Taxes Consolidation Act, 1997 (Number 39 of 1997)
[1]>
111Z. Specific allocation of covered taxes incurred by certain types of constituent entities
(1) In this section—
“passive income” means the following items of income included in qualifying income to the extent that a constituent entity-owner has been subject to tax under a controlled foreign company tax regime or as a result of an ownership interest in a hybrid entity—
(a) a dividend or dividend equivalents,
(b) interest or interest equivalents,
(c) rent,
(d) royalty,
(e) annuity, or
(f) net gains from assets of a type that produces income referred to in subparagraphs (a) to (e).
(2) A permanent establishment shall be allocated the amount of any covered taxes that are included in the financial accounts of a constituent entity and that relate to the qualifying income or loss of the permanent establishment.
(3) A constituent entity-owner shall be allocated the amount of any covered taxes that are included in the financial accounts of a tax transparent entity and that relate to qualifying income or loss allocated to a constituent entity-owner in accordance with section 111S(4).
(4) Subject to subsection (7), a constituent entity shall be allocated the amount of any covered taxes included in the financial accounts of its direct or indirect constituent entity-owners under a controlled foreign company tax regime, on the direct or indirect constituent entity-owners’ share of that constituent entity’s income.
(5) Subject to subsection (7), a constituent entity that is a hybrid entity shall be allocated the amount of any covered taxes included in the financial accounts of its constituent entity-owner which relates to qualifying income of the hybrid entity.
(6) A constituent entity that has made a distribution during the fiscal year shall be allocated the amount of any covered taxes accrued in the financial accounts of its direct constituent entity-owners on such distribution.
(7) (a) A constituent entity that was allocated covered taxes pursuant to subsection (4) or (5) in respect of passive income shall include such covered taxes in its adjusted covered taxes in an amount equal to the lesser of—
(i) the covered taxes allocated in respect of such passive income, or
(ii)TUTP × PI
where—
TUTP |
is the top-up tax percentage for the jurisdiction determined without regard to covered taxes incurred with respect to such passive income by the constituent entity-owner, and |
PI |
is the amount of the constituent entity’s passive income that is included under a controlled foreign company tax regime or a fiscal transparency rule. |
(b) Any covered taxes of the constituent entity-owner incurred with respect to such passive income as referred to in paragraph (a) that remains after the application of this subsection shall not be allocated under subsection (4) or (5).
(8) Where the qualifying income of a permanent establishment is treated as qualifying income of the main entity in accordance with section 111R(4), any covered taxes arising in the jurisdiction where the permanent establishment is located and associated with such income, shall be treated as covered taxes of the main entity for an amount not exceeding—
QIPE × HTR
where—
QIPE |
is the amount of qualifying income of the permanent establishment which is treated as qualifying income of the main entity in accordance with section 111R(4), and |
HTR |
is the highest tax rate on ordinary income in the jurisdiction where the main entity is located. |
<[1]