111D. Location of constituent entity

(1) Subject to subsections (2) to (9), an entity, other than a flow-through entity, shall for the purposes of this Part, be located in the jurisdiction where it is considered to be resident for tax purposes based on its place of management, its place of creation or similar criteria.

(2) Where it is not possible to determine the location of an entity, other than a flow-through entity, based on where it is considered to be a tax resident in accordance with subsection (1), the entity shall be deemed to be located in the jurisdiction where it was created.

(3)(a) Where a constituent entity is a flow-through entity and that constituent entity is—

(i) an ultimate parent entity of an MNE group or of a large-scale domestic group, or

(ii) required to apply a qualified IIR,

then, that constituent entity shall be located in the jurisdiction where it was created.

(b) Where a constituent entity is a flow-through entity and paragraph (a) does not apply, the constituent entity shall be considered to be stateless.

(4) Where a constituent entity is a permanent establishment referred to in—

(a) paragraph (a) of the definition in section 111A of ‘permanent establishment’, it shall be deemed to be located in the jurisdiction where it is treated as a permanent establishment and liable to tax under a tax treaty,

(b) paragraph (b) of the definition in section 111A of ‘permanent establishment’, it shall be deemed to be located in the jurisdiction where it is subject to income taxation based on its business presence,

(c) paragraph (c) of the definition in section 111A of ‘permanent establishment’, it shall be deemed to be located in the jurisdiction where it is situated, or

(d) paragraph (d) of the definition in section 111A of ‘permanent establishment’, it shall be considered to be stateless.

(5)(a) Subject to paragraphs (b) and (c), where a constituent entity is regarded as located in 2 jurisdictions, and those jurisdictions have a tax treaty, the constituent entity shall be deemed to be located in the jurisdiction where it is considered to be resident for tax purposes under that tax treaty.

(b) Where the tax treaty referred to in paragraph (a) requires the competent authorities to reach a mutual agreement on the deemed residence for tax purposes of the constituent entity, and no agreement is reached, subsection (6) shall apply.

(c) Where no relief from double taxation is available under a tax treaty as a consequence of the constituent entity being resident for tax purposes in both of the jurisdictions concerned, subsection (6) shall apply.

(6)(a) Subject to paragraphs (b) and (c), where a constituent entity is located in 2 jurisdictions and those jurisdictions do not have a tax treaty or where paragraph (b) or (c) of subsection (5) applies, as the case may be, the constituent entity shall be deemed to be located in the jurisdiction which charged the higher amount of covered taxes for the fiscal year.

(b) For the purpose of calculating the covered taxes referred to in paragraph (a), no account shall be taken of any tax paid in accordance with a controlled foreign company tax regime.

(c) Subject to paragraph (d), where the amount of covered taxes referred to in paragraph (a) is the same, or is zero, in both jurisdictions, then, the constituent entity shall be deemed to be located in the jurisdiction in which the greater substance-based income exclusion amount under section 111AE is calculated on an entity basis.

(d) Where the substance-based income exclusion amount referred to in paragraph (c) is the same, or is zero, in both jurisdictions, then—

(i) the constituent entity shall be considered to be stateless, or

(ii) where the constituent entity is an ultimate parent entity, the constituent entity shall be deemed to be located in the jurisdiction in which it is created.

(7) Where, on the application of paragraphs (5) and (6), a parent entity is deemed to be located in a jurisdiction where it is not subject to a qualified IIR, it shall be deemed to be subject to the qualified IIR of the other jurisdiction, unless a tax treaty prohibits the application of such rule.

(8) For the purpose of this Part, the location of a constituent entity, determined at the beginning of a fiscal year, shall remain the same throughout the fiscal year.

(9) For the purposes of Chapter 5, a stateless constituent entity shall be deemed to be located in a jurisdiction but not a jurisdiction where any other entity is located.