Paragraph 6 Transition into regime

Schedule 16 (transitional provision) is amended as follows.

In Chapter 1 of Part 2, in the Chapter heading, for “Transitional” substitute “General transitional”.

In Chapter 2 of Part 2, in the Chapter heading, after “Application” insert “of Chapter 1”.

After Part 2 insert—

“Part 2A

UTPR transitional safe harbour election

Election

12A

(1)

The filing member of a multinational group may elect for an accounting period that in the territory of the ultimate parent—

(a)

no member of the group located in the territory has an untaxed amount relating to that period, and

(b)

no joint venture group whose joint venture parent is located in the territory has an untaxed amount in relation to the multinational group relating to that period.

(2)

An election may only be made for an accounting period if—

(a)

the minimum corporate tax rate for the territory of the ultimate parent is equal to, or in excess of, 20%, and

(b)

the accounting period—

(i)

commenced on or before 31 December 2025 and ends before 31 December 2026, and

(ii)

is not longer than 12 months.

(3)

The “minimum corporate tax rate” for a territory means—

(a)

in the case of a territory in which corporate income tax may be imposed by subdivisions of that territory as well as by a national authority, the sum of—

(i)

the nominal national rate that generally applies, and

(ii)

the lowest nominal rate that generally applies that is imposed by a subdivision of that territory (and where one or more subdivisions do not impose corporate income tax, that rate will be zero), or

(b)

otherwise, the nominal rate that generally applies.”

In Schedule 16A at the end insert—

“Part 2

Untaxed amounts: international expansion of groups

No untaxed amounts for groups in initial phase of international expansion

7

(1)

This paragraph applies to a multinational group for an accounting period if—

(a)

it meets the international expansion condition for that period, and

(b)

the accounting period is the first accounting period in which the group came within the scope of Chapter 9A, or any of the following 4 accounting periods.

(2)

If this paragraph applies to a multinational group for an accounting period—

(a)

no member of the group has an untaxed amount relating to that period, and

(b)

no joint venture group has an untaxed amount in relation to the multinational group relating to that period.

(3)

A multinational group meets the international expansion condition for an accounting period if—

(a)

the group does not have members located in more than 6 territories, and

(b)

the sum of the values of tangible fixed assets of qualifying members of the group, other than members located in the reference territory, for that period does not exceed 50 million euros.

(4)

For the purposes of this paragraph—

(a)

the value of tangible fixed assets of a qualifying member of a multinational group is to be determined in accordance with section 229H, and

(b)

the “reference territory” is the territory for which the sum of the values of tangible fixed assets of qualifying members of the group located in that territory is greatest.

(5)

The first accounting period in which a multinational group comes within the scope of Chapter 9A is the later of—

(a)

the first accounting period for which it meets Condition A in section 129(2) (annual revenue exceeds 750 million euros), and

(b)

the first accounting period beginning on or after the day on which section 229C (allocation of untaxed amount to members) comes into force for any purpose.”