Document ID: chunk:federal_register_of_legislation:F2024L01740:front:0:p106
Version: federal_register_of_legislation:F2024L01740
Segment Type: other
Provision Reference: 
Character Range: 265109–267854

an amount equal to:
 (a) the Top‑up Tax of the Investment Entity for the Fiscal Year;
multiplied by:
 (b) the fraction that is:
 (i) the Inclusion Ratio of the Parent Entity for the Investment Entity for the Fiscal Year, computed on the assumption that all Ownership Interests in the Investment Entity not held by the Parent Entity were held by owners that are not Group Entities of the MNE Group;
  divided by:
 (ii) the Inclusion Ratio of the Parent Entity for the Investment Entity for the Fiscal Year.
 (3) In computing the fraction mentioned in subsection (2), treat the Investment Entities as:
 (a) Low‑Taxed Constituent Entities; and
 (b) the only Constituent Entities of the MNE Group.
 (4) For the purposes of this section:
 (a) treat references in section 2‑15 to GloBE Income as references to GloBE Income or Loss; and
 (b) treat the reference in paragraph 2‑15(2)(a) to net income as a reference to net income or loss.

Division 3—Top‑up Tax of Investment Entity etc.

7‑100  Top‑up Tax etc. of Investment Entity—primary deeming rule
 (1) Treat the Investment Entities as the only Constituent Entities of the MNE Group for the purposes of:
 (a) computing the Top‑up Tax of each of the Investment Entities; and
 (b) computing the MNE Group's Allocable GloBE Income or Loss for each of the Investment Entities (see section 7‑110); and
 (c) determining whether each of the Investment Entities is a Low‑Taxed Constituent Entity.
Note 1: To compute the Top‑up Tax mentioned in paragraph (a), it is necessary to compute various amounts on the assumption that the Investment Entities located in the jurisdiction in which the relevant Investment Entity is located are the only Constituent Entities of the MNE Group located in that jurisdiction, including the following:
(a) Jurisdictional Top‑up Tax for the jurisdiction (see subsection 7‑105(1));
(b) Net GloBE Income or Net GloBE Loss for the jurisdiction (see subsection 7‑105(2));
(c) Substance‑based Income Exclusion Amount for the jurisdiction (see subsection 7‑105(3)).
Note 2: For paragraph (c), to determine whether an Investment Entity is a Low‑Taxed Constituent Entity, it is necessary to compute the Effective Tax Rate and Net GloBE Income of the MNE Group for the jurisdiction in which it is located (see section 3‑195), on the assumption that the Investment Entities are the only Constituent Entities of the MNE Group located in the jurisdiction.
 (2) Paragraph (1)(a) does not affect the operation of Chapters 2, 3, 4 (other than sections 4‑30 and 4‑35, and Parts 4‑5 and 4‑6), 6, 8 and 9 to the extent that they affect the application of Chapter 5 for the purposes of computing the Top‑up Tax of each of the Investment Entities.
Example: In computing the GloBE Income or Loss