Malaysia legislation
Section 170
Section 170
(a)
the amount of any Covered Taxes included in the financial accounts of a Constituent Entity with respect to GloBE Income or Loss of a Permanent
Establishment is allocated to the Permanent
Establishment;
Act 851
(b)
the amount of any Covered Taxes included in the financial accounts of a Tax Transparent
Entity with respect to GloBE Income or Loss allocated to a Constituent Entity-owner pursuant to paragraph 168(1)(b) is allocated to that Constituent
Entity-owner;
(c)
in the case of a Constituent Entity whose Constituent
Entity-owners are subject to a Controlled Foreign
Company Tax Regime, the amount of any Covered
Taxes included in the financial accounts of its direct or indirect Constituent Entity-owners under a Controlled Foreign Company Tax Regime on their share of the controlled foreign company’s income are allocated to the Constituent Entity;
(d)
in the case of a Constituent Entity that is a Hybrid Entity, the amount of any Covered Taxes included in the financial accounts of a Constituent
Entity-owner on income of the Hybrid Entity is allocated to the Hybrid Entity; and
(e)
the amount of any Covered Taxes accrued in the financial accounts of a Constituent Entity’s direct
Constituent Entity-owners on distributions from the
Constituent Entity during the Financial Year are allocated to the distributing Constituent Entity.
(2)
The Covered Taxes allocated to a Constituent Entity pursuant to paragraphs (1)(c) and (d) in respect of Passive
Income are included in such Constituent Entity’s Adjusted
Covered Taxes in an amount equal to the lesser of—
(a)
the Covered Taxes allocated in respect of such
Passive Income; or
(b)
the Multinational Top-up Tax Percentage for the
Constituent Entity’s jurisdiction, determined without regard to the Covered Taxes incurred with respect to such Passive Income by the Constituent Entity-owner, multiplied by the amount of the Constituent Entity’s
Passive Income that can be included under any
Controlled Foreign Company Tax Regime or fiscal transparency rule.
Finance (No. 2)
(3)
Any Covered Taxes of the Constituent Entity-owner incurred with respect to such Passive Income that remain after the application of subsection (2) shall not be allocated under paragraph (1)(c) or (d).
(4)
Where the GloBE Income of a Permanent Establishment is treated as GloBE Income of the Main Entity pursuant to subsections 167(6) and (7), any Covered Taxes arising in the location of the Permanent Establishment and associated with such income are treated as Covered Taxes of the Main
Entity up to an amount not exceeding such income multiplied by the highest corporate tax rate on ordinary income in the jurisdiction where the Main Entity is located.
(5)
For the purposes of this section, “Passive Income”
means income included in GloBE Income that is—
(a)
a dividend or dividend equivalents;
(b)
interest or interest equivalent;
(c)
rent;
(d)
royalty;
(e)
annuity; or
(f)
net gains from property of a type that produces income described in paragraphs (a) to (e), but only to the extent a Constituent Entity-owner is subject to tax on such income under a Controlled Foreign Company
Tax Regime or as a result of an Ownership Interest in a
Hybrid Entity.
Mechanism to address temporary differences