Document ID: chunk:federal_register_of_legislation:F2024L01740:front:0:p10
Version: federal_register_of_legislation:F2024L01740
Segment Type: other
Provision Reference: 
Character Range: 25821–28625

an IIR Top‑up Tax Amount for the Fiscal Year in any of the following circumstances:
 (a) in a case where the Parent Entity is an Intermediate Parent Entity of the Applicable MNE Group:
 (i) the Ultimate Parent Entity of the Applicable MNE Group is required to apply a Qualified IIR for that Fiscal Year; or
 (ii) another Intermediate Parent Entity of the Applicable MNE Group that holds (directly or indirectly) a Controlling Interest in the Intermediate Parent Entity is required to apply a Qualified IIR for that Fiscal Year;
 (b) in a case where the Parent Entity is a Partially‑Owned Parent Entity of the Applicable MNE Group:
 (i) the Partially‑Owned Parent Entity is wholly owned (directly or indirectly) by another Partially‑Owned Parent Entity of the Applicable MNE Group; and
 (ii) the other Partially‑Owned Parent Entity is required to apply a Qualified IIR for that Fiscal Year.

Part 2‑2—Allocation of Top‑up Tax under the IIR

2‑10  Meaning of Allocable Share
  A Parent Entity's Allocable Share of the Top‑up Tax of a Low‑Taxed Constituent Entity for a Fiscal Year is an amount equal to:
 (a) the Top‑up Tax of the Low‑Taxed Constituent Entity for the Fiscal Year;
multiplied by:
 (b) the Parent Entity's Inclusion Ratio for the Low‑Taxed Constituent Entity for the Fiscal Year.
Note 1: See section 2‑20 for the effect of the IIR offset mechanism on the Allocable Share.
Note 2: See section 7‑95 for the computation of a Parent Entity's Allocable Share of the Top‑up Tax of a Constituent Entity that is an Investment Entity.

2‑15  Meaning of Inclusion Ratio
 (1) The Inclusion Ratio, of a Parent Entity of an MNE Group, for a Low‑Taxed Constituent Entity for a Fiscal Year, is:
 (a) the GloBE Income of the Low‑Taxed Constituent Entity for the Fiscal Year, reduced by the amount of that GloBE Income attributable to Ownership Interests held by other owners (see subsection (2));
divided by:
 (b) the GloBE Income of the Low‑Taxed Constituent Entity for the Fiscal Year.
Note: See subsection (3) if the Low‑Taxed Constituent Entity is a Flow‑through Entity.
 (2) For the purposes of paragraph (1)(a), the amount of GloBE Income attributable to Ownership Interests in the Low‑Taxed Constituent Entity held by other owners is the amount that would have been treated as attributable to such owners under the principles of the Acceptable Financial Accounting Standard used in the Consolidated Financial Statements of the Ultimate Parent Entity of the MNE Group on the following assumptions:
 (a) the Low‑Taxed Constituent Entity's net income were equal to its GloBE Income;
 (b) the Parent Entity had prepared Consolidated Financial Statements in accordance with that Acceptable Financial Accounting Standard (the hypothetical Consolidated Financial Statements);
 (c) the Parent Entity held a