Allocation of Topup Tax/Income Inclusion Rule (IIR)/Undertaxed Profits Rule (UTPR)

  • Low taxed jurisdiction
    • When allocating top up tax back to Entity, apply only to Pillar Two Currency and not the Entity Currency
    • Allocation of low taxed jurisdiction top-up tax amount is based on entities with Pillar Two Jurisdiction with positive Globe Income/All entities with positive Globe Income
    • Top-up tax amount allocation ignores Ownership percentage.
    • Total Excess profit (TotalGloBEIncomeAsAdjusted) by Jurisdiction is negative, no allocation takes place
  • Allocation process
    • Net GloBE Income = GloBE Income - GloBE losses
    • Jurisdictional Excess Profit = Net GloBE Income + Jurisdictional SBIE
    • TopUp Tax % = Pillar Two Tax rate 15% - Jurisdictional ETR
    • Jurisdictional ETR = (Jurisdictional Covered Tax / Net GloBE Income) round up to 4 digits
    • Entity level TopUp Tax = (Jurisdictional Excess Profit * TopUp Tax %) * Globe Income of Entity / Aggregated Positive GloBE income

Pillar Two Top-Up Tax

  • Formula for "Pillar Tow Tax rate v ETR" now considers the "TRCS_TopupTaxAllocation" member.
  • The calculation for "TRCS_PillarTwoETRPercent" is expressed as a percentage, rounded to four decimal places, in alignment with paragraph 3 of Article 5.1.1 of the OECD Consolidated Commentary to the Global Anti-Base Erosion Model Rules.
  • The calculation for "TRCS_TotalGloBEIncomeAsAdjusted" meets the requirements for updated calculation "TRCS_PillarTwoETRPercent".
  • Aggregation to the parent "TRCS_TopupTax" reflects changes made to both "TRCS_TopupTaxAllocation" and "TRCS_TotalGloBEIncomeAsAdjusted" calculations to meet requirements with section 5. of the OECD Model Rules (Pillar Two).

Pillar Two Top-Up Tax