GloBE Rules Series

ITQ G-

159

April 17, 2026

Question

XCo, a company located in jurisdiction X, is a Constituent Entity in an MNE Group which is “within scope” of the GloBE rules.

XCo owns 100% of the shares in YCo, a company located in jurisdiction Y.

In the 2027 fiscal year, XCo accrues (1) 30 of jurisdiction Y withholding tax on dividends paid by YCo; and (2) 100 of jurisdiction X tax under X’s CFC regime in respect of YCo.

The MNE Group makes an election to apply the Simplified ETR Safe Harbour (SESH) in jurisdiction Y in 2027.

For the purposes of SESH, will XCo’s 130 of tax be included in jurisdiction Y’s Simplified Taxes?

Answer

See section 5 of chapter 2 of the Side-by-Side Package.

Firstly, assuming the Five-Year Election (see para. 157) is not validly made …

100 of jurisdiction X tax under X’s CFC regime in respect of YCo: NOT INCLUDED in jurisdiction Y’s Simplified Taxes (para. 149).

30 of jurisdiction Y withholding tax on dividends paid by YCo: INCLUDED in jurisdiction Y’s Simplified Taxes (para. 149 and Art. 4.3.2(e)).

Secondly, assuming the Five-Year Election is validly made …

XCo’s 130 of tax will be INCLUDED in jurisdiction Y’s Simplified Taxes, UNLESS jurisdiction Y has a QDMTT (para. 157).

Do you agree?

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