Global Minimum Tax Act — G-3.3 18
me jurisdiction is not recorded in the same amount, not recorded in accordance with the arm’s length principle or not recorded at all in the financial accounts of the counterparties for a fiscal year (a) the GloBE income or loss of each of the counterparties is to be adjusted to reflect the amount determined in respect of the transaction in computing the counterparties’ incomes for tax purposes, if (i) as a result of transfer pricing adjustments, a difference between the treatment of an amount for tax purposes and for accounting purposes that is not eliminated over time and does not give rise to deferred tax (referred to in this subsection as a “permanent difference”) arises for each counterparty in respect of the transaction, and (ii) the permanent difference for each counterparty corresponds to the permanent difference for the other counterparty; or (b) the GloBE income or loss of each of the counterparties is to be adjusted to reflect the amount determined, as a result of a transfer pricing adjustment, in respect of the transaction in computing the income for tax purposes of one of the counterparties (referred to in this paragraph as the “high-tax entity”), if (i) as a result of the transfer pricing adjustment, a permanent difference arises for the high-tax entity in respect of the transaction but does not arise for the other counterparty, and (ii) the following conditions are met: (A) the nominal tax rate that applies to the high-tax entity equals or exceeds the minimum rate, and (B) the effective tax rate of the MNE group for the jurisdiction equals or exceeds the minimum rate in at least one of the two fiscal years immediately preceding the fiscal year. Qualified refundable tax credits (15) In computing the GloBE income or loss of a constituent entity for a fiscal year, a qualified refundable tax credit is treated as income as follows: (a) if the tax credit is related to the acquisition or construction of assets and the originator has an accounting policy of reducing the carrying value of its assets in respect of such tax credits or recognizing the tax credit as deferred income, the originator must follow the accounting policy; and (b) in any other case, the face value of the tax credit is treated as income in the fiscal year in which the entitlement under the tax credit accrues. Marketable transferable tax credits (16) In computing the GloBE income or loss of a constituent entity for a fiscal year, (a) if the constituent entity is an originator of a marketable transferable tax credit, the face value of the tax credit is treated as income in the origination year, subject to the following rules: (i) if the tax credit is transferred within 15 months of the end of the origination year, the purchase price (and not the face value) of the tax credit is treated as income in the origination year, (ii) if the tax credit is related to the acquisition or construction of assets and the originator has an accounting policy of reducing the carrying value of its assets in respect of such tax credits, or recognizing the tax credit as deferred income, the originator must follow this same accounting policy, (iii) if the tax credit is transferred more than 15 months after the end of the origination year, (A) if the tax credit is described in subparagraph (ii), the amount by which the face value of the tax credit that was included in GloBE income or loss under that subparagraph exceeds the purchase price of the tax credit is treated as a loss on a pro rata basis over the remaining productive life of the asset, and (B) in any other case, the amount by which the face value of the tax credit that was included in GloBE income or loss in the origination year exceeds the purchase price of the tax credit is treated as a loss in the fiscal year of the transfer, and (iv) if all or a portion of the tax credit expires without use, the face value attributable to the expired portion of the tax credit is treated as a loss or increase to the carrying value