4‑85 Meaning of Total Deferred Tax Adjus4‑85 Meaning of Total Deferred Tax Adjustment Amount

4‑85 Meaning of Total Deferred Tax Adjustment Amount

(1) Subject to the following subsections, the Total Deferred Tax Adjustment Amount for a Constituent Entity for a Fiscal Year is equal to: (a) if the applicable domestic tax rate is below the Minimum Rate—the deferred tax expense accrued in its financial accounts, to the extent that: (i) it is in respect of Covered Taxes for the Fiscal Year (the relevant deferred tax expense); and (ii) it relates to amounts included in the computation of the Constituent Entity’s GloBE Income for the Fiscal Year; or (b) otherwise—that deferred tax expense, to that extent, recast at the Minimum Rate. (2) That Total Deferred Tax Adjustment Amount does not include any of the following: (a) the amount of the relevant deferred tax expense that is in respect of items excluded from the computation of GloBE Income or Loss under Chapter 3; (b) the amount of the relevant deferred tax expense that is in respect of Disallowed Accruals and Unclaimed Accruals; (c) the impact of a valuation adjustment or accounting recognition adjustment with respect to a deferred tax asset; (d) the amount of the relevant deferred tax expense that arises from a re‑measurement with respect to a change in the applicable domestic tax rate; (e) the amount of the relevant deferred tax expense that is in respect of the generation and use of tax credits. (3) Adjust that Total Deferred Tax Adjustment Amount as follows: (a) increase it by the amount of any Unclaimed Accrual paid during the Fiscal Year; (b) increase it by the amount of any Recaptured Deferred Tax Liability computed in a preceding Fiscal Year that has been paid during the Fiscal Year; (c) if a deferred tax asset has not been recognised in the deferred tax expense mentioned in subsection (1) only because the recognition criteria are not met—reduce it by the amount that would be a reduction to the deferred tax expense if the deferred tax asset were so recognised. (4) Subsection (5) applies if: (a) a deferred tax asset has been recorded at a rate lower than the Minimum Rate; and (b) the deferred tax asset is attributable to a GloBE Loss for a Fiscal Year. (5) If this subsection applies: (a) recast the deferred tax asset at the Minimum Rate in the Fiscal Year mentioned in paragraph (4)(b) if this reflects the content of the GloBE Information Return for the MNE Group for the Fiscal Year; and (b) if the deferred tax asset is recast under paragraph (a)—reduce the Total Deferred Tax Adjustment Amount by the amount by which the deferred tax asset is increased because of that recasting.