111AB. Post-filing adjustments and tax rate changes

(1) (a) Subject to paragraph (b), where a constituent entity records an adjustment to its covered taxes for a previous fiscal year in its financial accounts, such adjustment shall be treated as an adjustment to covered taxes in the fiscal year in which the adjustment is made, unless the adjustment relates to a fiscal year in which there is a decrease in covered taxes for the jurisdiction.

(b) Subject to paragraph (d), where a constituent entity records a decrease in covered taxes for a previous fiscal year in its financial accounts that were included in the constituent entity’s adjusted covered taxes for a previous fiscal year, the effective tax rate and top-up tax for that fiscal year shall be recalculated in accordance with section 111AF by reducing adjusted covered taxes by the amount of the decrease in covered taxes.

(c) Where there is an adjustment to covered taxes in accordance with paragraph (b), the qualifying income for that fiscal year and any previous fiscal years shall be adjusted accordingly.

(d) On the making of an election by a filing constituent entity in accordance with section 111AAAD, where there is an aggregate decrease of less than €1,000,000 in the adjusted covered taxes determined for a jurisdiction for the fiscal year in accordance with paragraph (b), the decrease in covered taxes shall be treated as an adjustment to covered taxes in the fiscal year in which the adjustment is made.

(2) Where in a fiscal year the applicable domestic tax rate is reduced below the minimum tax rate, and such reduction results in a deferred tax expense in the financial accounts of a constituent entity for a fiscal year, the amount of the resulting deferred tax expense shall be treated as an adjustment to the constituent entity’s liability for covered taxes, that are taken into consideration pursuant to section 111U, for a previous fiscal year in accordance with subsection (1).

(3) (a) Where a deferred tax expense was recorded in the financial accounts of a constituent entity at a rate lower than the minimum tax rate, and the applicable tax rate is increased in a subsequent fiscal year, the amount of deferred tax expense that results from such increase shall be treated, upon payment of the related tax, as an adjustment to a constituent entity’s liability for covered taxes claimed for the previous fiscal year in which the deferred tax expense was recorded in accordance with subsection (1).

(b) The adjustment under paragraph (a) shall not exceed an amount equal to the deferred tax expense recalculated at the minimum tax rate.

(4) Where more than €1,000,000 of the amount accrued by a constituent entity as current tax expense, and included in adjusted covered taxes for a fiscal year, is not paid within 3 years after the end of that fiscal year, the effective tax rate and top-up tax for the fiscal year in which the unpaid amount was included as a covered tax shall be recalculated in accordance with section 111AF, by excluding such unpaid amount from the adjusted covered taxes.