For the purpose of computing its GloBE Income or Loss for a Financial Year, an Ultimate Parent Entity that is subject to a Deductible Dividend Regime shall reduce but not below zero its GloBE Income for such Financial Year by the amount that is distributed as a Deductible Dividend within twelve months of the end of the Financial Year if—
the dividend is subject to tax in the hands of the dividend recipient for a taxable period that ends within twelve months of the end of the Ultimate
Parent Entity’s Financial Year, and—
the dividend recipient is subject to tax on such dividend at a nominal rate that equals or exceeds the Minimum Rate;
it can be reasonably expected that the aggregate amount of Covered Taxes paid by the Ultimate Parent Entity and Taxes paid by the dividend recipient on the dividend income equals or exceeds the amount that results from multiplying the full amount of such income by the Minimum Rate; or
the dividend recipient is a natural person and the dividend is a patronage dividend from a supply Cooperative; or
the dividend recipient is a natural person that—
is a tax resident in the Ultimate Parent Entity
Jurisdiction; and
holds Ownership Interests that, in the aggregate, are a right to five per cent or less of the profits and assets of the Ultimate Parent
Entity; or
Kewangan (No. 2)
the dividend recipient is resident in the Ultimate
Parent Entity Jurisdiction and is—
a Governmental Entity;
an International Organisation;
a Non-profit Organisation; or
a Pension Fund that is not a Pension Services
Entity.
An Ultimate Parent Entity that reduces its GloBE Income pursuant to subsection (1) shall reduce its Covered Taxes other than the Taxes for which the dividend deduction was allowed proportionally and shall reduce its GloBE Income by the same amount.
If the Ultimate Parent Entity holds an Ownership
Interest in another Constituent Entity subject to the Deductible
Dividend Regime directly or through a chain of such
Constituent Entities, subsections (1) and (2) shall apply to each other Constituent Entity in the Ultimate Parent Entity
Jurisdiction that is subject to the Deductible Dividend Regime to the extent that its GloBE Income is further distributed by the Ultimate Parent Entity to recipients that meet the requirements of subsection (1).
The patronage dividends from a supply Cooperative are subject to tax to the extent they reduce an expense or cost that is deductible in the computation of the taxable income of the recipient.
For the purposes of this section—
“Cooperative” means an Entity that collectively markets or acquires goods or services on behalf of its members and that is subject to a tax regime in the jurisdiction in which it is located that is designed to ensure tax neutrality in respect of members’ property or services sold through the Cooperative and property or services acquired by members through the
Cooperative;
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“Deductible Dividend” means, with respect to a Constituent
Entity that is subject to a Deductible Dividend Regime—
a distribution of profits to the holder of an Ownership
Interest that is deductible from taxable income of the
Constituent Entity under the laws of the jurisdiction in which it is located; or
a patronage dividend to a member of a Cooperative;
“Deductible Dividend Regime” means—
a tax regime designed to yield a single level of taxation on the owners of an Entity through a deduction from the income of the Entity for distributions of profits to the owners (for this purpose, patronage dividends of a Cooperative are treated as distributions to owners); or
a regime applicable to Cooperatives that exempts the
Cooperative from taxation.