Clause 70

in paragraph 1(1)(a), replace “sub‑paragraph (5)” with “sub‑paragraph (5)(a)”;

in paragraph 1(1), after sub‑paragraph (a), insert —“(aa)taking into account any qualifying current tax expense and qualifying deferred tax expense of a constituent entity that is allocated to a flow‑through entity in which A holds an ownership interest in that financial year, and that is allocated to A under sub‑paragraph (5)(b), (c) and (d);”;

in paragraph 1(3)(d)(ii), after “entities”, insert “only”;

in paragraph 1(4), replace “expense of the permanent establishment” with “expense in respect of the permanent establishment”;

in paragraph 1, replace sub‑paragraph (5) with —“(5) In sub‑paragraph (1)(a) and (aa), where a proportion of the FANIL for a financial year of a flow‑through entity (A) of an MNE group is allocated to another constituent entity (B) of the same MNE group under paragraph 6(9) or (12) —

the same proportion of the qualifying current tax expense and qualifying deferred tax expense of A for the financial year is also allocated to B;

a proportion described in sub‑paragraph (5A) of the qualifying current tax expense and qualifying deferred tax expense of B that is allocated to A for the financial year, is allocated to B, if B had in accordance with the regulations allocated that qualifying current tax expense and qualifying deferred tax expense to A for that financial year; (c)a proportion described in sub‑paragraph (5B) of the qualifying current tax expense and qualifying deferred tax expense of another constituent entity (C) that holds ownership interest in A through B that is allocated to A for the financial year, is also allocated to B, if C had in accordance with the regulations allocated that qualifying current tax expense and qualifying deferred tax expense to A for that financial year; and

a proportion described in sub‑paragraph (5C) of the qualifying current tax expense and qualifying deferred tax expense of another constituent entity (D), through which B holds ownership interest in A, that is allocated to A for the financial year, is also allocated to B, if D had in accordance with the regulations allocated that qualifying current tax expense and qualifying deferred tax expense to A for that financial year.(5A) The proportion in sub‑paragraph (5)(b) is 100%.(5B) The proportion in sub‑paragraph (5)(c) is that which C’s ownership interests held in A through B bears to C’s total ownership interests in A.(5C) The proportion in sub‑paragraph (5)(d) is that which B’s ownership interests in D bears to the total direct ownership interests in D.”;

in paragraph 4(2), replace “an MNE group” with “a group”;

in paragraph 6(1)(a), replace “sub‑paragraph (9), (11) or (12)” with “sub‑paragraph (9) or (12)”;

in paragraph 6(6), after “for the permanent establishment”, insert “(prepared 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)”;

in paragraph 6(9)(a)(ii), replace “(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)” with “only (none of which is the ultimate parent entity of that MNE group)”;

in paragraph 6(9), replace sub‑paragraph (c) with —“(c)then, the part of any remaining FANIL that is attributable to a reference entity (C) in relation to A —

is allocated to C in accordance with its ownership interest in the profits of A and to the extent that the law of the jurisdiction in which C is located treats A, and each entity through which C holds its ownership interest in A, as fiscally transparent with respect to A’s FANIL; and

is allocated to A if not allocated to any reference entity under sub‑paragraph (i).”;

in paragraph 6, replace sub‑paragraphs (10) and (11) with —“(10) However, sub‑paragraph (9) applies with the omission of sub‑paragraph (a) of that sub‑paragraph to the extent that 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 only.”;

in paragraph 6(12)(c)(ii), replace “(each of which is treated as fiscally transparent in the jurisdiction where D is located)” with “only”;

in paragraph 6, after sub‑paragraph (12), insert —“(12A) For the purposes of sub‑paragraphs (9) to (12), a flow‑through entity that is the ultimate parent entity of an MNE group includes a flow‑through entity that would be the ultimate parent entity of an MNE group if any controlling interest in the flow‑through entity held by an excluded entity (Z) were disregarded.”;

in paragraph 6(13), delete “a direct ownership interest in X and who is”;

in paragraph 6(13), before sub‑paragraph (a), insert —“(aa)a direct ownership interest in X; or

in paragraph 6(13)(b) and (c), after “interests in X”, insert “or (in the case of a flow‑through entity that is treated as the ultimate parent entity of an MNE group under sub‑paragraph (12A)) an indirect ownership interest in X through Z’s controlling interest in X,”; and

in paragraph 7(3)(c), delete “direct”.