Accrued Pension Expense 

AG, section 2.5 formula 

Net pension surplus 

2 types of pension expenses: (1) contributions to “defined benefit” Pension Fund; and (2) “defined benefit” pensions paid directly to senior employees after they leave Constituent Entity’s employment (provided they satisfy a “minimum employment period” condition) 

Art. 3.2.1(i) adjustment to GloBE Income – applies to Type 1 pension expenses, but not to Type 2 (because of the Art. 10.1.1 definition of “Accrued Pension Expense”)

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

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

Allocation (under Art. 4.3.2(c)) of tax arising under Blended CFC Tax Regime

Application of 2 formulas in AG, para. 58.3

Non-Constituent Entity

Passive Income

Art. 4.3.3

Example 4.3.3-1 in IF’s Examples document

QDMTT

Art. 4.3.2(c)

Jurisdiction A CFC tax is not taken into account in computing jurisdiction A QDMTT (subject to exception): AG, para. 118.28

Substance-based Income Exclusion

SBIE amount does not reduce GloBE Income

SBIE has no impact on ETR

Whether lower tax is paid by (1) paying Top-up Tax, or (2) paying sufficient local tax to avoid Top-up Tax

Art. 3.2.7 not applicable 

Art. 10.1.1 definition of “Excluded Dividends” 

Art. 10.1.1 definition of “Portfolio Shareholding” 

Redeemable preference shares (RPS) 

Financial accounting classification (equity vs. debt) mismatch of RPS between issuer and holder 

AG, section 2.3: new Commentary on definition of “Ownership Interest” in Art. 10.1.1 – requires same classification of financial instrument (by issuer and holder) for GloBE Income purposes

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)

“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)

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

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)

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