Taxes Consolidation Act 1997 section 111AF

Additional top-up tax

Section 111AF deals with how and when the effective tax rate and top-up tax for a multinational enterprise (MNE) group or large-scale domestic group must be recalculated for a prior fiscal year, and how any resulting additional top-up tax is allocated among constituent entities.

• Where certain adjustments to covered taxes or qualifying income or loss affect a prior fiscal year, the effective tax rate and top-up tax must be recalculated, and any extra top-up tax arising is treated as additional top-up tax in the year the adjustment is made.
• If there is additional top-up tax for a jurisdiction but no net qualifying income, a constituent entity's qualifying income is calculated by dividing the top-up tax allocated to it by the minimum tax rate (TUTA / MTR).
• Where additional top-up tax arises from adjustments relating to expected covered taxes on losses, it is allocated pro rata among constituent entities based on the formula (QIQL × MTR) − ACT, but only to entities whose adjusted covered taxes are both less than zero and below their qualifying income or loss multiplied by the minimum tax rate.
• Any constituent entity allocated additional top-up tax under this section is treated as a low-taxed constituent entity for the purposes of the income inclusion rule in Chapter 2.

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