Revenue Note for Guidance

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Revenue Note for Guidance

111N Calculation and allocation of UTPR top-up tax amount

(1)(a) The UTPR top-up tax amount of an MNE group allocated to a constituent entity for a fiscal year shall be calculated as:

A x B

where—

A is the UTPR top-up tax amount of an MNE group allocated to the State for a fiscal year as determined in accordance with subsection (2), and

B is the UTPR percentage in respect of the constituent entity for a fiscal year as determined in accordance with paragraph (b).

(1)(b) The UTPR percentage in respect of a constituent entity for a fiscal year shall be calculated as:

((A / B) x 50 per cent) + ((C / D) x 50 per cent)

where—

A is the total number of employees of the constituent entity,

B is the total number of employees of all the constituent entities of the MNE group located in the State,

C is the sum of the net book values of tangible assets of the constituent entity, and

D is the sum of the net book values of tangible assets of all constituent entities of the MNE group located in the State.

(2) The UTPR top-up tax amount of an MNE group allocated to the State for a fiscal year shall be calculated as:

A x B

where—

A is the total UTPR top-up tax of the MNE group for a fiscal year as determined in accordance with subsection (3), and

B is the UTPR percentage in respect of the MNE group located in the State for a fiscal year as determined in accordance with subsection (6).

(3) The total UTPR top-up tax of an MNE group shall be equal to the sum of the top-up tax calculated for each low-taxed constituent entity of the MNE group in accordance with section 111AD, as adjusted by subsections (4) and (5).

(4) This subsection provides that the UTPR top-up tax of a low-taxed constituent entity shall be equal to zero where all of the ultimate parent entity’s ownership interests in such low-taxed constituent entity are held directly or indirectly by one or more parent entities, which are required to apply a qualified IIR in respect of that low-taxed constituent entity for the fiscal year.

(5) Where subsection (4) does not apply, the top-up tax of a low-taxed constituent entity shall be reduced, for the purposes of subsection (3), by a parent entity’s allocable share of the top-up tax of that low-taxed constituent entity that is brought into charge under a qualified IIR.

(6) Subject to subsection (8), the UTPR percentage in respect of an MNE group located in the State shall be calculated as 50% of the total number of employees of all the constituent entities of the MNE group located in the State as a percentage of the total number of employees of all constituent entities of the MNE group located in jurisdictions that have a qualified UTPR in force for the fiscal year, plus 50% of the sum of the net book values of tangible assets of all constituent entities of the MNE group located in the State, as a percentage of the sum of the net book value of tangible assets of all constituent entities of the MNE group located in jurisdictions that have a qualified UTPR in force for the fiscal year. It is calculated as follows:

((A / B) x 50 per cent) + ((C / D) x 50 per cent)

where—

A is the total number of employees of all the constituent entities of the MNE group located in the State,

B is the total number of employees of all constituent entities of the MNE group located in jurisdictions that have a qualified UTPR in force for the fiscal year,

C is the sum of the net book value of tangible assets of all constituent entities of the MNE group located in the State, and

D is the sum of the net book value of tangible assets of all constituent entities of the MNE group located in jurisdictions that have a qualified UTPR in force for the fiscal year.

(7) This subsection provides the basis for calculating the number of employees and allocation of tangible assets for the purposes of the UTPR calculations in subsections (1)(b) and (6):

  • (7)(a) The number of employees of a constituent entity in a jurisdiction shall be the number of employees employed on a full-time equivalent basis located in that jurisdiction, including independent contractors provided that they participate in the ordinary operating activities of the constituent entity.
  • (7)(b) The tangible assets of a constituent entity in a jurisdiction shall include the tangible assets of that constituent entity located in that jurisdiction but shall not include cash or cash equivalent, intangible assets, or financial assets.
  • (7)(c) A constituent entity that is a permanent establishment shall be allocated the employees whose payroll costs are included in the separate financial accounts of that permanent establishment as determined by section 111R(1) adjusted in accordance with section 111R(2) (which sets out the allocation of qualifying income or loss between a main entity and permanent establishment).
  • (7)(d) A constituent entity that is a permanent establishment shall be allocated the tangible assets included in the separate financial accounts of the permanent establishment as determined by section 111R (1) adjusted in accordance with section 111R (2).
  • (7)(e) The number of employees and the tangible assets allocated to the jurisdiction of a permanent establishment shall not be taken into account for the number of employees and the tangible assets, as the case may be, of the tax jurisdiction of the main entity.
  • (7)(f) The number of employees and the net book value of tangible assets held by an investment entity shall be excluded from the calculation of the UTPR percentage in respect of an MNE group located in the State.
  • (7)(g) The number of employees and the net book value of tangible assets of a flow-through entity shall be excluded from the calculation of the UTPR percentage in respect of an MNE group located in the State, unless they are allocated to permanent establishment, or, in the absence of a permanent establishment, to a constituent entity that is located in the jurisdiction where the flow-through entity was created.

(8) Where the UTPR top-up tax amount allocated to a jurisdiction under a qualified UTPR in a prior fiscal year has not resulted in the constituent entities of an MNE group located in that jurisdiction having an additional cash tax expense equal, in total, to the UTPR top-up tax amount for that prior fiscal year allocated to that jurisdiction, then:

  • (8)(a) the UTPR percentage for that MNE group in respect of that jurisdiction shall be deemed to be zero, and
  • (8)(b) the number of employees and the net book value of tangible assets of the constituent entities of that MNE group which are located in that jurisdiction shall be excluded from the calculation of the UTPR percentage in respect of an MNE group located in the State.

(9) Subsection (8) shall not apply for a fiscal year if all jurisdictions with a qualified UTPR in force for the fiscal year have a UTPR percentage of zero for the MNE group for that fiscal year.

Relevant Date: Finance Act 2024