Akta Kewangan (No. 2) 2023 · Updated to 29 Dec 2023 · Chapter 9
194. Taxable Distribution Method Election
Feedback & supportAt the election of the Filing Constituent Entity, a Constituent Entity-owner that is not an Investment Entity may apply the Taxable Distribution Method with respect to its Ownership Interest in a Constituent Entity that is an
Investment Entity if the Constituent Entity-owner can be reasonably expected to be subject to tax on distributions from the Investment Entity at a tax rate that equals or exceeds the Minimum Rate.
Kewangan (No. 2)
Under the Taxable Distribution Method—
distributions and deemed distributions of the
Investment Entity’s GloBE Income are included in the GloBE Income of the Constituent Entity-owner other than an Investment Entity that received the distribution;
the Local Creditable Tax Gross-up is included in the GloBE Income and Adjusted Covered Taxes of the Constituent Entity-owner other than an Investment
Entity that received the distribution;
the Constituent Entity-owner’s proportionate share of the
Investment Entity’s Undistributed Net GloBE Income for the Tested Year is treated as GloBE Income of the Investment Entity for the Reporting Financial
Year and the result of multiplying the Minimum Rate by such GloBE Income is treated as Multinational
Top-up Tax of a Low-Tax Constituent Entity in the
Financial Year for the purposes of Chapter 4 of this Part;
and
the Investment Entity’s GloBE Income or Loss for the Financial Year and any Adjusted Covered Taxes attributable to such income are excluded from all
Effective Tax Rate computations under Chapter 7
of this Part and subsections 192(2) to (10), except as provided in paragraph (b).
The Undistributed Net GloBE Income for the Tested Year cannot be reduced by distributions or deemed distributions to the extent that such distributions were treated as a reduction to Undistributed Net GloBE Income of a previous Tested Year.
For the purpose of computing Undistributed Net
GloBE Income, a GloBE Loss is reduced to the extent it reduced Undistributed Net GloBE Income at the end of a previous Financial Year.
Undang-Undang Malaysia 130
If a GloBE Loss for a Financial Year is not reduced to zero before the end of the end of the last Tested Period that includes such Financial Year, the remainder becomes an Investment Loss Carry-forward and is reduced in the same manner as a GloBE Loss in subsequent Financial Years.
For the purposes of this section—
the Tested Year is the third year preceding the
Reporting Financial Year;
the Testing Period is the period beginning with the first day of the Tested Year and ending with the last day of the Reporting Financial Year that the
Ownership Interest was held by a Group Entity;
a deemed distribution arises when a direct or indirect
Ownership Interest in the Investment Entity is transferred to a non-Group Entity and is equal to the proportionate share of the Undistributed Net
GloBE Income attributable to such Ownership Interest on the date of such transfer determined without regard to the deemed distribution; and
the Local Creditable Tax Gross-up is the amount of
Covered Taxes incurred by the Investment Entity that is allowed as a credit against the tax liability of the owner of the Constituent Entity arising in connection with a distribution from the Investment Entity.
The election under this section is a Five-Year Election.
If the election is revoked, the proportionate share of the owner of the Constituent Entity in the Undistributed Net
GloBE Income of the Investment Entity for the Tested Year at the end of the Financial Year preceding the revocation year is treated as GloBE Income of the Investment Entity for the revocation year and the result of multiplying the Minimum
Rate by such GloBE Income is treated as Multinational
Top-up Tax of a Low-Tax Constituent Entity in the revocation year for the purposes of Chapter 4 of this Part.
Kewangan (No. 2)
For the purposes of this section, “Undistributed Net
GloBE Income” means the amount of the Investment Entity’s
GloBE Income, if any, for the Tested Year reduced but not below zero by—
any Covered Taxes of the Investment Entity;
distributions and deemed distributions to shareholders other than Constituent Entities that are Investment
Entities in the Testing Period;
GloBE Losses arising in the Testing Period; and
Investment Loss Carry-forwards.