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

Art. 4.3.2(e)

Allocation of taxes on distributions: GloBE rules vs. QDMTT

Dividend withholding tax vs. corporate income tax in shareholder jurisdiction

Para. 118.30 of Comm on definition of “QDMTT” in Art. 10.1.1 (as amended by July 2023 AG)

July 2023 AG, chapter 3: Leases

Operating leases

Tangible asset carve-out for lessor

Mixed use asset: lease of part of building

Para. 43.1.7 of Comm to Art. 5.3.4

Lessee does not recognize right-of-use asset in financial statements

Para. 43.1.1 of Comm to Art. 5.3.4

Lease to local PE of non-resident company

Para. 43.1.5 of Comm to Art. 5.3.4

July 2023 AG, chapter 2

Tax credit

Originator

Marketable Transferable Tax Credit, MTTC

Legal transferability standard

Marketability standard

Para. 112.1 in Comm to Art. 3.2.4

Para. 112.5 in Comm to Art. 3.2.4

Amended para. 5 of Comm to Art. 4.1.2(d)

Purchaser of tax credit

MTTC in purchaser’s hands

Para. 112.6 in Comm to Art. 3.2.4

GloBE Income

Non-MTTC in purchaser’s hands

Para. 14.2 of Comm to Art. 4.1.3(c)

Adjusted Covered Taxes

Amended para. 113 of Comm to Art. 3.2.4

Para. 14.3(b) of Comm to Art. 4.1.3(c)

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

QDMTT

Art. 8 of OECD model double tax treaty

Operation of aircraft in international traffic

Treaty exemption in source country under Art. 8 of treaty: applicable to QDMTT? – definition of “Covered tax” in Art. 2(1) of treaty

Para. (a) vs. para. (d) of “permanent establishment” definition in Art. 10.1.1

Stateless PE (Art. 10.3.3(d)); “Stateless Constituent Entity” (Art. 10.1.1)

Para. 118.1 of Comm to definition of “QDMTT” in Art. 10.1.1 (introduced by July 2023 AG)

Flow-through Entity

Tax Transparent Entity

POPE

IIR

QDMTT

Para. 118.8.3 of Comm to Art. 10.1.1 definition of “QDMTT”

Arts. 3.5.1, 3.5.3 & 3.5.5: allocation of Financial Accounting Net Income and Loss

Art. 4.3.2(b): allocation of Covered Taxes

Jurisdictional blending for QDMTT purposes

July 2023 AG, chapter 3: Leases

Operating leases

Tangible asset carve-out for lessor

Lessee’s right-of-use asset

Para. 43.1.5 of Comm to Art. 5.3.4

Leased asset located in different jurisdiction from lessor

Elimination of intercompany leases

July 2023 AG, chapter 2

Tax credit

Originator

Marketable Transferable Tax Credit, MTTC

Legal transferability standard

Marketability standard

Para. 112.1 in Comm to Art. 3.2.4

Para. 112.5 in Comm to Art. 3.2.4

Amended para. 5 of Comm to Art. 4.1.2(d)

Purchaser of tax credit

MTTC in purchaser’s hands

Para. 112.6 in Comm to Art. 3.2.4

GloBE Income