Finance (No. 2) Act 2023 · Updated to 29 Dec 2023 · Chapter 9
193. Investment Entity Tax Transparency Election
Feedback & supportA Filing Constituent Entity may elect to treat a Constituent Entity that is an Investment Entity or an
Filing Constituent Entity
“Filing Constituent Entity” means an Entity filing the return in accordance with section 201 or 202;
Insurance Investment Entity as a Tax Transparent Entity if the
Insurance Investment Entity
“Insurance Investment Entity” means an Entity that would meet the definition of an Investment Fund or a Real Estate Investment Vehicle except that it is established in relation to liabilities under an insurance or annuity contract and is wholly-owned by an Entity that is subject to regulation in its location as an insurance company;
Constituent Entity-owner is subject to tax in its location under a mark-to-market or similar regime based on the annual changes in the fair value of its Ownership Interest in the Entity and the tax rate applicable to the Constituent Entity-owner with respect to such income equals or exceeds the Minimum Rate.
Constituent Entity-owner
“Constituent Entity-owner” means a Constituent Entity that directly or indirectly owns an Ownership Interest in another Constituent Entity of the same Multinational Enterprise Group;
For the purposes of subsection (1), a Constituent
Entity that indirectly owns an Ownership Interest in an Investment Entity or Insurance Investment Entity through a direct Ownership Interest in another Investment Entity or Insurance Investment Entity is considered to be subject to tax under a mark-to-market or similar regime with respect to the indirect Ownership Interest in the first-mentioned
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;
Entity if it is subject to a mark-to-market or similar regime with respect to the direct Ownership Interest in the second-mentioned Entity.
Ownership Interest
“Ownership Interest” means any equity interest that carries rights to the profits, capital or reserves of an Entity, including the profits, capital or reserves of a Main Entity’s Permanent Establishment;
The election under this section is a Five-Year Election.
Five-Year Election
“Five-Year Election” means an election in the prescribed form made by a Filing Constituent Entity and furnished to the Director General with respect to a Financial Year (hereinafter referred to as the “election year”) that cannot be revoked with respect to the election year or the four succeeding Financial Years and if revoked with respect to a Financial Year (hereinafter referred to as the “revocation year”), a new election cannot be made with respect to the four Financial Years succeeding the revocation year;
If the election is revoked, gain or loss from the disposition of an asset or liability held by the Investment
Entity shall be determined based on the fair value of the assets or liabilities on the first day of the revocation year.
Finance (No. 2)