Distribution Tax Regime Election

Distribution Tax Regime Election Contents What is a Distribution Tax Regime? Article 7.3.1 of the OECD Model Rules permits a constituent entity to to make a Distribution Tax Regime Election.  A distribution tax regime is a tax regime that doesn’t levy a tax charge on taxable income when it is generated, but when it is distributed. […]

Deemed Disposal of Assets Election

Deemed Disposal of Assets In some jurisdictions there can be a deemed disposal of assets. This occurs in the UK for instance where a company migrates by changing its treaty residence. In other jurisdictions it can apply on an ‘immigration’ (ie where a company becomes tax resident in a jurisdiction). In general, the company is […]

Excluded Entity Election

Excluded Entity Election Excluded entities are not taken into account for the purposes of calculating the jurisdictional effective tax rate, any top-up tax payment and the imposition of top-up tax (the IIR and UTPR etc). However, they are taken into account for the purposes of determining whether an MNE group is within the scope of […]

Taxable Distribution Method Election

Taxable Distribution Method Election Contents Taxable Distribution Method Election, Generally The taxable distribution method election is an election available for investment entities and is an alternative to making a tax transparency election. This is available where the constituent entity owner can be reasonably expected to be subject to tax on distributions at a rate of […]

Tax Transparency Election

Tax Transparency Election An entity can make a tax transparency election in respect of its ownership interest in an investment entity. This then changes the default tax treatment under the Pillar Two rules. For more information on the treatment of investment entities/funds under Pillar Two, see Investment Funds and Pillar Two The election is a […]

GloBE Loss Election

GloBE Loss Election Contents GloBE Loss Election, Generally Instead of applying the deferred tax rules (or for instance in jurisdictions where there is a very low rate of corporate income tax), an entity can make a Pillar Two GloBE loss election. For more information on deferred tax under Pillar Two, see Deferred Tax. This dispenses […]

Consolidation Election

Consolidation Election Whilst consolidated financial accounts are used for determining whether MNE groups are in scope (see our Scope analysis), Pillar Two GloBE income is based on the entity-level financial accounts before any consolidation adjustments. As such, transactions between group entities are taken into account when determining the Pillar Two GloBE income or loss of […]

Capital Gains Election

Election to Spread Capital Gains A capital gains election allows an MNE group to spread gains and losses on sales of local immovable tangible assets over the current year and the previous four years and to match gains with losses. The intention behind this is to avoid volatility in the ETR calculation that could arise […]

Stock-Based Compensation Election

Stock Based Compensation Election Article 3.2.2 of the OECD Model Rules include an election (the ‘stock-based compensation election’) to replace the deductible amount of stock-based compensation in the financial accounts of the constituent entity with the amount deductible in its corporate income tax return. This applies to shares/stock and options and warrants related to them. […]