6‑70 Fair value adjustments6‑70 Fair value adjustments

6‑70 Fair value adjustments

Election (1) Subsection (2) applies if, because of an event (the triggering event), a Constituent Entity of an MNE Group (the adjusting Constituent Entity) is required or permitted to adjust the basis of its assets or the amount of its liabilities to fair value for tax purposes in the jurisdiction in which it is located. (2) A Filing Constituent Entity for an MNE Group may make an election for the MNE Group under this subsection that applies to the adjusting Constituent Entity. (3) An election under subsection (2) is: (a) an Annual Election (if the election specifies that it is an Annual Election); or (b) a Five‑Year Election (if the election specifies that it is a Five‑Year Election). Adjustments (4) In computing the GloBE Income or Loss of the adjusting Constituent Entity for a Fiscal Year, apply the rules in subsections (5), (6) and (7) if: (a) an election under subsection (2) applies to the adjusting Constituent Entity and the Fiscal Year; and (b) the Fiscal Year ends after the triggering event occurred. (5) Include an amount of gain or loss in respect of each of the adjusting Constituent Entity’s assets and liabilities computed as follows: (a) first, compute the difference between: (i) the carrying value for financial accounting purposes of the asset or liability immediately before the day of the triggering event; and (ii) the fair value of the asset or liability immediately after the triggering event; (b) then, if the triggering event is in connection with a GloBE Reorganisation in relation to which the adjusting Constituent Entity has an amount of Non‑Qualifying Gain or Loss, reduce the result of paragraph (a) by that amount.

Note: If the amount of Non‑Qualifying Gain or Loss is a negative number, reducing the result of paragraph (a) by that amount would increase it.

(6) Use the fair value for financial accounting purposes of the asset or liability immediately after the triggering event. (7) Include the amount mentioned in subsection (5) as follows: (a) if the election is an Annual Election—include all of that amount in relation to the Fiscal Year in which the triggering event occurs; (b) if the election is a Five‑Year Election—include one fifth of that amount in relation to the Fiscal Year in which the triggering event occurs and in relation to each of the subsequent 4 Fiscal Years. (8) If paragraph (7)(b) applies, and the adjusting Constituent Entity ceases to be a Constituent Entity of the MNE Group in a Fiscal Year (the leaving year) that is one of the 5 Fiscal Years mentioned in that paragraph, then despite that paragraph: (a) include one‑fifth of the amount mentioned in subsection (5) in relation to the Fiscal Year in which the triggering event occurs; and (b) include one‑fifth of that amount in relation to each of the subsequent 4 Fiscal Years that end before the leaving year; and (c) include any remaining part of that amount in relation to the leaving year.