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International Tax Quiz (ITQ)
GloBE rules series
Go to Tax treaty series
Source material
The questions and answers are based on:
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GloBE model rules released by the Inclusive Framework
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Commentary to the GloBE model rules
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GloBE Implementation Framework
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Administrative Guidance to the GloBE model rules
Your comments are very welcome!
I believe in continuous improvement! All your comments (positive and negative!) will be gratefully received – I will take these comments into account in future updates. Please send your comments to: contact@stevetowers.tax. Thank you!
Numbering system
There are currently more than 240 ITQs. They are arranged in 2 series:
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GloBE rules series (ITQ G-001, ITQ G-002, etc.)
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Tax treaty series (ITQ T-001, ITQ T-002, etc.)
ITQ G-
053
Key Issues:
Computation of GloBE Income
40% minority shareholders – no impact on computation of GloBE
Income Income included in profit under equity accounting method
Other comprehensive income
Immaterial deviations from Acceptable Financial Accounting Standard
Withholding tax deducted from outbound royalties (economically borne by Constituent Entity under “gross-up” condition, but legally imposed on payee)
Income tax expense referable to income included in profit under equity accounting method
Date uploaded:
March 31, 2023
ITQ G-
051
Key Issues:
Sovereign wealth fund
“Governmental Entity” definition in Art. 10.1.1
“Excluded Entity” definition in Art. 1.5.1
Exclusion from “Constituent Entity” definition: Art. 1.3.3
AG, para. 36.4 in Commentary on definition of “Ultimate Parent Entity” in Art. 1.4.1: sovereign wealth fund that meets definition of a Governmental Entity (1) will not be considered to be a UPE, and (2) will not be considered to be part of an MNE Group
Government is not an “Entity” (AG, para. 17.1 in Commentary on definition of “Entity” in Art. 10.1.1)
As sovereign wealth fund (SWF) is not a UPE, SWF’s subsidiary is not included in “Group”: Art.1.2.2
“Constituent Entity” definition in Art.1.3.1
Date uploaded:
March 17, 2023
ITQ G-
052
Key Issues:
Art. 10.1.1 definition of “Non-profit Organisation”
Art. 1.5.1 definition of “Excluded Entity”
Art. 1.3.3: exclusion of “Excluded Entity” from definition of “Constituent Entity”
Art. 1.5.2(a) definition of “Excluded Entity”
Para. 54.1 in new Commentary to Art. 1.5.2, added by AG (aggregation of activities)
Para. 43.1 in new Commentary to Art. 1.5.2, added by AG (Main Entity and PE considered together)
New text in para. 53 in Commentary to Art. 1.5.2, added by AG (borrowing from third party) – not “wholly owned subsidiary”
Art. 1.5.2(b) definition of “Excluded Entity” – borrowing from third party
Bright-line test which can deem “ancillary activities” under Art. 1.5.2(a)(ii) (para. 54.2 in new Commentary to Art. 1.5.2, added by AG)
Date uploaded:
March 24, 2023
ITQ G-
050
Key Issues:
“Investment entity” in IFRS 10: definition in para. 27, para. 31, para. 32
Preparation of consolidated financial statements
“Ultimate Parent Entity” definition in Art. 1.4.1
“Controlling Interest” definition in Art. 10.1.1
“Group” definition in Art. 1.2.2
“MNE Group” definition in Art. 1.2.1
AG, section 1.2.4 (Examples)
Date uploaded:
March 10, 2023
ITQ G-
048
Key Issues:
Does a minimum tax qualify as a QDMTT?: AG, paras. 118-38 (tax rate), 118.34 (Top-up Tax formula does not subtract QDMTT), 118.33 (no jurisdictional blending), 10 (meaning of “Outcomes will be functionally equivalent to the GloBE rules”)
If minimum tax is a QDMTT (scenario A): calculation of QDMTT (with a Substance-based Income Exclusion)
If minimum tax is not a QDMTT (scenario B): calculation of GloBE Top-up Tax (with a Substance-based Income Exclusion)
Total tax is higher under scenario B than under scenario A
Date uploaded:
February 24, 2023
ITQ G-
046
Key Issues:
QDMTT definition and ordering rules
Absence of Substance-based Income Exclusion (SBIE) does not disqualify from QDMTT status: AG paras. 118.36-37
QDMTT: CFC tax and UTPR tax are not taken into account in computing QDMTT: AG, para. 118.30 and para. 118.31, Art. 4.2.2(c)
Date uploaded:
February 3, 2023
ITQ G-
044
Key Issues:
Transitional CbCR safe harbour failed
De minimis exclusion in Art. 5.5
UTPR
Allocation of UTPR to jurisdiction, even though jurisdiction qualifies for de minimis exclusion
Art. 9.3: exclusion from UTPR of MNE Groups in initial phase of international activity
Date uploaded:
January 20, 2023