Document ID: chunk:federal_register_of_legislation:F2024L01740:front:0:p31
Version: federal_register_of_legislation:F2024L01740
Segment Type: other
Provision Reference: 
Character Range: 78850–81705

with an option that has not been exercised, and that has not expired without exercise, before the start of the first Fiscal Year (the subsequent year) to which the election does not apply as a result of revocation.
 (8) In computing the GloBE Income or Loss of the Constituent Entity for the subsequent year, adjust the Constituent Entity's Financial Accounting Net Income or Loss for the subsequent year so as to include as income an amount equal to the amount (if any) by which:
 (a) the cumulative amount included as an expense under paragraph (3)(a), in relation to the stock‑based compensation expense, for Fiscal Years prior to the subsequent year;
exceeds:
 (b) the cumulative amount of the stock‑based compensation expense that would have been allowed as an expense in the computation of the Constituent Entity's GloBE Income or Loss if the election had not applied to the prior Fiscal Years.

3‑95  Adjustment—Arm's Length Principle and tax/accounting permanent differences in respect of cross‑border transactions
 (1) In computing the GloBE Income or Loss of a Constituent Entity of an MNE Group for a Fiscal Year, adjust the Constituent Entity's Financial Accounting Net Income or Loss for the Fiscal Year in accordance with the following subsections.
 (2) Subsection (3) applies if:
 (a) the amount of a transaction that is between Constituent Entities of the MNE Group that are located in different jurisdictions:
 (i) is not recorded in the financial accounts of both Constituent Entities in the same amount; or
 (ii) is not recorded in the financial accounts of both Constituent Entities consistently with the Arm's Length Principle; or
 (iii) is not recorded at all in the financial accounts of both Constituent Entities; and
 (b) as a result of adjustments to the taxable income of each of the Constituent Entities made in connection with transfer pricing, a tax/accounting permanent difference (see subsection (6)) arises in respect of the transaction for each of the Constituent Entities; and
 (c) the tax/accounting permanent difference for each Constituent Entity corresponds to the tax/accounting permanent difference for the other Constituent Entity.
 (3) For the purposes of subsection (1), adjust the amount (the recorded amount) in which the transaction is recorded in the financial accounts of both Constituent Entities so that the recorded amount reflects the adjustments to the taxable income mentioned in paragraph (2)(b).
 (4) Subsection (5) applies if:
 (a) the amount of a transaction that is between Constituent Entities of the MNE Group that are located in different jurisdictions:
 (i) is not recorded in the financial accounts of both Constituent Entities in the same amount; or
 (ii) is not recorded in the financial accounts of both Constituent Entities consistently with the Arm's Length Principle; or
 (iii) is not