Document ID: chunk:federal_register_of_legislation:F2024L01740:front:0:p33
Version: federal_register_of_legislation:F2024L01740
Segment Type: other
Provision Reference: 
Character Range: 84018–86854

at all in the financial accounts of both Constituent Entities; and
 (b) if subparagraph (a)(ii) applies—any of the following conditions are satisfied:
 (i) the transaction is a sale or other transfer of an asset, that gives rise to a loss that is included in the computation of the GloBE Income or Loss of one of the Constituent Entities;
 (ii) one of the Constituent Entities is an Investment Entity or Insurance Investment Entity, but the other is not;
 (iii) one of the Constituent Entities is a Minority‑Owned Constituent Entity, but the other is not.
 (3) For the purposes of subsection (1), adjust the amount in which the transaction is recorded in the financial accounts of each Constituent Entity so as to be consistent with the Arm's Length Principle.
Note: Part 3‑4 sets out rules for allocating income or loss between a Main Entity and its Permanent Establishments.

3‑105  Meaning of Arm's Length Principle
  The Arm's Length Principle is the principle under which transactions between Constituent Entities of the same MNE Group must be recorded by reference to the conditions that would have been obtained between independent enterprises in comparable transactions and under comparable circumstances.

3‑110  Adjustment—Refundable Tax Credits and transferable tax credits
  In computing a Constituent Entity's GloBE Income or Loss for a Fiscal Year, adjust the Constituent Entity's Financial Accounting Net Income or Loss for the Fiscal Year so as to:
 (a) include tax credits in that Financial Accounting Net Income or Loss, in accordance with sections 3‑115 and 3‑120, to the extent they are:
 (i) Qualified Refundable Tax Credits; or
 (ii) Marketable Transferable Tax Credits; and
 (b) subject to paragraph (a), exclude tax credits from that Financial Accounting Net Income or Loss to the extent they are:
 (i) Non‑Qualified Refundable Tax Credits; or
 (ii) Non‑Marketable Transferable Tax Credits; or
 (iii) Other Tax Credits.

3‑115  Qualified Refundable Tax Credits—amounts
 (1) For the purposes of paragraph 3‑110(a), include a Qualified Refundable Tax Credit as follows:
 (a) if subsection (2) of this section applies—include the tax credit in accordance with the accounting policy mentioned in paragraph (2)(b);
 (b) in any other case—include the face value of the tax credit as income in the Fiscal Year in which the entitlement under the tax credit accrues.
 (2) For the purposes of paragraph (1)(a), this subsection applies if all of the following conditions are met:
 (a) the tax credit is related to the acquisition or construction of assets;
 (b) the person to whom the tax credit was originally granted (the Originator) has an accounting policy of reducing the carrying value of its assets in respect of such tax credits or recognising the tax credit as deferred income;
 (c) the holder of the tax credit is