Malaysia legislation
Section 194
Section 194
(2)
Under the Taxable Distribution Method—
(a)
distributions and deemed distributions of the
Investment Entity’s GloBE Income are included in the GloBE Income of the Constituent Entity-owner other than an Investment Entity that received the distribution;
(b)
the Local Creditable Tax Gross-up is included in the GloBE Income and Adjusted Covered Taxes of the Constituent Entity-owner other than an Investment
Entity that received the distribution;
(c)
the Constituent Entity-owner’s proportionate share of the Investment Entity’s Undistributed Net GloBE
Income for the Tested Year is treated as GloBE
Income of the Investment Entity for the Reporting
Financial Year and the result of multiplying the Minimum Rate by such GloBE Income is treated as Multinational Top-up Tax of a Low-Tax
Constituent Entity in the Financial Year for the purposes of Chapter 4 of this Part; and
(d)
the Investment Entity’s GloBE Income or Loss for the Financial Year and any Adjusted Covered Taxes attributable to such income are excluded from all
Effective Tax Rate computations under Chapter 7
of this Part and subsections 192(2) to (10), except as provided in paragraph (b).
(3)
The Undistributed Net GloBE Income for the Tested Year cannot be reduced by distributions or deemed distributions to the extent that such distributions were treated as a reduction to Undistributed Net GloBE Income of a previous Tested Year.
Act 851
(4)
For the purpose of computing Undistributed Net GloBE
Income, a GloBE Loss is reduced to the extent it reduced
Undistributed Net GloBE Income at the end of a previous
Financial Year.
(5)
If a GloBE Loss for a Financial Year is not reduced to zero before the end of the end of the last Tested Period that includes such Financial Year, the remainder becomes an
Investment Loss Carry-forward and is reduced in the same manner as a GloBE Loss in subsequent Financial Years.
(6)
For the purposes of this section—
(a)
the Tested Year is the third year preceding the
Reporting Financial Year;
(b)
the Testing Period is the period beginning with the first day of the Tested Year and ending with the last day of the Reporting Financial Year that the Ownership Interest was held by a Group Entity;
(c)
a deemed distribution arises when a direct or indirect Ownership Interest in the Investment Entity is transferred to a non-Group Entity and is equal to the proportionate share of the Undistributed
Net GloBE Income attributable to such Ownership
Interest on the date of such transfer determined without regard to the deemed distribution; and
(d)
the Local Creditable Tax Gross-up is the amount of
Covered Taxes incurred by the Investment Entity that is allowed as a credit against the tax liability of the owner of the Constituent Entity arising in connection with a distribution from the Investment
Entity.
(7)
The election under this section is a Five-Year Election.
(8)
If the election is revoked, the proportionate share of the owner of the Constituent Entity in the Undistributed Net
GloBE Income of the Investment Entity for the Tested Year at the end of the Financial Year preceding the revocation
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year is treated as GloBE Income of the Investment Entity for the revocation year and the result of multiplying the Minimum
Rate by such GloBE Income is treated as Multinational
Top-up Tax of a Low-Tax Constituent Entity in the revocation year for the purposes of Chapter 4 of this Part.
(9)
For the purposes of this section, “Undistributed Net
GloBE Income” means the amount of the Investment Entity’s
GloBE Income, if any, for the Tested Year reduced but not below zero by—
(a)
any Covered Taxes of the Investment Entity;
(b)
distributions and deemed distributions to shareholders other than Constituent Entities that are Investment
Entities in the Testing Period;
(c)
GloBE Losses arising in the Testing Period; and
(d)
Investment Loss Carry-forwards.