Global Minimum Tax Act — G-3.3 24
Allocation of covered taxes to a permanent establishment 24 (1) An amount in respect of covered taxes is allocated from a particular constituent entity to a permanent establishment for a fiscal year if (a) the permanent establishment is a group entity in respect of the particular constituent entity; and (b) the amount is (i) recorded in the financial accounts of the particular constituent entity, and (ii) in respect of the GloBE income or loss of the permanent establishment for the fiscal year. Permanent establishment loss (2) If subsection 18 (26) applies in respect of a permanent establishment and the main entity in respect of the permanent establishment, the following rules apply: (a) a deferred tax expense in respect of a deferred tax asset is excluded in computing the adjusted covered taxes of the permanent establishment and the main entity if (i) the deferred tax asset is attributable to a tax loss arising in the jurisdiction in which the permanent establishment is located, and (ii) the loss is treated as an expense of the main entity under paragraph 18 (26)(a); and (b) if covered taxes arise in the jurisdiction in which the permanent establishment is located in respect of income (referred to in this paragraph as the “allocated income”) of the permanent establishment that is included in computing the GloBE income or loss of the main entity for a fiscal year under paragraph 18 (26)(b), the covered taxes are allocated from the permanent establishment to the main entity for the fiscal year, to the extent of the lesser of (i) the amount of the covered taxes, and (ii) the amount determined by the formula A × B where A is the allocated income, and B is the highest rate of corporate tax on ordinary income in the jurisdiction where the main entity is located. Allocation — tax transparent entities (3) An amount in respect of covered taxes is allocated from a tax transparent entity to its constituent entity-owner, to the extent that (a) the constituent entity-owner holds an ownership interest in the tax transparent entity; and (b) the amount is (i) recorded in the financial accounts of the tax transparent entity, and (ii) in respect of any portion of the net income or loss of the tax transparent entity that is included in computing the financial accounting income of the constituent entity-owner because of paragraphs 17 (6)(b) and (c). Allocation — controlled foreign companies (4) The following rules apply for the purposes of allocating, to a constituent entity (referred to in this subsection as the “controlled foreign company”) of an MNE group, amounts in respect of covered taxes to which a constituent entity-owner of the controlled foreign company is subject under a controlled foreign company tax regime: (a) subject to paragraphs (b) and (c), an amount in respect of covered taxes arising in a fiscal year is allocated from the constituent entity-owner to the controlled foreign company, if (i) the constituent entity-owner is located in one jurisdiction (referred to in this paragraph as the “parent jurisdiction”) and the controlled foreign company is located in another jurisdiction (referred to in this subsection as the “subsidiary jurisdiction”), and (ii) the amount is (A) recorded in the financial accounts of the constituent entity-owner for the fiscal year, and (B) in respect of covered taxes, imposed under a controlled foreign company tax regime of the parent jurisdiction, applicable in respect of the constituent entity-owner’s share of the controlled foreign company’s income; (b) for the purposes of clause (a)(ii)(B), in the case of covered taxes imposed under a blended controlled foreign company tax regime that are recorded in the financial accounts of a constituent entity-owner for a fiscal year that is a transitional special allocation 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 eq