GloBE Rules Series

ITQ G-

156

March 20, 2026

Question

An MNE Group which is “within scope” of the GloBE rules, has 2 Constituent Entities located in jurisdiction A: ACo 1 and ACo 2.

In a Fiscal Year, ACo 1 has (i) Financial Accounting Net Income or Loss (FANIL) of $2 million; (ii) income tax expense of $500,000; and (iii) dividends (included in FANIL) from long-term shareholdings in public companies of $200,000.

In the same Fiscal Year, ACo 2 has (i) FANIL of $3 million; and (ii) income tax expense of $1 million.

Also, in the same Fiscal Year, there are trading transactions between ACo 1 and ACo 2: ACo 1 sells $1 million of goods to ACo 2.

Based on this limited information, what is the MNE Group’s Simplified Income for the purposes of the Simplified ETR Safe Harbour?

Answer

See sections 3.1 and 3.2 in chapter 2 of the Side-by-Side Package.

The Jurisdictional Profit (or Loss) before Income Tax (JPBT) in jurisdiction A is: $2 million + $0.5 million + $3 million + $1 million = $6.5 million.

No adjustment is made for the trading transactions between ACo 1 and ACo 2.

ACo 1’s dividends of $0.2 million from long-term shareholdings in public companies qualify as “Excluded Dividends” (Art. 10.1.1 definition). Thus, these dividends are removed in computing Simplified Income.

Therefore, Simplified Income = $6.5 million – $0.2 million = $6.3 million.

Do you agree?

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