Finance (No. 2) Act 2023 · Updated to 29 Dec 2023 · Chapter 7
183. Minority-Owned Constituent Entity
Feedback & supportThe computation of the Effective Tax Rate and
Effective Tax Rate
“Effective Tax Rate” means, in respect of a Multinational Enterprise Group, the sum of the Adjusted Covered Taxes of each Constituent Entity located in the jurisdiction divided by the Net GloBE Income of the jurisdiction for the Financial Year;
Multinational Top-up Tax for a jurisdiction in accordance with Chapters 5 to 10 of this Part with respect to members of a Minority-Owned Subgroup shall apply as if they were a separate Multinational Enterprise Group.
Multinational Top-up Tax
“Multinational Top-up Tax” means tax computed for the jurisdiction or Constituent Entity in accordance with sections 175 to 179;
The Adjusted Covered Taxes and GloBE Income or Loss of members of a Minority-Owned Subgroup are excluded from the determination of the remainder of the Effective Tax Rate of the Multinational Enterprise Group in subsections 174(1) to (3)
Adjusted Covered Taxes
“Adjusted Covered Taxes” means an amount as determined under section 169;
and Net GloBE Income in subsection 174(4).
Net GloBE Income
“Net GloBE Income” means the amount as determined in accordance with subsection 174(4);
The Effective Tax Rate and Multinational Top-up Tax of a Minority-Owned Constituent Entity that is not a member of a Minority-Owned Subgroup is computed on an entity basis in accordance with Chapters 5 to 10 of this Part.
Minority-Owned Constituent Entity
“Minority-Owned Constituent Entity” means a Constituent Entity where the Ultimate Parent Entity has a direct or indirect Ownership Interest in that Entity of thirty per cent or less;
The Adjusted Covered Taxes and GloBE Income or
Loss of the Minority-Owned Constituent Entity are excluded from the determination of the remainder of the Multinational
Enterprise Group’s Effective Tax Rate in subsections 174(1)
Group
“Group” means— (a) a collection of Entities that are related through ownership or control such that the assets, liabilities, income, expenses and cash flows of those Entities are— (i) included in the Consolidated Financial Statements of the Ultimate Parent Entity; or Finance (No. 2) (ii) excluded from the Consolidated Financial Statements of the Ultimate Parent Entity solely on size or materiality grounds, or on the grounds that the Entity is held for sale; or (b) an Entity that is located in one jurisdiction and has one or more Permanent Establishments located in other jurisdictions provided that the Entity is not a part of another Group mentioned in paragraph (a);
to (3) and Net GloBE Income in subsection 174(4).
Subsection (4) does not apply if the Minority-Owned
Constituent Entity is an Investment Entity.
Constituent Entity
“Constituent Entity” means— (a) any Entity that is included in a Group; or (b) any Permanent Establishment of a Main Entity that is within paragraph (a) and which is treated as separate from the Main Entity and any other Permanent Establishment of that Main Entity, but does not include an Excluded Entity;
A Minority-Owned Constituent Entity whose Controlling
Interests are held, directly or indirectly, by a Minority-Owned
Parent Entity is a Minority-Owned Subsidiary.
Parent Entity
“Parent Entity” means an Ultimate Parent Entity that is not an Excluded Entity, an Intermediate Parent Entity, or a Partially-Owned Parent Entity;
Finance (No. 2)
For the purposes of this section—
“Minority-Owned Parent Entity” means a Minority-Owned
Constituent Entity that holds, directly or indirectly, the
Controlling Interests of another Minority-Owned Constituent
Entity, except where the Controlling Interests of the first-mentioned Entity are held, directly or indirectly, by another Minority-Owned Constituent Entity;
Entity
“Entity” means— (a) any legal person (other than a natural person); or (b) an arrangement that prepares separate financial accounts, such as a partnership or trust;
“Minority-Owned Subgroup” means a Minority-Owned
Parent Entity and its Minority-Owned Subsidiaries.