5‑40 Top‑up Tax of a Constituent Entity5‑40 Top‑up Tax of a Constituent Entity

5‑40 Top‑up Tax of a Constituent Entity

(1) Subsection (2) applies if an MNE Group has Net GloBE Income for a jurisdiction for a Fiscal Year. (2) The Top‑up Tax of a Constituent Entity of the MNE Group, located in the jurisdiction, for a Fiscal Year is the amount computed in accordance with the following formula: Start formula Jurisdictional Top-up Tax times start fraction GloBE Income of the CE over Aggregate GloBE Income of all CEs end fraction end formula where:

Aggregate GloBE Income of all CEs is the sum of the GloBE Income of all Constituent Entities of the MNE Group that have GloBE Income for the Fiscal Year included in the computation of Net GloBE Income of the MNE Group in accordance with section 5‑15 for the jurisdiction for the Fiscal Year.

GloBE Income of the CE is the GloBE Income of the Constituent Entity for the jurisdiction for the Fiscal Year.

Jurisdictional Top‑up Tax is the Jurisdictional Top‑up Tax of the MNE Group for the jurisdiction for the Fiscal Year.

(3) Subject to the following subsections, if an MNE Group does not have Net GloBE Income for a jurisdiction for a Fiscal Year, the Top‑up Tax of a Constituent Entity of the MNE Group, located in the jurisdiction, for the Fiscal Year is zero. (4) Subsection (5) applies if: (a) an MNE Group does not have Net GloBE Income for a jurisdiction for a Fiscal Year (the current Fiscal Year); and (b) there are one or more amounts of Additional Current Top‑up Tax of the MNE Group for the jurisdiction for the current Fiscal Year, in respect of a prior Fiscal Year. (5) Increase the Top‑up Tax of a Constituent Entity of the MNE Group, located in the jurisdiction, for the current Fiscal Year by the amount computed in accordance with the following formula: Start formula Additional Current Top-up Tax in respect of prior year times start fraction GloBE Income of the CE for prior year over Aggregate GloBE Income of all CEs for prior year end fraction end formula where:

Additional Current Top‑up Tax in respect of prior year is the sum of the amounts of Additional Current Top‑up Tax mentioned in paragraph (4)(b).

Aggregate GloBE Income of all CEs for prior year is the sum of the GloBE Income of all Constituent Entities of the MNE Group that have GloBE Income for the prior Fiscal Year included in the computation of Net GloBE Income of the MNE Group in accordance with section 5‑15 for the jurisdiction for the prior Fiscal Year.

GloBE Income of the CE for prior year is the GloBE Income of the Constituent Entity for the jurisdiction for the prior Fiscal Year.