costs , of a particular standard constituent entity of an MNE group, means any costs if (a) it is not the case that (i) the costs are payable primarily in respect of work done in the course of the ordinary operating activities of any standard constituent entity of the MNE group, and (ii) that work is done in the jurisdiction in which the particular standard constituent entity is located; (b) the costs are capitalized and included in the carrying value of an asset used to calculate the eligible tangible asset amount of any constituent entity of the MNE group, as determined without reference to subsection (11); (c) where the particular standard constituent entity is the main entity in respect of a permanent establishment, the costs are reflected in the separate financial accounts of the permanent establishment as adjusted in accordance with clause 17 (1)(b)(ii)(B) or subsection 17 (2); (d) the costs are core international shipping costs, or ancillary international shipping costs that can reasonably be considered to be attributable to qualified ancillary international shipping income, of any constituent entity of the MNE group; or (e) where the particular standard constituent entity is a permanent establishment, the costs can reasonably be considered to be attributable to income that is excluded from the GloBE income or loss of the particular standard constituent entity under paragraph 17 (6)(a) or subsection 20 (4). Interjurisdictional employee deeming rule (4) For the purposes of subparagraph (3)(a)(ii), if an eligible employee of a particular standard constituent entity of an MNE group spends more than 50% of the time that the eligible employee is doing work (referred to in this subsection as the “ordinary course work”) in the course of the ordinary operating activities of the standard constituent entities of the MNE group in a fiscal year, in the jurisdiction in which the particular standard constituent entity is located, all the ordinary course work is deemed to be done in the jurisdiction for the fiscal year. Eligible payroll costs — flow-through entity allocation (5) If a particular amount would, in the absence of this subsection, be included in