4‑55 Allocation of amounts from Constitu4‑55 Allocation of amounts from Constituent Entity‑owner to CFC

4‑55 Allocation of amounts from Constituent Entity‑owner to CFC

(1) An amount in respect of Covered Taxes for a Fiscal Year is allocated from a Constituent Entity‑owner of a Constituent Entity of an MNE Group to the Constituent Entity if: (a) the Constituent Entity‑owner is subject to a Controlled Foreign Company Tax Regime; and (b) the amount is: (i) accrued in the financial accounts of the Constituent Entity‑owner for the Fiscal Year; and (ii) so accrued in respect of Covered Taxes imposed under the Controlled Foreign Company Tax Regime on the Constituent Entity‑owner’s share of the Constituent Entity’s income. Blended CFC Tax Regimes (2) Subsection (3) applies for a Fiscal Year if: (a) the Controlled Foreign Company Tax Regime mentioned in subsection (1) is a Blended CFC Tax Regime; and (b) the Fiscal Year: (i) begins on or before 31 December 2025; and (ii) ends on or before 30 June 2027. (3) The amount allocated under subsection (1) for the Fiscal Year is the amount computed in accordance with the following formula: Start formula start fraction Blended CFC Allocation Keys over Sum of all Blended CFC Allocation Keys end fraction times Allocable Blended CFC Tax end formula where:

Allocable Blended CFC Tax means the total amount, in respect of Covered Taxes imposed under the Blended CFC Tax Regime, that is recorded in the financial accounts of the Constituent Entity‑owner for the Fiscal Year.

Blended CFC Allocation Key means the Blended CFC Allocation Key of the Constituent Entity computed under subsection (4).

Sum of all Blended CFC Allocation Keys means the amount computed under subsection (5).

(4) For the purposes of subsection (3), the Blended CFC Allocation Key of a Constituent Entity of the MNE Group is the amount computed in accordance with the following formula (treating a negative result as zero): Start formula Attributable Income of Entity times open bracket Applicable Rate minus GloBE Jurisdictional ETR close bracket end formula where:

Applicable Rate is the lowest rate that, if it were the corporate tax rate applicable in the jurisdiction in which the Constituent Entity is located, would result in the tax charge in that jurisdiction in respect of the Constituent Entity being sufficient to prevent a tax charge on the Constituent Entity‑owner under the Blended CFC Tax Regime in respect of its share of the income of the Constituent Entity for the Fiscal Year.

Attributable Income of Entity means the Constituent Entity‑owner’s share of the Constituent Entity’s income, as determined under the Blended CFC Tax Regime in computing the Covered Taxes mentioned in subparagraph (1)(b)(ii).