Taxes Consolidation Act 1997 section 111AX

Transitional relief for substance-based income exclusion

Section 111AX provides transitional relief by setting out the higher percentages used to calculate the payroll and tangible asset carve-outs for the substance-based income exclusion during a ten-year transition period from 2023 to 2032.

• The standard 5% rate used in the substance-based income exclusion is replaced with higher transitional rates for fiscal years beginning in 2023 through 2032, applying to both payroll and tangible asset carve-outs.
• For the payroll carve-out, the rate starts at 10% in 2023 and decreases gradually each year, reaching 5.8% by 2032.
• For the tangible asset carve-out, the rate starts at 8% in 2023 and decreases gradually each year, reaching 5.4% by 2032.
• The transition period applies to all MNE Groups regardless of when they first come within the scope of the GloBE Rules.

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