Taxes Consolidation Act 1997 section 111AKA

Simplified calculations safe harbour

Section 111AKA sets out a simplified calculations safe harbour for non-material constituent entities (NMCEs), allowing eligible groups to use streamlined methods for determining qualifying income, revenue and tax.

• An NMCE is an entity within an MNE group or large-scale domestic group that is not consolidated line-by-line in the parent's financial statements solely on size or materiality grounds, subject to audit and accounting standard conditions.
• Under the simplified calculations, both qualifying income/loss and qualifying revenue are set equal to total revenue per Country-by-Country Reporting regulations, and adjusted covered taxes equal the current year's income tax accrued.
• A filing constituent entity may elect to deem the jurisdictional top-up tax to be zero where there is no excess profit, or the jurisdiction meets de minimis revenue and income thresholds, or the jurisdiction's effective tax rate equals or exceeds the minimum tax rate.
• If a main entity is an NMCE, all its permanent establishments are also NMCEs; if it is not, none of its permanent establishments can be NMCEs.

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