111AF. Additional top-up tax

(1) (a) Where, pursuant to—

(i) section 111K(1),

(ii) section 111P(7)(g),

(iii) section 111X(9),

(iv) section 111AB(1)(b) and (4), and

(v) section 111AS(5),

an adjustment to covered taxes or qualifying income or loss results in the recalculation of the effective tax rate and top-up tax of the MNE group or large-scale domestic group for a jurisdiction for a prior fiscal year, the effective tax rate and top-up tax shall be recalculated in accordance with sections 111AC, 111AD and 111AE.

(b) Any amount of incremental top-up tax arising from the recalculation referred to in paragraph (a) shall be treated as an additional top-up tax for the purpose of section 111AD(3) for the fiscal year in which the relevant adjustment is made.

(2) Where, for a fiscal year and a jurisdiction—

(a) there is an additional top-up tax, and

(b) no net qualifying income,

the qualifying income of a constituent entity located in that jurisdiction for the purposes of section 111I(2) shall be an amount calculated as—

TUTA / MTR

where—

TUTA is the top-up tax allocated to the constituent entity pursuant to subsections (5) and (6) of section 111AD, and

MTR is the minimum tax rate.

(3) (a) Where, pursuant to subsections (5) and (6) of section 111U, an additional top-up tax is due for a jurisdiction, the qualifying income of a constituent entity located in that jurisdiction for the purposes of section 111I(2), shall be an amount calculated as—

TUTACE / MTR

where—

(b) For the purposes of paragraph (a), the allocation of the additional top-up tax to a constituent entity shall be made pro-rata, to each constituent entity located in the jurisdiction, based on the following formula—

(QIQL × MTR) -ACT

where—

QIQL is the qualifying income or loss of the constituent entity for the fiscal year,

MTR is the minimum tax rate, and

ACT is the adjusted covered taxes of the constituent entity for the fiscal year.

(c) For the purposes of paragraph (a), the additional top-up tax for a jurisdiction for a fiscal year shall only be allocated to constituent entities that record an amount of adjusted covered tax that is—

(i) less than zero, and

(ii) less than the qualifying income or loss of such constituent entities multiplied by the minimum tax rate.

(4) Where a constituent entity is allocated additional top-up tax in accordance with this section or subsection (5) or (6) of section 111AD, such constituent entity shall be treated as a low-taxed constituent entity for the purposes of Chapter 2.