Global Minimum Tax Act — G-3.3 25
Definition of total deferred tax adjustment amount 25 (1) The total deferred tax adjustment amount , of a constituent entity for a fiscal year, means the positive or negative amount determined by the formula A + B − C where A is (a) if the tax rate applicable in determining the constituent entity’s deferred tax expense, in respect of covered taxes, recorded in its financial accounts for the year exceeds the minimum rate, the amount that would be the constituent entity’s deferred tax expense in respect of covered taxes (subject to the exclusions under subsection (2)), if the applicable tax rate were the minimum rate, and (b) in any other case, the constituent entity’s deferred tax expense, in respect of covered taxes, recorded in its financial accounts for the year (subject to the exclusions under subsection (2)); B is the total of all amounts each of which is (a) an amount paid in the year in respect of an unclaimed accrual of the constituent entity, or (b) the amount of any recaptured deferred tax liability determined for a preceding fiscal year that reverses in the year; and C is the total of all amounts each of which is (a) a reduction to the amount determined for A that would have occurred due to the recognition of a loss deferred tax asset for a current year tax loss but for the recognition criteria under the applicable accounting standard having not been met, or (b) to the extent not reflected as a reduction in determining the amount for A, the amount by which a deferred tax asset has increased because of subsection (5). Total deferred tax adjustment amount — exclusions (2) In determining the amount for A in subsection (1), the following are to be excluded: (a) the portion of deferred tax expense that is in respect of (i) an item that is not included in computing GloBE income or loss, (ii) a disallowed accrual or an unclaimed accrual, or (iii) the generation or use of a tax credit; (b) the effect of any valuation adjustment or accounting recognition adjustment in respect of a deferred tax asset; and (c) the portion of deferred tax expense that arises because of a re-measurement with respect to a change in the rate of tax applicable in determining the deferred tax expense. Foreign tax credits — substitute loss carry-forward (3) Despite subparagraph (2)(a)(iii), deferred tax expense must be included in determining the amount for A in subsection (1) if it is in respect of a deferred tax asset in respect of (a) a substitute loss carry-forward tax credit, except that, in a fiscal year in which the substitute loss carry-forward tax credit is used, the deferred tax expense is to be included only to the extent the substitute loss carry-forward tax credit is used to reduce or eliminate covered taxes in respect of income that is included in computing the constituent entity’s GloBE income or loss; or (b) a substitute loss carry-forward recapture amount. Substitute loss carry-forward recapture amount (4) To the extent it would not otherwise arise or reverse, as the case may be, a deferred tax asset is deemed, in respect of a substitute loss carry-forward recapture amount of a constituent entity that is located in a particular jurisdiction, to (a) arise in the fiscal year that the substitute loss carry-forward recapture amount arises, in an amount equal to the product obtained by multiplying the substitute loss carry-forward recapture amount by the statutory tax rate applicable to the constituent entity in the fiscal year under the income tax laws of the particular jurisdiction; and (b) reverse, in any fiscal year (referred to in this paragraph as a “recharacterization year”) in which a recharacterization of income (referred to in this paragraph as the “recharacterized income”) described in paragraph (b) of the definition substitute loss carry-forward recapture amount in subsection 2 (1) occurs, in an amount equal to the tax credits used by the constituent entity solely as a result of the recharacterization of income in the recharact