# Finance (No. 2) Act 2023, Paragraph 3: Disqualifying conditions


(1) The following conditions are disqualifying conditions for the purposes of paragraph 1(3)(c) in relation to a multinational group and a territory.
(2) Condition A is that—
(a) the ultimate parent is located in the territory,
(b) the ultimate parent is a flow-through entity, and
(c) the qualifying domestic top-up tax applying in the territory—
(i) does not generally impose a charge on the ultimate parent as a result of it being a flow-through entity, and
(ii) does not include provision for a charge to be imposed on the ultimate parent in circumstances where there would otherwise be an amount of tax that was not charged to any member of the group in that territory.
(3) Condition B is that—
(a) a responsible member of the group is located in the territory,
(b) the member is not the ultimate parent of the group,
(c) the member is a flow-through entity, and
(d) the qualifying domestic top-up tax applying in the territory—
(i) does not generally impose a charge on the member as a result of it being a flow-through entity, and
(ii) does not include provision for a charge to be imposed on the member in circumstances where there would otherwise be an amount of tax that was not charged to any member of the group in that territory.
(4) Condition C is that—
(a) the qualifying domestic top-up tax applying in the territory provides that it does not apply to a multinational group in the initial phase of the group’s international expansion,
(b) that provision is not limited in application to circumstances where the members of a multinational group in the territory are not subject to Pillar Two rules, and
(c) that provision applies to the group.
(5) Condition D is that the enforceability of an amount of qualifying domestic top-up tax accruing to a standard member of the group is in question.
(6) Subsections (3), (4) and (6) of section 256A (qualifying domestic top-up tax treated as not accruing where contested) apply for the purpose of determining whether the enforceability of an amount of qualifying domestic top-up tax is in question.
(7) Condition E is that—
(a) a member of the group located in the territory has a relevant pre-entry deferred tax asset or relevant pre-entry deferred tax liability, and
(b) the qualifying domestic top-up tax applying in the territory either—
(i) does not make provision corresponding to section 185(7A) to (7D) (exclusion for deferred tax assets arising as a result of government arrangements etc) in relation to relevant pre-entry deferred tax assets and relevant pre-entry deferred tax liabilities, or
(ii) makes such corresponding provision in a way that is inconsistent with the Pillar Two commentary in relation to relevant pre-entry deferred tax assets or relevant pre-entry deferred tax liabilities.
(8) In subsection (7) “relevant pre-entry deferred tax asset” and “relevant pre-entry deferred tax liability” have the same meaning as in Schedule 16, but for that purpose the words “or (7C)” in the definition of “relevant pre-entry deferred tax asset” are to be disregarded.
(9) Condition F is that the qualifying domestic top-up tax applying in the territory is not charged in respect of a member of the group located in the territory because of an exemption (however framed) or special regime relating to persons concerned in securitisation transactions.

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Source: https://www.legislation.gov.uk/ukpga/2023/30/schedule/16A/paragraph/3 (the official version)
Page: https://openlegislation.uk/finance-no-2-act-2023/schedule-16A/paragraph-3
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.