Taxes Consolidation Act 1997 section 111AR

Ultimate parent entity subject to a deductible dividend regime

Section 111AR addresses the situation where an ultimate parent entity (UPE) of an MNE group or large-scale domestic group is subject to a deductible dividend regime, setting out the conditions under which qualifying income may be reduced by the amount of deductible dividends distributed.

• A UPE subject to a deductible dividend regime may reduce its qualifying income by the amount distributed as deductible dividends within 12 months after the fiscal year end, capped at the qualifying income for that year.
• The reduction applies only where the dividend recipient is taxed at or above the minimum tax rate, or the combined taxes of the UPE and recipient meet the minimum rate threshold, or the recipient falls within specified exempt categories.
• The UPE's covered taxes (excluding those for which a dividend deduction was allowed) must be reduced in the same proportion as the qualifying income reduction.
• Where the UPE holds an ownership interest in another constituent entity subject to a deductible dividend regime, the same rules extend to that entity's qualifying income to the extent it is further distributed to qualifying recipients.

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