Document ID: chunk:federal_register_of_legislation:F2024L01740:front:0:p70
Version: federal_register_of_legislation:F2024L01740
Segment Type: other
Provision Reference: 
Character Range: 175663–178410

Note: In computing amounts under Parts 5‑1, 5‑2, 5‑3 and 5‑4, special rules apply for MNE Groups which have any of the following:
        (a) a Minority‑Owned Constituent Entity: see sections 5‑120 and 5‑125;
        (b) a Joint Venture (and any JV Subsidiaries): see section 6‑75;
        (c) an Investment Entity or Insurance Investment Entity: see sections 7‑100 and 7‑115, and Parts 7‑5 and 7‑6.

5‑5  Meaning of Effective Tax Rate
 (1) Subsection (2) applies in relation to an MNE Group for a jurisdiction for a Fiscal Year if it has Net GloBE Income for the jurisdiction for the Fiscal Year.
 (2) The Effective Tax Rate of the MNE Group for the jurisdiction for the Fiscal Year is equal to:
 (a) the sum of the Adjusted Covered Taxes for the Fiscal Year of each Constituent Entity of the MNE Group located in the jurisdiction;
divided by:
 (b) the Net GloBE Income of the MNE Group for the jurisdiction for the Fiscal Year;
expressed as a percentage.
Note: The sum of the Adjusted Covered Taxes for the Fiscal Year of each Constituent Entity of the MNE Group located in the jurisdiction may be modified by subsection 5‑10(2) or 7‑50(2) or paragraph 7‑65(a).
 (3) Subsection (4) applies if:
 (a) the sum of the Adjusted Covered Taxes mentioned in paragraph (2)(a) exceeds zero; and
 (b) there is an Excess Negative Tax Expense Carry‑forward for the MNE Group for the jurisdiction with a balance that exceeds zero.
 (4) For the purposes of subsection (2), apply that balance to reduce the sum of the Adjusted Covered Taxes mentioned in paragraph (2)(a) (but not below zero).
 (5) Reduce the balance of the Excess Negative Tax Expense Carry‑forward to the extent that it is applied under subsection (4).

5‑10  Effective Tax Rate—Excess Negative Tax Expense administrative procedure
 (1) Subsection (2) applies if, disregarding that subsection, the sum of the Adjusted Covered Taxes mentioned in paragraph 5‑5(2)(a) is less than zero.
 (2) For the purposes of subsection 5‑5(2), treat that sum as being zero.
 (3) If subsection (2) applies:
 (a) where an Excess Negative Tax Expense Carry‑forward has not been established for the MNE Group for the jurisdiction:
 (i) an Excess Negative Tax Expense Carry‑forward is established for the MNE Group for the jurisdiction; and
 (ii) the balance of the Excess Negative Tax Expense Carry‑forward is increased by the absolute value of the sum mentioned in subsection (1); or
 (b) otherwise—the balance of Excess Negative Tax Expense Carry‑forward for the MNE Group for the jurisdiction is increased by the absolute value of the sum mentioned in subsection (1).
Note 1: In some circumstances, the balance of the Excess Negative Tax Expense Carry‑forward is applied to reduce the sum of Adjusted Covered