Partnership – definitions of “Entity” (Art. 10.1.1), “Flow-through Entity” (Art. 10.2.1), “Tax Transparent Entity” (Art. 10.2.1(a)), “stateless Entity” (Art. 10.3.2(b)), “Constituent Entity” (Art. 1.3.1(a))

Permanent Establishment – para. (a) of definition in Art. 10.1.1

Location of PE (Art. 10.3.3(a))

PE can have payroll carve-out (Art. 5.3.3) and tangible asset carve-out (Art. 5.3.4)

Allocation of FANIL to PE (Arts. 3.4 & 3.5.1(a))

Allocation of Adjusted Covered Taxes to PE (Art. 4.3.2(a))

SBIE computation

IIR tax imposed on UPE and POPE

Art. 2.1.6

Top-up Tax of Constituent Entity located in same jurisdiction as UPE or POPE, respectively

Top-up Tax of UPE or POPE, respectively

EU GloBE Directive, Arts. 8(2), 9(3), and 10

Possible drafting glitch in Art. 10, EU GloBE Directive – cf. Art. 2.3, GloBE model rules

US Notice 2023-80: US foreign tax credits for foreign IIR and QDMTT taxes

Art. 4.3.2(c)

“final top-up tax” (phrase used in Notice 2023-80)

Does DMTT qualify as a QDMTT?

“Scaling down” of DMTT amount, to reflect MNE Group’s less than 100% Ownership Interest

Para. 118.10 of Comm to “QDMTT” definition in Art. 10.1.1 (added to Comm by Feb 2023 AG)

Jurisdictional Top-up Tax - Art. 5.2.3

QDMTT – not applicable to (i) MNE Groups which fall outside scope of GloBE rules, and (ii) 100% domestic groups

Art. 24(5) of double tax treaty: non-discrimination

Does QDMTT breach Art. 24(5)?

Art. 6 vs. Art. 7, OECD model double tax treaty

“PE” definition in Art. 5, OECD model double tax treaty

“PE” definition in Art. 10.1.1, GloBE rules – para. (a) not satisfied, because Art. 6 is not similar to Art. 7

“Constituent Entity”: Art. 1.3.1

QDMTT

Para. 118.4 of Comm to definition of “QDMTT” in Art. 10.1.1

Transitional CbCR Safe Harbour – de minimis test

Hybrid Arbitrage Arrangement

Paras. 74.25 to 74.31 of “Safe Harbours and Penalty Relief” report, added by December 2023 AG

Was loan entered into after 15 December 2022?

Meaning of “performance … differs” in para. 74.30(c)(ii)

Floating interest rate

QDMTT: amount of DMTT tax cannot be “scaled down” to reflect UPE’s Ownership Interest of less than 100% - i.e., DMTT tax must be either 100% or 0%, to “qualify” as QDMTT

Para. 118.10 of Comm to “QDMTT” definition in Art. 10.1.1 (added to Comm by Feb 2023 AG)

UTPR: amount of UTPR tax cannot be “scaled down” to reflect UPE’s Ownership Interest of less than 100%

Arts. 2.5 and 2.6

Transitional UTPR Safe Harbour

Corporate income tax rate of at least 20 percent

Federal and State taxes

Nominal rate, not effective rate

Deductibility of State income tax for Federal income tax purposes

Combined rate

Section 5.2 in July 2023 AG

Art. 8.2.1

QDMTT Safe Harbour 

“Standards for a QDMTT Safe Harbour” in chapter 5 of July 2023 AG 

QDMTT Accounting Standard: QDMTT is computed based on local financial accounting standard

Consistency Standard: QDMTT imposed on 100% of Jurisdictional Top-up Tax, notwithstanding that UPE’s “Ownership Interest” is 80%

Para. 46, chapter 5 of July 2023 AG

QDMTT payable

QDMTT challenged under tax stabilization agreement

Art. 5.2.3

Contingent liability vs. tax expense 

IAS 37 (Provisions, Contingent Liabilities and Contingent Assets), paras. 37 & 86

Para. 20.1 of Comm to Art. 5.2.3: “accrued”

Allocation of cap (under tax stabilization agreement) between corporate income tax and QDMTT

STTR

Art. 1(6)(a) (STTR): “preferential adjustment”

Art. 1(6)(b)(ii) (STTR): “permanent reduction”

Unrepatriated foreign source income is exempt in residence jurisdiction

3 year rule in Art. 1(6)(b)(ii) (STTR): impact on time withholding tax paid

STTR tax = “Covered Tax” (GloBE rules)

Art. 4.6.1 (GloBE rules) – increase in liability for Covered Tax for previous Fiscal Year