Taxes Consolidation Act 1997 section 111AI

Qualified domestic top-up tax safe harbour

Section 111AI introduces the Qualified Domestic Top-Up Tax Safe Harbour (QDTT Safe Harbour), which allows MNE groups to treat jurisdictional top-up tax as zero for a fiscal year where the jurisdiction's domestic top-up tax meets specific OECD standards.

• Where a jurisdiction's qualified domestic top-up tax has been certified as meeting QDTT Safe Harbour standards under the OECD peer review process, a filing constituent entity may elect to treat the jurisdictional top-up tax for the QDTT subgroup as zero for that fiscal year, excluding any additional top-up tax element.
• The safe harbour will not apply where the domestic top-up tax is being challenged by the MNE group in judicial or administrative proceedings, or has been deemed non-assessable or non-collectible by the local tax authority on constitutional grounds, superior law, or a specific government agreement limiting the group's tax liability.
• The safe harbour is also disapplied in several structural scenarios: where the ultimate parent entity is a flow-through entity in a jurisdiction that does not charge domestic top-up tax on such entities; where members include a flow-through entity required to apply an IIR top-up tax in a non-charging jurisdiction; where a transitional exclusion under Article 49 of the Directive is not properly limited; where securitisation entities are not charged domestic top-up tax (unless liability is redirected to another group entity); where investment entities (other than excluded entities) are not charged; and where joint venture groups are not charged domestic top-up tax in their jurisdiction.
• The safe harbour is further disapplied where government-provided tax attributes resulting in deferred tax assets and liabilities are not excluded from the computations under the transitional CbCR safe harbour when calculating the domestic top-up tax, and all information concerning the application of the QDTT Safe Harbour must be included in the top-up tax information return for the fiscal year.

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