Global Minimum Tax Act — G-3.3 17
ible, as the case may be, in the jurisdiction in which the permanent establishment is located) in accordance with (a) if paragraph (a) of the definition permanent establishment in subsection 2 (1) applies, the tax treaty applicable to the permanent establishment; (b) if paragraph (b) of that definition applies, the law of the jurisdiction in which the permanent establishment is located; or (c) if paragraph (c) of that definition applies, Article 7 of the OECD Model Tax Convention. Permanent establishments — general rule (3) Except as provided by subsection 18 (26), the net income or loss of a permanent establishment (other than any portion of that amount that is excluded from the financial accounting income of the permanent establishment because of subsection (2)) is not to be taken into account in determining the GloBE income or loss of the main entity in respect of the permanent establishment. No consolidation adjustments (4) The financial accounting income of a constituent entity is to include income, expenses, gains and losses (other than amounts excluded from GloBE income or loss because of subsection (5)) arising from transactions between the constituent entity and any other group entity, other than any transactions to which an election under subsection 18 (24) applies. Profit and loss statement — general rule (5) Unless otherwise required under this Act, no amount is included in computing the GloBE income or loss of a constituent entity if it is recognized outside of the profit and loss statement of the constituent entity’s financial statements. Financial accounting income — flow-through entity (6) If a constituent entity is a particular flow-through entity, the following rules apply in determining the financial accounting income for a fiscal year of the particular flow-through entity and any other group entities in respect of the net income or loss of the particular flow-through entity: (a) amounts in respect of the particular flow-through entity’s net income or loss that are attributable to ownership interests of persons or entities that are not group entities and that hold their ownership interests in the particular flow-through entity directly, or through a tax transparent structure, are not to be included in computing the financial accounting income of any group entity, unless (i) the particular flow-through entity is an ultimate parent entity, or (ii) the particular flow-through entity is owned, directly or through a tax transparent structure, by an ultimate parent entity that is also a flow-through entity, in which case this paragraph does not apply to amounts in respect of the particular flow-through entity’s net income or loss to the extent those amounts are attributable to persons or entities that hold their ownership interests in the particular flow-through entity through that ultimate parent entity; (b) if a particular group entity has an ownership interest in the particular flow-through entity, an amount that, in the absence of this paragraph — and, for greater certainty, after excluding amounts to which paragraph (a) applies and amounts allocated to a permanent establishment in accordance with paragraph (1)(b) — would be included in the financial accounting income of the particular flow-through entity is excluded from its financial accounting income and included in the financial accounting income of the particular group entity in accordance with the particular group entity’s ownership interest (determined having regard only to ownership interests held by group entities) in the particular flow-through entity, to the extent that (i) the particular flow-through entity is not an ultimate parent entity, (ii) the particular flow-through entity is fiscally transparent in relation to the particular group entity, (iii) the particular group entity is not a flow-through entity, other than a reverse hybrid entity or an ultimate parent entity, and (iv) the particular group entity holds its ownership interest in the par