Global Minimum Tax Act (S.C. 2024, c. 17, s. 81)

DIVISION 6Multi-Parented MNE Groups

Marginal note:Multi-parented MNE group rules

• 40 (1) Except for this section and subparagraph 14(3)(c)(ii), the following rules apply in respect of a multi-parented MNE group:

  • (a) all the entities of all the groups (referred to in this section as the “constituent groups”) constituting the multi-parented MNE group are deemed to be entities of a single MNE group that is the multi-parented MNE group;

  • (b) all the entities (other than excluded entities) of all the constituent groups are deemed to be constituent entities of the single MNE group;

  • (c) references to the “consolidated financial statements” of an ultimate parent entity in this Act are to be read as references to the financial statements described in either paragraph (f) of the definition dual-listed arrangement, or paragraph (c) of the definition stapled structure, in subsection 2(1), as applicable, and the financial accounting standard used in the preparation of those financial statements is deemed to be the accounting standard of the ultimate parent entities of each of the constituent groups;

  • (d) the ultimate parent entity of each constituent group is deemed to be an ultimate parent entity of the single MNE group; and

  • (e) references to “ultimate parent entity” in this Act are to be read as references to all of the ultimate parent entities of the constituent groups, as the context requires.

• Marginal note:Deemed group entities

  (2) If a particular entity would be included in a particular constituent group of a multi-parented MNE group if all the ownership interests in the particular entity held by group entities of the constituent groups of the multi-parented MNE group were held by a single group entity (other than the particular entity) of the particular constituent group, the particular entity is deemed

  • (a) for the purposes of subsection (1) and subsection 11(1), to be included in the particular constituent group; and

  • (b) for the purposes of section 35, not to be a joint venture or a joint venture subsidiary in respect of any of the constituent groups of the multi-parented MNE group.

DIVISION 7Elections in Relation to Investment Entities

SUBDIVISION ATax Transparency Election

Marginal note:Investment entity tax transparency election

• 41 (1) A constituent entity, of an MNE group, that is an investment entity or an insurance investment entity is deemed to be a flow-through entity that is a tax transparent entity in relation to a constituent entity-owner of the constituent entity, if

  • (a) the filing constituent entity of the MNE group elects in respect of the constituent entity-owner under this subsection; and

  • (b) either

    • (i) both of the following conditions are met:

      • (A) the constituent entity-owner is subject to tax in the jurisdiction where it is located under a mark-to-market or similar regime based on the annual changes in fair value of its ownership interest in the constituent entity, and

      • (B) under that regime, the tax rate applicable to the constituent entity-owner with respect to those annual changes in fair value is greater than or equal to the minimum rate, or

    • (ii) the constituent entity-owner is a mutual insurance company.

• Marginal note:Indirect constituent entity-owners

  (2) For the purposes of clause (1)(b)(i)(A), a constituent entity-owner is deemed to be subject to tax in the jurisdiction where it is located under a mark-to-market or similar regime with respect to its indirect ownership interest in an investment entity or an insurance investment entity, if the constituent entity-owner

  • (a) holds that ownership interest through one or more other investment entities or insurance investment entities; and

  • (b) is subject to tax in the jurisdiction where it is located under a mark-to-market or similar regime with respect to all its direct ownership interests in any entity described in paragraph (a).

• Marginal note:Five-year election

  (3) The following rules apply in respect of an election made under subsection (1):

  • (a) the election is a five-year election; and

  • (b) if the election is revoked at any time, for the purpose of determining the GloBE income or loss of the investment entity or insurance investment entity in respect of which the election was made after that time, any gain or loss from the disposition after that time of an asset or liability held by the entity is to be determined based on

    • (i) if the entity’s assets and liabilities are accounted for on a fair value basis, the fair value of the asset or liability on the first day of the fiscal year in which the disposition occurs, and

    • (ii) in any other case, the fair value of the asset or liability on the first day of the revocation year.

SUBDIVISION BTaxable Distribution Method Election

Marginal note:Definitions

• 42 (1) The following definitions apply in this section.

  qualifying owner

  qualifying owner, of an investment entity, means an entity if

  • (a) the entity

    • (i) is a group entity in respect of the investment entity,

    • (ii) is not an investment entity, and

    • (iii) holds an ownership interest in the investment entity; and

  • (b) it can reasonably be expected that the aggregate of the tax payable by the entity in respect of distributions from the investment entity and the tax payable by the entity in respect of the distributed profits is equal to or greater than the amount of the distributions multiplied by the minimum rate. (détenteur admissible)

  testing period

  testing period in respect of the undistributed net GloBE income of an investment entity for a tested year, means the tested year and

  • (a) if any of the three fiscal years immediately following the tested year is a revocation year, any fiscal years following the tested year that precede the revocation year; and

  • (b) in any other case, the three fiscal years immediately following the tested year. (période de test)

  undistributed net GloBE income

  undistributed net GloBE income, of an investment entity for a tested year, means the amount determined by the formula

  A − B

  where

  A

  is the investment entity’s GloBE income for the tested year (which, for greater certainty, does not include any amount deemed to be included in the investment entity’s GloBE income for that tested year because of clause (2)(d)(i)(A) or (2)(e)(i)(A)); and

  B

  is the total of all amounts, other than to the extent the amounts are taken into account as reductions in computing the undistributed net GloBE income of the investment entity for a previous tested year, each of which is

  • (a) covered taxes paid or payable by the investment entity for the tested year,

  • (b) a distribution or deemed distribution by the investment entity that is received by shareholders (other than other investment entities) in the testing period in respect of the tested year,

  • (c) the investment entity’s GloBE loss for a fiscal year within the testing period in respect of the tested year, or

  • (d) a GloBE loss of the investment entity for an election year that precedes the tested year, to the extent the loss was not taken into account as a reduction in computing the investment entity’s undistributed net GloBE income for any tested year preceding the tested year. (revenu GloBE net non distribué)

• Marginal note:Taxable distribution method election

  (2) If the filing constituent entity elects under this section in respect of a qualifying owner’s ownership interest in an investment entity or insurance investment entity (referred to in this section as the “investment entity”) and an election under subsection 41(1) is not in effect in relation to that ownership interest, the following rules apply in respect of fiscal years to which the election applies (each referred to in this section as an “election year” or a “tested year”):

  • (a) the election is a five-year election;

  • (b) distributions and deemed distributions of amounts out of the investment entity’s GloBE income for an election year are included in computing the GloBE income or loss of the qualifying owner for the election year in which it receives the distribution;

  • (c) any amount in respect of covered taxes paid or payable by the investment entity that is allowed as a credit against the tax liability of the qualifying owner, in respect of a distribution from the investment entity, arising in an election year is included for that election year in computing the qualifying owner’s

    • (i) GloBE income or loss, and

    • (ii) adjusted covered taxes;

  • (d) for the particular election year that is the third fiscal year immediately following a tested year

    • (i) for the purposes of subsection 15(3), the GloBE income of the investment entity for the particular election year is deemed to be equal to the total of all amounts, each of which is

      • (A) the proportionate share — of a qualifying owner in respect of whose ownership interest in the investment entity an election under this subsection applies — of the investment entity’s undistributed net GloBE income for the tested year, and

      • (B) the GloBE income, if any, of the investment entity for the particular election year attributable to any ownership interests in the investment entity in respect of which an election under this subsection does not apply, and

    • (ii) the top-up amount of the investment entity for the particular election year, determined in the absence of this subparagraph, is increased by the amount determined by the formula

      A × B

      where

      A

      is the total of all amounts described in clause (i)(A), and

      B

      is the minimum rate;

  • (e) if the election is revoked,

    • (i) for the purposes of subsection 15(3), the GloBE income of the investment entity for the revocation year is deemed to be equal to the total of all amounts, each of which is

      • (A) the proportionate share — of a qualifying owner in respect of whose ownership interest in the investment entity an election under this subsection applies — of the investment entity’s undistributed net GloBE income for any of the three tested years immediately preceding the revocation year, and

      • (B) the GloBE income, if any, of the investment entity for the revocation year attributable to any ownership interests in the investment entity in respect of which an election under this subsection does not apply, and

    • (ii) the top-up amount of the investment entity for the revocation year, determined in the absence of this subparagraph, is increased by the amount determined by the formula

      A × B

      where

      A

      is the total of all amounts described in clause (i)(A), and

      B

      is the minimum rate; and

  • (f) the investment entity’s GloBE income or loss for an election year that is attributable to any ownership interests in respect of which an election under this subsection applies, and any adjusted covered taxes in respect of that GloBE income or loss, are excluded from all computations of effective tax rates and top-up amounts under this Act, other than as provided in paragraphs (c) to (e).

• Marginal note:Deemed distribution — transfer of ownership interest

  (3) For the purposes of this section, if, in an election year, a qualifying owner (referred to in this subsection as the “transferor”) transfers an ownership interest in an investment entity in respect of which an election under subsection (2) applies to a person that is not a group entity in respect of the transferor,

  • (a) the transfer is treated as a deemed distribution by the investment entity to the transferor; and

  • (b) the amount of the deemed distribution is the amount determined by the formula

    A × B ÷ C

    where

    A

    is the total of all amounts, each of which is the transferor’s proportionate share of the investment entity’s undistributed net GloBE income (determined without reference to the deemed distribution), immediately before the transfer, for a tested year that is any of the three fiscal years immediately preceding the transfer year,

    B

    is the value of the transferred ownership interest, and

    C

    is the total value of all the ownership interests in the investment entity.

DIVISION 8Safe Harbours

SUBDIVISION APermanent Safe Harbours

Marginal note:Definitions

43 The following definitions apply in this Subdivision.

non-material constituent entity

non-material constituent entity means a particular constituent entity of an MNE group, or a permanent establishment of the particular constituent entity, if

• (a) the particular constituent entity’s assets, liabilities, income, expenses and cash flows are not included in the ultimate parent entity’s consolidated financial statements;

• (b) the consolidated financial statements are

  • (i) described in paragraph (a) or (c) of the definition consolidated financial statements in subsection 2(1), and

  • (ii) externally audited and the accompanying auditor’s opinion does not contain objections or qualifications in relation to the exclusion of the particular constituent entity from the consolidation perimeter; and

• (c) where the total revenue, as reported on the MNE group’s country-by-country report, that is attributable to the particular constituent entity for a fiscal year is greater than €50 million, the financial accounts that are used to complete the MNE group’s country-by-country report are prepared in accordance with an acceptable financial accounting standard or authorized financial accounting standard. (entité constitutive non matérielle)

relevant country-by-country reporting regulations

relevant country-by-country reporting regulations, in respect of an MNE group, means

• (a) the country-by-country reporting requirements of

  • (i) if the country-by-country report is filed by the ultimate parent entity of the MNE group, the jurisdiction where the ultimate parent entity is located, or

  • (ii) if the country-by-country report is filed by the surrogate parent entity of the MNE group (as defined in the OECD final report referred to in paragraph (b)), the jurisdiction where the surrogate parent entity is located; or

• (b) in any other case, the Transfer Pricing Documentation and Country-by-Country Reporting, Action 13 - 2015 Final Report, published by the OECD on October 5, 2015 and the Guidance on the Implementation of Country-by-Country Reporting: BEPS Action 13, published by the OECD in October 2022, as amended from time to time. (règlements pertinents en matière de déclaration pays par pays)

simplified income

simplified income, of a non-material constituent entity of an MNE group for a fiscal year, means

• (a) if an election is made under section 46 for the fiscal year, the amount determined under paragraph 46(a) for the fiscal year; and

• (b) in any other case, the non-material constituent entity’s GloBE income or loss for the fiscal year. (résultat net simplifié)

simplified revenue

simplified revenue, of a non-material constituent entity of an MNE group for a fiscal year, means

• (a) if an election is made under section 46 for the fiscal year, the amount determined under paragraph 46(a) for the fiscal year; and

• (b) in any other case, the non-material constituent entity’s financial accounting revenue for the fiscal year. (chiffre d’affaires simplifié)

simplified tax

simplified tax, of a non-material constituent entity of an MNE group for a fiscal year, means

• (a) if an election is made under section 46 for the fiscal year, the amount determined under paragraph 46(b) for the fiscal year; and

• (b) in any other case, the non-material constituent entity’s adjusted covered taxes for the fiscal year. (impôt simplifié)