111AH. Minority owned constituent entities

(1) In this section—

“minority-owned constituent entity” means a constituent entity in which the ultimate parent entity has a direct or indirect ownership interest of 30 per cent or less of the total ownership interests of the constituent entity;

“minority-owned parent entity” means a minority-owned constituent entity that holds, directly or indirectly, the controlling interests in another minority-owned constituent entity, except where the controlling interests in the former entity are held, directly or indirectly, by another minority-owned constituent entity;

“minority-owned subgroup” means a minority-owned parent entity and its minority-owned subsidiaries;

“minority-owned subsidiary” means a minority-owned constituent entity whose controlling interests are held, directly or indirectly, by a minority-owned parent entity.

(2) (a) The calculation of the effective tax rate and the top-up tax for a jurisdiction, with respect to members of a minority-owned subgroup, shall apply as if each minority-owned subgroup was a separate MNE group or large-scale domestic group.

(b) The adjusted covered taxes and qualifying income or loss of members of a minority-owned subgroup shall be excluded from—

(i) the determination of the residual amount of the effective tax rate for the jurisdiction of the MNE group or large-scale domestic group, calculated in accordance with section 111AC(2), and

(ii) the net qualifying income or loss for the jurisdiction of the MNE group or large-scale domestic group calculated in accordance with section 111AC(3).

(3) (a) The effective tax rate and top-up tax of a minority-owned constituent entity that is not a member of a minority-owned subgroup shall be calculated on an entity basis.

(b) The adjusted covered taxes and qualifying income or loss of the minority-owned constituent entity referred to in paragraph (a), shall be excluded from—

(i) the determination of the residual amount of the effective tax rate of the MNE group or large-scale domestic group for the jurisdiction, calculated in accordance with section 111AC(2), and

(ii) the net qualifying income or loss of the MNE group or large-scale domestic group for the jurisdiction calculated in accordance with section 111AC(3).

(c) This subsection shall not apply to a minority-owned constituent entity that is an investment entity.