001

Computation of XCo's GloBE Income or Loss: 

1. Start with profit (in P&L) (Art. 3.1): 20,000 

2. Other comprehensive income: ignore – not part of "Financial Accounting Net Income or Loss" (Art. 3.1 and definition of “Other Comprehensive Income” in Art. 10.1.1) 

Adjustments (Art. 3.2.1): 

3. Income tax expense: 

a. In regard to Covered Taxes: add 6,000 (including 200 in respect of "dividend income minus related expenses": see "including …" in para. (a) of definition of “Net Taxes Expense” in Art. 10.1.1) 

b. In regard to other taxes: to the extent “other taxes” are those described in para. (c), (d) or (e) of definition of "Net Taxes Expense" in Art. 10.1.1, the amount will be added; but not otherwise. I will assume that no part of the "other taxes" falls within para. (c), (d) or (e). Thus, 6,000 is added

4. Current and deferred tax shown as contra to particular revenue items: 

a. In regard to Covered Taxes: add 800 (first part of definition of "Net Taxes Expense" in Art. 10.1.1) 

b. In regard to other taxes: same as above. Thus, 800 is added 

5. Accrued dividend income (gross) in respect of: 

a. 10% shareholding held for 6 months: deduct 400 (not "Short-term Portfolio Shareholding", as shareholding is 10% – thus, "Excluded Dividend") 

b. 5% shareholding held for 18 months: deduct 650 (not "Short-term Portfolio Shareholding", as held for 18 months – thus, "Excluded Dividend") 

c. 8% shareholding held for 9 months: no adjustment ("Short-term Portfolio Shareholding") 

Thus, 1,050 is deducted 

6. Received dividend income (gross) (accrued in P&L in preceding fiscal year, received in current fiscal year) in respect of 12% shareholding held for 30 months: definition of "Excluded Dividends" in Art. 10.1.1 says "received or accrued". However, it does not make sense to deduct this dividend, which is not included in this year's profit to begin with. Commentary needs to clarify! I will assume that the correct answer is that the dividend is not included in this year's "Excluded Dividends". Thus, no adjustment. 

7. Expenses relating to all dividend income: Art. 3.2 does not require an adjustment for all or part of these expenses. Thus, no adjustment. 

8. Gain (included in P&L) on disposal of 12% shareholding: 1,000. This satisfies Art. 10.1.1 definition of "Excluded Equity Gain or Loss". Thus, 1,000 is deducted 

9. Loss (included in P&L) on disposal of 10% shareholding: 600. This satisfies Art. 10.1.1 definition of "Excluded Equity Gain or Loss". Thus, 600 is added 

Based on the above, XCo's GloBE Income or Loss = 20,000 + 6,000 + 800 – 1,050 – 1,000 + 600 = 25,350