Singapore legislation
Schedule 1
Schedule 1
Definitions for other expressions
FIRST SCHEDULESections 2(1), (2) and (4), 9(1)(b), 18(4), (7) and (8), 24(16), 25(3), (5) and (7), 30(8) and 40(5)Definitions for other expressions“Adjusted covered taxes” and “covered taxes”1.—
In this Act, the “adjusted covered taxes” of a constituent entity (including the ultimate parent entity) (A) of an MNE group for a financial year is the qualifying current tax expense and qualifying deferred tax expense of A for the financial year after —
taking into account any qualifying current tax expense and qualifying deferred tax expense of a flow‑through entity for the financial year that is allocated to A under sub‑paragraph (5);
making the adjustments (including any allocation of qualifying current tax expense or qualifying deferred tax expense to or from another constituent entity) required under the regulations;
making any adjustment (including any allocation of qualifying current tax expense or qualifying deferred tax expense to or from another constituent entity) permitted under the regulations; and
taking into account (with adjustments) any deferred tax assets and deferred tax liabilities (including any amounts treated as such) of A in accordance with the regulations. (2) The Minister may make regulations under section 84 to prescribe —
for the purpose of sub‑paragraph (1)(b) — the adjustments that must be made in accordance with the GloBE rules, including for any qualifying current tax expense or qualifying deferred tax expense that is allocated to or from another constituent entity;
for the purpose of sub‑paragraph (1)(b) — the adjustments that must be made in accordance with the GloBE rules (including for any qualifying current tax expense or qualifying deferred tax expense that is allocated to or from another constituent entity) where there is any restructuring or reorganisation or where a constituent entity joins or leaves an MNE group; (c)for the purpose of sub‑paragraph (1)(c) — the optional adjustments that may be made in accordance with the GloBE rules, including for any qualifying current tax expense or qualifying deferred tax expense that is allocated to or from another constituent entity; and
for the purpose of sub‑paragraph (1)(d) — the deferred tax assets and deferred tax liabilities of A (including amounts treated as such) that are to be taken into account, and adjustments to be made before they are taken into account, in accordance with the GloBE rules.(3) Before making any adjustment in sub‑paragraph (1), the qualifying current tax expense and qualifying deferred tax expense for a financial year of —
a flow‑through entity (not being the ultimate parent entity of an MNE group);
a flow‑through entity (X) that is the ultimate parent entity of an MNE group;
a permanent establishment of X through which X wholly or partly carries out its business; or
a permanent establishment of a flow‑through entity (Y) through which Y wholly or partly carries out its business, where Y is —
treated as fiscally transparent in the jurisdiction where X is located; and
held directly by X or indirectly by X through one or more flow‑through entities (each of which is treated as fiscally transparent in the jurisdiction where X is located),is reduced proportionally by the proportion of its FANIL that is excluded under paragraph 6(9)(a) or (12)(d), as the case may be.(4) For the purpose of sub‑paragraph (1), where the constituent entity is the main entity of a permanent establishment, the qualifying current tax expense and qualifying deferred tax expense of the constituent entity for the financial year excludes the qualifying current tax expense and qualifying deferred tax expense of the permanent establishment for the financial year, and such excluded amounts are treated as the qualifying current tax expense and qualifying deferred tax expense (respectively) of the permanent establishment for that financial year for the purpose of that sub‑paragraph.(5) In sub‑paragraph (1)(a), where a proportion of the FANIL for a financial year of a flow‑through entity of an MNE group is allocated to another constituent entity of the same MNE group under paragraph 6(9), (11) or (12), the same proportion of the qualifying current tax expense and qualifying deferred tax expense of the flow‑through entity for the financial year is also allocated to that other constituent entity.(6) In this Act, “covered taxes”, in relation to a constituent entity, means the following:
taxes on the income or profits of the constituent entity, including taxes on the constituent entity’s share of the income or profits of another entity in which the constituent entity holds any ownership interest;
taxes imposed under an eligible distribution tax system;
taxes imposed as a substitute for a tax on profits that generally applies in a jurisdiction, including withholding taxes on income;
taxes charged by reference to the capital or the retained earnings of a company, including a tax charged by reference to both the income and capital of a company,but does not include —
any MTT, or any qualified IIR;
any DTT, or any qualified domestic minimum top‑up tax;
a qualified UTPR;
any disqualified refundable imputation tax; and
any tax payable by a life insurer in respect of amounts accruing to or paid to policyholders.(7) In this paragraph —“disqualified refundable imputation tax” means a tax accrued or payable by an entity that is —
refundable to the beneficial owner of a dividend paid by the entity;
creditable against any tax liability of such beneficial owner (other than a tax liability in respect of the dividend); or
refundable to the entity on the distribution of the dividend,and is not a qualified imputation tax;“eligible distribution tax system” means a corporate income tax system under the law of a jurisdiction where —
the tax is generally payable only when profits are distributed (or deemed to be distributed) by a corporation to its shareholders or when specific non‑business expenses are incurred by the corporation;
the tax rate is equal to or exceeds the minimum rate; and
the tax system was in force on or before 1 July 2021;“qualified imputation tax” means a covered tax accrued or payable by an entity in a jurisdiction that is refundable or creditable to the beneficial owner of a dividend distributed by the entity (or the main entity of a permanent establishment if the covered tax is accrued or paid by the permanent establishment) —
to the extent that the refund or credit is provided by another jurisdiction under a foreign tax credit regime;
where the beneficial owner is subject to tax on the dividend under the law of the firstmentioned jurisdiction at a rate equal to or above the minimum rate;
where the beneficial owner is an individual who is tax resident and subject to income tax on the dividend in the firstmentioned jurisdiction; or
where the beneficial owner is —
a governmental entity;
an international organisation;
a non‑profit organisation that is established, formed, incorporated or registered, and managed in the firstmentioned jurisdiction;
a pension fund that is established, formed, incorporated or registered, and managed in the firstmentioned jurisdiction;
an investment entity that is established, formed, incorporated or registered, and regulated in the firstmentioned jurisdiction and that is not in the same MNE group as the entity; or
a life insurance company located in the firstmentioned jurisdiction but only if the dividend is received in connection with a pension fund business and subject to tax in a similar manner as a dividend received by a pension fund;“qualifying current tax expense”, in relation to a constituent entity, means the current tax expense reflected in the FANIL of the constituent entity that relates to covered taxes;“qualifying deferred tax expense”, in relation to a constituent entity, means the deferred tax expense reflected in the FANIL of the constituent entity that relates to covered taxes.“Consolidated financial statements”
2. In this Act, “consolidated financial statements” means —
the financial statements prepared by an entity in accordance with an acceptable financial accounting standard, in which the assets, liabilities, income, expenses and cash flows of that entity and the entities in which it has a controlling interest are presented as those of a single economic unit;
where the group is an entity in paragraph (b) of the definition of “group” in section 2(1) — the financial statements of the entity that are prepared in accordance with an acceptable financial accounting standard;
where the ultimate parent entity has financial statements described in sub‑paragraph (a) or (b) that are not prepared in accordance with an acceptable financial accounting standard — the financial statements prepared with adjustments to prevent any material competitive distortion; or
where the ultimate parent entity does not prepare financial statements as described in sub‑paragraph (a), (b) or (c) — consolidated financial statements that would have been prepared by the ultimate parent entity if it were required by the law or a regulatory body of the jurisdiction in which it is located to do so in accordance with an authorised financial accounting standard that is either an acceptable financial accounting standard or another financial accounting standard that is adjusted to prevent any material competitive distortion.“Entity”3.—
In this Act, an “entity” is —
any legal person but not a natural person;
a general partnership or limited partnership;
a trust; or
any other arrangement that results in the preparation of separate financial statements in respect of the activities carried out under the arrangement.(2) An entity that is, or is part of, a national, regional or local government or that carries out a government function is not to be regarded as an entity for the purposes of this Act.“Excluded entity”4.—
In this Act, an excluded entity is an entity that is —
a governmental entity;
an international organisation;
a non‑profit organisation;
a pension fund;
a qualifying non‑profit subsidiary;
a qualifying service entity; or
a qualifying exempt income entity.(2) In this Act, an investment fund or a real estate investment vehicle is also an excluded entity if it is the ultimate parent entity of an MNE group or would be so but for the fact it does not prepare consolidated financial statements that include assets, liabilities, income, expenses and cash flows of entities in which it holds an ownership interest.“Governmental entity”(3) In this Act, an entity is a governmental entity if —
it is part of or wholly‑owned by a government (including any political subdivision or local authority thereof);
it has the principal purpose of —
carrying out a government function; or
managing or investing the assets of that government or the jurisdiction concerned through the making and holding of investments, asset management, and related investment activities for the assets of that government or jurisdiction;
it does not carry on a trade or business;
it is accountable to that government on its overall performance and provides annual information reporting to that government;
its assets vest in that government on its termination, liquidation or dissolution; and
its profits are ultimately distributed only to that government.(4) The carrying out of the activities in sub‑paragraph (3)(b)(ii) does not constitute the carrying on of a trade or business for the purpose of sub‑paragraph (3)(c).“International organisation”(5) In this Act, an international organisation is an intergovernmental or supranational organisation, or an entity that acts for, is part of, or is wholly‑owned by such an organisation, but only if —
the organisation comprises primarily of governments;
the organisation has a headquarters, or privileges or immunities in respect of its establishments, in the jurisdiction in which it is established; and
its governing documents, or the law of that jurisdiction, precludes the distribution of its profits for the benefit of private persons.“Non‑profit organisation”(6) In this Act, an entity is a non‑profit organisation if —
it is established and operated in the jurisdiction it is resident in —
exclusively for religious, charitable, scientific, artistic, cultural, athletic, education, or other similar purposes; or
as a professional organisation, business league, chamber of commerce, labour organisation, agricultural or horticultural organisation, civic league or an organisation operated exclusively for the promotion of social welfare or similar purposes; and
it meets all of the following conditions:
substantially all of the income from the activities it carries out for the purposes for which it was established is exempt from income tax in the jurisdiction where it is resident;
it has no shareholders or members who have any proprietary or beneficial interest in its income or assets;
the income or assets of the entity may not be distributed to, or applied for the benefit of, a private person or non‑charitable entity other than —
pursuant to the conduct of the entity in carrying out activities for the purposes for which it was established;
as payment of reasonable compensation for services rendered or for the use of property or capital; or
as payment representing the fair market value of property which the entity has purchased;
upon termination, liquidation or dissolution of the entity, all of its assets are distributed or revert to a non‑profit organisation or to the government (including any political subdivision thereof) or a governmental entity of the jurisdiction in which the entity is resident;
the entity does not carry on a trade or business that is not directly related to the purposes for which it was established.“Pension fund”(7) In this Act, an entity is a pension fund if —
it is an entity that is established and operated in a jurisdiction exclusively or almost exclusively to administer or provide retirement benefits and ancillary or incidental benefits to individuals where —
the entity is regulated as such in that jurisdiction (including any political subdivision thereof); or
those benefits are secured or otherwise protected by national regulations and funded by a pool of assets held through a fiduciary arrangement or trust to secure the fulfilment of the corresponding pension obligations against a case of insolvency of the entity or the group the entity is a member of; or
it is an entity established and operated exclusively or almost exclusively —
to invest funds for the benefit of an entity mentioned in sub‑paragraph (a); or
to carry out activities that are ancillary to the regulated activities carried out by the entity mentioned in sub‑paragraph (a), but only if the entities are members of the same group.“Qualifying non‑profit subsidiary”(8) In this Act, an entity is a qualifying non‑profit subsidiary if it is not a qualifying service entity or a qualifying exempt income entity and —
100% of the total value of its ownership interests is held directly or indirectly (through a chain of non‑profit organisations) by a non‑profit organisation;
the revenue, for the financial year concerned, of the MNE group of which the entity is a member, ignoring the revenue of every member that is a non‑profit organisation, a qualifying service entity or a qualifying exempt income entity (including its permanent establishments), does not exceed —
EUR 750 million or its equivalent in other currency as determined under the regulations (as adjusted proportionately if the financial year is a period other than 12 months); or
25% of the total revenue of the MNE group; and
no election under paragraph 5 is in force in relation to the entity.“Qualifying service entity”(9) In this Act, an entity is a qualifying service entity if —
at least 95% of the total value of its ownership interests is held directly or indirectly (through a chain of excluded entities) by one or more excluded entities (not being a pension fund in sub‑paragraph (7)(b), qualifying non‑profit subsidiary, qualifying service entity or qualifying exempt income entity);
either —
the entity only carries out activities that are ancillary to the activities of those owners; or
all, or almost all, of its activities (ignoring activities falling within sub‑paragraph (i)) consist of the holding of assets (which may or may not include financing activities for the acquisition of assets) or the investment of funds for the benefit of those owners; and
no election under paragraph 5 is in force in relation to the entity.(10) Without limiting sub‑paragraph (9)(a) and (c), a main entity or any of its permanent establishments is a qualifying service entity if (and only if) the main entity and all of its permanent establishments satisfy the condition in sub‑paragraph (9)(b) as if they were a single entity.“Qualifying exempt income entity”(11) In this Act, an entity is a qualifying exempt income entity if —
at least 85% of the total value of its ownership interests is held directly or indirectly (through a chain of excluded entities) by one or more excluded entities (not being a pension fund in sub‑paragraph (7)(b), qualifying non‑profit subsidiary, qualifying service entity or qualifying exempt income entity);
almost all of the entity’s income is excluded dividends or excluded equity gains or losses (or a mixture of both); and
no election under paragraph 5 is in force in relation to the entity.(12) Without limiting sub‑paragraph (11)(a) and (c), a main entity or any of its permanent establishments is a qualifying exempt income entity if (and only if) the main entity and all of its permanent establishments satisfy the condition in sub‑paragraph (11)(b) as if they were a single entity.Election to not treat entity as excluded entity 5.—
This paragraph applies where a filing entity of an MNE group makes an election in a GloBE information return (whether filed in Singapore or in another jurisdiction) in accordance with the GloBE rules that a member (X) of the group that would otherwise be an excluded entity as a result of paragraph 4(1)(e), (f) or (g) is not to be treated as an excluded entity.(2) Where an election under sub‑paragraph (1) is effective in accordance with the GloBE rules and this paragraph, X is to be treated as a constituent entity for the purposes of this Act.(3) An election under sub‑paragraph (1) must not be revoked for the financial year with respect to which it is made or for any of the subsequent 4 financial years, and any such revocation has no effect.(4) If an election under sub‑paragraph (1) is revoked for a financial year, another election under that sub‑paragraph must not be made (whether in Singapore or in another jurisdiction) in respect of X for that or any of the subsequent 4 financial years, and any such election has no effect.“GloBE income or loss” and “FANIL”6.—
In this Act, the “GloBE income or loss” of a constituent entity (including the ultimate parent entity) of an MNE group for a financial year means the FANIL of the constituent entity for the financial year after —
taking into account any FANIL of a flow‑through entity for the financial year that is allocated to the constituent entity under sub‑paragraph (9), (11) or (12);
making the adjustments (including any allocation of FANIL to or from another constituent entity) required under the regulations; and
making any adjustment (including any allocation of FANIL to or from another constituent entity) permitted under the regulations.(2) The Minister may make regulations under section 84 to prescribe —
for the purpose of sub‑paragraph (1)(b) — the adjustments that must be made in accordance with the GloBE rules including for any FANIL that is allocated to or from another constituent entity;
for the purpose of sub‑paragraph (1)(b) — the adjustments that must be made in accordance with the GloBE rules (including for any FANIL that is allocated to or from another constituent entity) where there is any restructuring or reorganisation or where a constituent entity joins or leaves an MNE group;
for the purpose of sub‑paragraph (1)(b) — the adjustments that must be made for transactions that are not made under arm’s length conditions as defined by the regulations; and
for the purpose of sub‑paragraph (1)(c) — the optional adjustments that may be made in accordance with the GloBE rules, including for any FANIL that is allocated to or from another constituent entity.FANIL of constituent entity other than permanent establishment(3) In this Act, “FANIL” or “financial accounting net income or loss”, in relation to a constituent entity (including the ultimate parent entity) of an MNE group other than a permanent establishment, means —
the net income or loss determined for that constituent entity (but before making any consolidation adjustments to eliminate any income, expense, gain or loss arising from transactions between members of the same group) in preparing the consolidated financial statements of the ultimate parent entity of the MNE group; or
if it is not reasonably practicable to determine the amount in sub‑paragraph (a) on the basis of the financial accounting standard used in the preparation of the consolidated financial statements of the ultimate parent entity of the MNE group, the net income or loss determined for that constituent entity under an acceptable financial accounting standard or an authorised financial accounting standard, but only if —
the constituent entity prepares its financial statements in accordance with that financial accounting standard;
the information in the constituent entity’s financial statements is reliable; and
in a case where —
due to the application of a specific principle or procedure of that financial accounting standard, there is a difference of more than EUR 1 million (or its equivalent in other currency as determined under the regulations) between an amount of income or expense in such financial statements and the corresponding amount that would be recognised under the financial accounting standard used in the preparation of the consolidated financial statements of the ultimate parent entity; and (B)such difference would not be eliminated over time,adjustments to the amount are made to eliminate the difference, as if the financial accounting standard used in the preparation of the consolidated financial statements of the ultimate parent entity had been applied to determine the amount.(4) If the FANIL of a constituent entity of an MNE group is not included in the consolidated financial statements of the ultimate parent entity of that MNE group for a financial year (FY1), and the financial year of that constituent entity is different from the financial year of the ultimate parent entity, the FANIL of that constituent entity for FY1 is the FANIL of that constituent entity for the financial year of that constituent entity that ends at any time in FY1.(5) In sub‑paragraph (3)(b)(ii), whether information in the financial statements of a constituent entity is “reliable” is to be determined by reference to the GloBE rules.FANIL of permanent establishment(6) In this Act, “FANIL” or “financial accounting net income or loss”, in relation to a permanent establishment (other than one in section 4(1)(d)), means the profits of the permanent establishment as reflected in any separate financial accounts for the permanent establishment or, if there are no separate financial accounts, the net income or loss determined for the main entity under sub‑paragraph (3)(a) or (b) (as the case may be), that is properly attributable to the permanent establishment —
in accordance with an applicable tax treaty;
if there is no applicable tax treaty, under the law of the jurisdiction where the permanent establishment is located if it is subject to tax of a similar character to income tax in that jurisdiction; or
if there is no applicable tax treaty and the permanent establishment is not subject to tax of a similar character to income tax in the jurisdiction where it is located, in accordance with Article 7 of the OECD Model Tax Convention.(7) In this Act, “FANIL” or “financial accounting net income or loss”, in relation to a permanent establishment (X) in section 4(1)(d), means the income of X’s main entity (Y) that is exempt from tax under the law of the jurisdiction where Y is located that is attributable to Y’s operations conducted through X outside that jurisdiction, after deducting expenses attributable to those operations, but only if such expenses are not deductible under that law by Y in that jurisdiction.Currency of FANIL(8) The amount of the “FANIL” under sub‑paragraph (3), (6) or (7) is the amount converted to the currency in which the ultimate parent entity prepares or would have prepared its consolidated financial statements, if it is not already so converted.Exclusion and allocation of FANIL of flow‑through entities(9) The FANIL for a financial year of a flow‑through entity (A) of an MNE group (not being the ultimate parent entity of that MNE group) is excluded or allocated in the following manner:
first, the part of the FANIL that is attributable to an individual or entity (B) that is not a member of that MNE group, where —
B holds a direct ownership interest in A; or
B holds an indirect ownership interest in A through one or more flow‑through entities of that MNE group (each of which is treated as fiscally transparent in the jurisdiction where B is located and none of which is the ultimate parent entity of that MNE group),is excluded from A’s FANIL;
then, the part of any remaining FANIL that is attributable to any permanent establishment of A is allocated to that permanent establishment;
then, the part of any remaining FANIL that is attributable to a constituent entity of that MNE group that holds a direct ownership interest in A —
is allocated to that constituent entity in accordance with its ownership interest in the profits of A, if the constituent entity is located in a jurisdiction that treats A as fiscally transparent; and
is allocated to A if the constituent entity is located in a jurisdiction that does not treat A as fiscally transparent.(10) However, where —
A is a flow‑through entity where the ownership interests in A are held by a flow‑through entity that is the ultimate parent entity of the MNE group, directly or through one or more flow‑through entities each of which is treated as fiscally transparent in the jurisdiction where the ultimate parent entity is located; and (b)A itself is also fiscally transparent in that jurisdiction, then sub‑paragraph (9) applies with the omission of sub‑paragraph (a) of that sub‑paragraph.(11) In allocating under sub‑paragraph (9) the FANIL of a flow‑through entity (C) of an MNE group for a financial year to the constituent entities of that group in a case where the FANIL for a financial year of another flow‑through entity (A) of the MNE group has been allocated to C on the application of sub‑paragraph (9)(c)(i) to the FANIL of A —
sub‑paragraph (9)(a)(i) does not apply in relation to the part of the FANIL of C that is allocated from A, but only if B is located in a jurisdiction where C is treated as fiscally transparent; and
sub‑paragraph (9)(a)(ii) does not apply in relation to the part of the FANIL of C that is allocated from A.(12) The FANIL for a financial year of a constituent entity that is —
a flow‑through entity (D) that is the ultimate parent entity of an MNE group;
a permanent establishment of D through which D wholly or partly carries out its business; or
a permanent establishment of a flow‑through entity (E) through which E wholly or partly carries out its business where —
E is treated as fiscally transparent in the jurisdiction where D is located; and
the ownership interests in E are held by D directly or through one or more flow‑through entities (each of which is treated as fiscally transparent in the jurisdiction where D is located),is excluded or allocated in the following manner:
first, the part of the FANIL that is attributable to a relevant owner of D or E is excluded from the constituent entity’s FANIL, except that a loss attributable to a relevant owner is only so excluded if the relevant owner is allowed to use the loss in computing its income for tax purposes in the jurisdiction where it is located;
then, the part of D’s FANIL that is attributable to any permanent establishment of D is allocated to the permanent establishment;
then, any remaining FANIL is allocated to the constituent entity.(13) In sub‑paragraph (12), “relevant owner”, in relation to a flow‑through entity (X) for a financial year, means a person who holds a direct ownership interest in X and who is —
subject to tax under the law of the jurisdiction where that person is located or resident on X’s income for that financial year that is attributable to that person’s ownership interest in X, in the period that ends within 12 months of the end of that financial year, where either of the following is satisfied:
the full amount of that income is subject to tax at a nominal rate that is not less than the minimum rate;
it is reasonable to expect that the sum of that tax and the adjusted covered taxes of X on that income is not less than the amount of that income multiplied by the minimum rate;
a natural person who is a tax resident of the jurisdiction where X is located, and all the direct ownership interests in X held by natural persons do not carry rights to more than 5% of the profits or the assets of X at the end of that financial year; or
an excluded entity in paragraph 4(1)(a), (b), (c) or (d) which is a tax resident of the jurisdiction where X is located, and all the direct ownership interests in X held by such excluded entities do not carry rights to more than 5% of the profits or the assets of X at the end of that financial year.FANIL for DTT purposes of constituent entities of MNE group whose financial statements were prepared according to Accounting Standards (14) For the purpose of Part 3, where all the constituent entities of an MNE group located in Singapore —
have the same financial year as the ultimate parent entity of the MNE group; and
prepare their financial statements for that financial year in accordance with the Accounting Standards made or formulated under Part 3 of the Accounting Standards Act 2007, where either —
they are required to do so under any written law in Singapore; or
the financial statements are audited by an external auditor,the “FANIL” or “financial accounting net income or loss” of each of those entities for that financial year is the net income or loss determined for that entity in its financial statements, and sub‑paragraphs (3), (6) and (7) do not apply in such a case.(15) Sub‑paragraph (14) does not apply to a constituent entity that is a permanent establishment located in Singapore if there are no separate financial accounts for that permanent establishment for the financial year.“Investment entity”, “investment fund”, “real estate investment vehicle” and “insurance investment entity”7.—
In this Act, an “investment entity” is —
an investment fund or a real estate investment vehicle;
an entity —
at least 95% of the total value of the ownership interests of which is held directly by an entity mentioned in sub‑paragraph (a) or indirectly through a chain of such entities; and (ii)whose activities consist exclusively or almost exclusively of holding assets or investing funds for the benefit of those owners; or
an entity at least 85% of the total value of the ownership interests of which is held directly by an entity mentioned in sub‑paragraph (a) or indirectly through a chain of such entities, but only if almost all of the firstmentioned entity’s income is excluded dividends or excluded equity gain or loss (or a mixture of both) that is excluded from the computation of GloBE income or loss.(2) In this Act, an “investment fund” is an entity that meets all of the following conditions:
it is designed to pool assets (which may be financial or non‑financial in nature) from a number of investors (who are not all connected with one another);
it carries out its investment activities in accordance with a defined investment policy;
it allows investors to reduce transaction, research, and analytical costs, or to spread risk, collectively;
it is primarily designed to generate investment income or gains, or for protection against a particular or general event or outcome;
investors have a right to a return from the assets of the entity or income earned on those assets, based on the contributions made by those investors;
it or its manager is subject to a regulatory regime in the jurisdiction in which it is established or managed (including appropriate anti‑money laundering and investor protection regulation); (g)it is managed by investment fund management professionals on behalf of its investors.(3) In this Act, a “real estate investment vehicle” is an entity that meets all of the following conditions:
it is widely held by investors who are generally not connected with one another through any relationship of common ownership or control;
it is primarily designed to invest directly or indirectly in immovable property; (c)its income is subject to taxation in any jurisdiction either as the income of the entity or as the income of the holders of its direct ownership interests, and if there is any deferral of the taxation of the income, the period of such deferral is not more than one year.(4) In this Act, an “insurance investment entity” is an entity that meets all of the following conditions:
it is not an investment fund or real estate investment vehicle, but would be —
an investment fund if it were designed to pool assets from more than one investor who are not connected with one another; or
a real estate investment vehicle if it were widely held by investors who are generally not connected with one another through any relationship of common ownership or control;
it is established in relation to liabilities under insurance or annuity contracts; (c)it is wholly‑owned by one or more persons, all of whom are members of an MNE group, and each person with a direct ownership interest in the entity is subject to a regulatory regime in the jurisdiction in which it is established or managed, and that regime is specific to persons engaged in the business of entering into insurance or annuity contracts or of performing activities ancillary to such business.“Joint venture”, “JV group”, “JV subsidiary” and related expressions8.—
In this Act —
a “joint venture” is an entity whose financial results are reported under the equity method in the consolidated financial statement of its ultimate parent entity, being one that holds (whether directly or indirectly) at least 50% of the entity’s ownership interest;
a “standalone JV” means a joint venture without a JV subsidiary; and
a joint venture is “connected to” an MNE group if the ultimate parent entity mentioned in sub‑paragraph (a) is also the ultimate parent entity of the MNE group.(2) However, the following are not “joint ventures”:
the ultimate parent entity of an MNE group, being an MNE group that satisfies section 8(1);
an excluded entity, other than a pension fund in paragraph 4(7)(b), qualifying non‑profit subsidiary, qualifying service entity or qualifying exempt income entity;
an entity (X) whose ownership interests held by entities of an MNE group are held (directly or through a chain of excluded entities) by an excluded entity (Y) (other than a pension fund in paragraph 4(7)(b), qualifying non‑profit subsidiary, qualifying service entity or qualifying exempt income entity), and where one of the following applies:
X operates exclusively or almost exclusively to hold assets or invest funds for the benefit of its investors;
X only carries on activities that are ancillary to those carried out by Y;
all, or almost all, of X’s activities (disregarding activities that are ancillary to those carried out by Y) consist of holding assets or investing funds for the benefit of its investors;
almost all of X’s income is excluded dividends or excluded equity gain or loss, or both;
an entity held by entities of an MNE group that comprises exclusively of excluded entities;
a JV subsidiary.(3) In this Act —
a “JV group” is a joint venture and its JV subsidiaries, and each of these is an “entity of a JV group”; (b)a “JV subsidiary” is an entity whose assets, liabilities, income, expenses and cash flows are consolidated by a joint venture under an acceptable financial accounting standard, or would have been so consolidated had it been required by the law or a regulatory body of the jurisdiction in which the joint venture is located to consolidate such items in accordance with an acceptable financial accounting standard; (c)a permanent establishment whose main entity is a joint venture or a JV subsidiary as defined in sub‑paragraph (b) is deemed to be a separate “JV subsidiary”; and
a JV subsidiary is “connected to” an MNE group if the joint venture mentioned in sub‑paragraph (b) is connected to the MNE group within the meaning of sub‑paragraph (1)(c).“Minority‑owned constituent entity” and “minority‑owned subgroup”9.—
In this Act —
a “minority‑owned constituent entity” is a constituent entity of a group whose ultimate parent entity holds (whether directly or indirectly) 30% or less of the entity’s ownership interest in the financial year concerned; and
a “minority‑owned subgroup” is a minority‑owned parent entity and its minority‑owned subsidiaries.(2) In this paragraph —
a “minority‑owned parent entity” is a minority‑owned constituent entity that holds directly or indirectly the controlling interests of another minority‑owned constituent entity, except where the controlling interests of the firstmentioned entity are held by another minority‑owned constituent entity; and
a “minority‑owned subsidiary” is a minority‑owned constituent entity whose controlling interests are held (whether directly or indirectly) by a minority‑owned parent entity.“Stateless entity”
10. In this Act, a “stateless entity” is —
a flow‑through entity that is treated as a stateless entity under section 5(3); or
a permanent establishment in section 5(5).