Malaysia legislation

Section 181

of FINANCE (NO. 2) ACT 2023

Section 181

(a)

the Effective Tax Rate and Multinational Top-up Tax for the prior Financial Year shall be recalculated in accordance with the rules of sections 174

to 180 after taking into account the adjustments to Adjusted Covered Taxes and GloBE Income or

Loss required by the relevant Effective Tax Rate

Adjustment Provisions; and

(b)

any amount of incremental Multinational Top-up Tax resulting from such recalculation shall be treated as

Additional Current Multinational Top-up Tax under section 177 arising in the current Financial Year.

(2)

If there is Additional Current Multinational Top-up Tax attributable to a recalculation under subsection (1) and the jurisdiction does not have Net GloBE Income for the current

Financial Year, the GloBE Income of each Constituent Entity located in the jurisdiction for the purposes of subsection 162(2)

shall be equal to the result of the Multinational Top-up Tax allocated to such Entity under sections 178 and 179

divided by the Minimum Rate.

Act 851

(3)

If there is Additional Current Multinational Top-up Tax attributable to the operation of subsections 169(3) and (4), the GloBE Income of each Constituent Entity located in the jurisdiction for the purposes of subsection 162(2) shall be equal to the result of the Multinational Top-up Tax allocated to such

Entity under this paragraph divided by the Minimum Rate.

(4)

The amount of Additional Current Multinational

Top-up Tax allocated to each Constituent Entity for the purposes of this section shall be allocated only to Constituent

Entities that record an Adjusted Covered Taxes amount that is less than zero and less than the GloBE Income or Loss of such Constituent Entity multiplied by the Minimum Rate.

(5)

The allocation shall be made pro rata based upon an amount determined for each of those Constituent Entities according to the following formula:

(A x B) – C where

A is the GloBE Income or Loss;

B is the Minimum Rate; and

C is the Adjusted Covered Taxes.

(6)

If a Constituent Entity is allocated Additional Current

Multinational Top-up Tax pursuant to this section and section 178, such Constituent Entity shall be treated as a Low-Taxed Constituent Entity for the purposes of

Chapter 4 of this Part.

(7)

For the purposes of this section, “Effective Tax Rate

Adjustment Provisions” means the adjustment provisions under—

(a)

subsections 165(16) to (19);

(b)

subsections 171(4) to (6);

(c)

subsections 173(1) to (5) and (9); and

(d)

section 191.

Finance (No. 2)

105

De minimis exclusion