Finance (No. 2) Act 2023 · Updated to 29 Dec 2023 · Chapter VI · Amendments to the Labuan Business Activity Tax Act 1990
81. Amendment of section 3
Feedback & supportSection 3 of the principal Act is amended—
by renumbering the existing section as subsection (1); and
by inserting after the renumbered subsection (1) the following subsections:
“(2) Notwithstanding any other provisions of this
Act and for the purposes of the imposition of Domestic
Top-up Tax or Multinational Top-up Tax and the implementation of the GloBE Rules, Part XI of the
Income Tax Act 1967 shall also apply to a Labuan entity which is a Constituent Entity that is a member of a Multinational Enterprise Group that has annual
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;
revenue of seven hundred and fifty million euro or more in the Consolidated Financial Statements of the Ultimate Parent Entity in at least two of the four consecutive Financial Years immediately preceding the tested Financial Year.
Ultimate Parent Entity
“Ultimate Parent Entity” means either— (a) an Entity that— (i) owns directly or indirectly a Controlling Interest in any other Entity; and (ii) is not owned, with a Controlling Interest, directly or indirectly by another Entity; or (b) the Main Entity of a Group 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;
Where one or more of the Financial Years of the
Multinational Enterprise Group taken into account for the purposes of subsection (2) is of a period other than twelve months, for each of those Financial Years the seven hundred and fifty million euro annual revenue is adjusted proportionally to correspond with the length of the relevant Financial Year.
Multinational Enterprise Group
“Multinational Enterprise Group” means any Group that includes at least one Entity or Permanent Establishment that is not located in the jurisdiction of the Ultimate Parent Entity; Finance (No. 2)
For the purposes of subsections (2) and (3),
“Consolidated Financial Statement”, “Constituent
Consolidated Financial Statement
“Consolidated Financial Statement” means— (a) the financial statements prepared by an Entity in accordance with an Acceptable Financial Accounting Standard, in which the assets, liabilities, income, expenses and cash flows of that Entity and the Entities in which it has a Controlling Interest are presented as those of a single economic unit; Finance (No. 2) (b) where an Entity is an entity under paragraph (b) of the definition of “Group”, the financial statements of the Entity that are prepared in accordance with an Acceptable Financial Accounting Standard; (c) where the Ultimate Parent Entity has financial statements described in paragraph (a) or (b) that are not prepared in accordance with an Acceptable Financial Accounting Standard, the financial statements are those that have been prepared subject to adjustments to prevent any Material Competitive Distortions; and (d) where the Ultimate Parent Entity does not prepare financial statements described in paragraphs (a) to (c), the Consolidated Financial Statements of the Ultimate Parent Entity are those that would have been prepared if such Entity were required to prepare such statements in accordance with an Authorised Financial Accounting Standard that is either an Acceptable Financial Accounting Standard or another financial accounting standard that is adjusted to prevent any Material Competitive Distortions;
Entity”, “Financial Year”, “GloBE Rules”, “Multinational
Financial Year
“Financial Year” means an accounting period with respect to which the Ultimate Parent Entity of the Multinational Enterprise Group prepares its Consolidated Financial Statements and in the case of Consolidated Financial Statements as defined in paragraph (d) of the definition of “Consolidated Financial Statements”, Financial Year means the calendar year;
Enterprise Group” and “Ultimate Parent Entity” have the meaning assigned to them in Part XI of the Income
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);
Tax Act 1967.”.