Paragraph 11 Tax-transparent investment entities: double counting

In section 168 (underlying profits of transparent entities), after subsection (10) insert—

“(10ZA)

Where M is treated as a flow-through entity by virtue of an election made in relation to R and M under section 213 (investment entity tax transparency election), the underlying profits of R are to be adjusted so as to exclude any gain, profit or loss—

(a)

that arises from changes in the fair value of, or from the impairment of, R’s interest in M, and

(b)

that is not an excluded equity gain or loss (taking into account any election under section 165),

but the amount excluded under this subsection is not to exceed the amount of M’s underlying profits that is allocated to R under subsection (3).”