5‑55 Payroll Carve‑out Amount5‑55 Payroll Carve‑out Amount

5‑55 Payroll Carve‑out Amount

(1) The Payroll Carve‑out Amount for a Constituent Entity of an MNE Group located in a jurisdiction, for a Fiscal Year, is computed as follows: (a) first, compute the total amount of Eligible Payroll Costs accrued for the Fiscal Year of Eligible Employees of the Constituent Entity; (b) next, exclude from that total amount the Eligible Payroll Costs, to the extent they are: (i) capitalised and included in the carrying value of Eligible Tangible Assets for the Fiscal Year of a Constituent Entity of the MNE Group; or (ii) included in the Constituent Entity’s International Shipping Income Costs or Ancillary International Shipping Income Costs for the Fiscal Year, and excluded from the computation of the Constituent Entity’s GloBE Income or Loss for the Fiscal Year under section 3‑220; (c) next, multiply the result of paragraph (b) by 5%. (2) However, for the purposes of paragraph (1)(a), if, in the Fiscal Year: (a) an Eligible Employee performs activities for the MNE Group both in the jurisdiction and outside the jurisdiction; and (b) the proportion of the Eligible Employee’s time spent performing those activities in the jurisdiction is 50% or less; reduce the Eligible Payroll Costs accrued for the Fiscal Year of the Eligible Employee by multiplying it by that proportion. (3) For the purposes of paragraph (1)(a), if a Filing Constituent Entity for an MNE Group chooses, under subsection (4), to exclude certain Eligible Payroll Costs for certain Eligible Employees from the computation mentioned in that paragraph, exclude those Eligible Payroll Costs in computing the total amount mentioned in that paragraph. (4) For the purposes of subsection (3), a Filing Constituent Entity for an MNE Group may choose to exclude some or all Eligible Payroll Costs for some or all Eligible Employees from the computation mentioned paragraph (1)(a) by excluding relevant amounts from the MNE Group’s GloBE Information Return for the Fiscal Year.