Simplified ETR safe harbour

The test

• A Simplified ETR at or above the Minimum Rate — or
• A Simplified Loss

Simplified Income

Jurisdictional Profit or Loss before Income Tax — the aggregate Financial Accounting Net Income or Loss of the entities plus their income tax expense — with Excluded Dividends and Excluded Equity Gains or Losses removed and illegal payments and large fines added back; industry adjustments for insurance, Tier One capital and shipping; conditional adjustments for equity-reported items and M&A; and any optional adjustments elected. The fines threshold is higher than under the full rules.

Simplified Taxes

Jurisdictional Income Tax Expense, current and deferred, less tax that is not a Covered Tax and tax on income outside Simplified Income; adjusted for refunds, credits and uncertain positions; with deferred tax recast at the Minimum Rate and valuation allowances ignored. Deferred tax liabilities that are not Recapture Exception Accruals are left out, and the recapture rule generally does not run.

The Tested Jurisdiction

The entities for which the GloBE Rules require a separate rate. By Annual Election, ordinary Constituent Entities and same-country Investment Entities in a jurisdiction may be tested together.

Who cannot elect

• Stateless Constituent Entities, save as the package provides
• Investment Entities, save as the package provides
• A jurisdiction with an Eligible Distribution Tax System election and an outstanding recapture account balance

First election and re-entry

No Top-up Tax liability in the jurisdiction in any Fiscal Year beginning within the look-back period — under the full rules or a Specified Safe Harbour.

Integrity rules

The figures must respect four principles, including matching of intragroup income and expense, full allocation of income, and deducting each expense or loss once.