Revenue Note for Guidance

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Revenue Note for Guidance

111AP Multi-parented MNE and large-scale domestic groups

Summary

This section provides for a situation in which two or more Groups prepare consolidated financial statements in which the financial performance of these Groups is presented as a single economic unit in accordance with a dual-listed arrangement or a stapled structure. The rules in this section ensure that this Part applies to these structures in the same way they would apply to a Group with single UPE with an appropriate allocation of top-up tax amongst the constituent entities of the combined MNE Group.

Details

Definitions

(1) Introduces definitions relating to multi-parented MNE and large-scale domestic groups such as stapled structures and dual-listed arrangements.

“consolidated financial statements of the multi-parented MNE group or large-scale domestic group” means the combined consolidated financial statements referred to in the definitions of a ‘stapled structure’ or a ‘dual-listed arrangement’, prepared under an acceptable financial accounting standard, which is deemed to be the accounting standard of the ultimate parent entity;

“dual-listed arrangement” means an arrangement entered into by two or more ultimate parent entities of separate groups under which:

  1. the ultimate parent entities agree to combine their business by contract alone,
  2. pursuant to contractual arrangements the ultimate parent entities will make distributions, with respect to dividends and in liquidation, to their shareholders based on a fixed ratio,
  3. the ultimate parent entities’ activities are managed as a single economic unit under contractual arrangements while retaining their separate legal identities,
  4. the ownership interests of the ultimate parent entities that comprise the agreement are quoted, traded or transferred independently in different capital markets, and
  5. the ultimate parent entities prepare consolidated financial statements:
    1. in which the assets, liabilities, income, expenses and cash flows of entities in all of the groups are presented together as those of a single economic unit, and
    2. that are required by a regulatory regime to be audited by an external independent auditor;

“multi-parented large-scale domestic group” means 2 or more groups where the ultimate parent entities enter into an arrangement that is a stapled structure or a dual-listed arrangement that does not include an entity or permanent establishment of either group subject to the arrangement which is located in a different jurisdiction with respect to the location of the other entities of the 2 groups;

“multi-parented MNE group” means 2 or more groups where the ultimate parent entities enter into an arrangement that is a stapled structure or a dual-listed arrangement that includes at least one entity or permanent establishment of either group subject to the arrangement which is located in a different jurisdiction with respect to the location of the other entities of the 2 groups;

“stapled structure” means an arrangement entered into by two or more ultimate parent entities of separate groups under which:

  1. 50 per cent or more of the ownership interests in the ultimate parent entities of the separate groups are:
    1. if they are listed, quoted at a single price, and
    2. by reason of form of ownership, restrictions on transfer, or other terms or conditions, combined with each other, and cannot be transferred or traded independently, and
  2. one of the ultimate parent entities prepares consolidated financial statements:
    1. in which the assets, liabilities, income, expenses and cash flows of all the entities of the groups concerned are presented together as those of a single economic unit, and
    2. that are required by a regulatory regime to be audited by an external independent auditor.

Application

(2) Where entities and constituent entities of two or more groups form part of a multi-parented MNE group or large-scale domestic group, the entities and constituent entities of each group shall be treated as members of one multi-parented MNE group or large-scale domestic group.

(3) For the purposes of subsection (2) an entity, other than an excluded entity, shall be treated as a constituent entity if it is consolidated on a line-by-line basis in the consolidated financial statements of the multi-parented MNE group or large-scale domestic group or if its controlling interests are held by entities in the multi-parented MNE group or large-scale domestic group.

(4) The ultimate parent entities of the separate groups that compose the multi-parented MNE group or large-scale domestic group shall be the ultimate parent entities of the multi parented MNE group or large-scale domestic group and in the application of this Part in respect of a multi-parented MNE group or large-scale domestic group any references to an ultimate parent entity shall apply, as required, as if they are references to multiple ultimate parent entities.

(5) This subsection provides that sections 111E to 111J (charging provisions in respect of the IIR top-up tax) shall apply to the parent entities and ultimate parent entities of the multi-parented MNE group or large-scale domestic group with respect to their allocable share of the top-up tax of the low-taxed constituent entities.

(6) This subsection provides that sections 111L to 111N and section 111AZ (charging provisions in respect of the UTPR top-up tax) shall apply to constituent entities of a multi-parented MNE group or large-scale domestic group, taking into account the top-up tax of each low-taxed constituent entity that is a member of the multi-parented MNE group or large-scale domestic group.

(7) This subsection provides that the ultimate parent entities of the multi-parented MNE group or large-scale domestic group are required to file the top-up tax information return in respect of the information concerning each of the groups that compose the multi-parented MNE group or large-scale domestic group in accordance with section 111AAI. There is an exception where a designated filing entity is appointed to file this information.

Relevant Date: Finance Act 2024