Document ID: chunk:federal_register_of_legislation:F2024L01740:front:0:p101
Version: federal_register_of_legislation:F2024L01740
Segment Type: other
Provision Reference: 
Character Range: 252705–255463

(i) a Direct Ownership Interest in a Constituent Entity of the MNE Group; or
 (ii) an Indirect Ownership Interest in a Constituent Entity of the MNE Group through a chain of other Constituent Entities of the MNE Group; and
 (c) the Constituent Entity is (or all of the Constituent Entities in the chain are) subject to the Deductible Dividend Regime; and
 (d) the Constituent Entity is (or all of the Constituent Entities in the chain are) located in the same jurisdiction as the Ultimate Parent Entity.
 (2) Subsection (3) applies if:
 (a) the Constituent Entity distributes an amount (the dividend amount) in respect of its GloBE Income for a Fiscal Year as a Deductible Dividend within 12 months after the end of the Fiscal Year; and
 (b) the Constituent Entity distributes some or all of the dividend amount to the Ultimate Parent Entity (directly or through the chain); and
 (c) the Ultimate Parent Entity distributes some or all of the dividend amount as a Deductible Dividend within 12 months after the end of the Fiscal Year; and
 (d) the condition in paragraph 7‑20(2)(a), (b) or (c) is satisfied in relation to the recipient of the dividend distributed by the Ultimate Parent Entity.
 (3) Subsections 7‑20(2), (3), (4), (5), (6) and (7) apply to the Constituent Entity in the same way that they apply to an Ultimate Parent Entity.

7‑30  Meaning of Deductible Dividend Regime
 (1) Deductible Dividend Regime means a tax regime designed to yield a single level of taxation on the holders of Ownership Interests in an Entity through a deduction from the income of the Entity for distributions of profits to the holders.
 (2) For the purposes of subsection (1), treat patronage dividends of a Cooperative as distributions to holders of Ownership Interests in the Cooperative.
 (3) A Deductible Dividend Regime is taken to include a tax regime applicable to Cooperatives that exempts them from taxation.

7‑35  Meaning of Deductible Dividend
  A distribution by a Constituent Entity of an MNE Group that is subject to a Deductible Dividend Regime is a Deductible Dividend if either of the following apply:
 (a) it is a distribution of profits to the holder of an Ownership Interest in the Constituent Entity that is deductible from the taxable income of the Constituent Entity under the laws of the jurisdiction in which it is located;
 (b) if the Constituent Entity is a Cooperative—it is a patronage dividend to a member of the Cooperative.

Part 7‑3—Eligible Distribution Tax Systems
Note: Taxes on distributed profits, deemed profit distributions and non‑business expenses imposed under an Eligible Distribution Tax System are Covered Taxes (see paragraph 4‑40(1)(b)).

7‑40  Deemed distribution tax election
 (1) A Filing Constituent Entity for an