Part 3Multinational top-up tax
Chapter 4Calculation of adjusted profits of members of a multinational group
Adjustments of underlying profits
141General exclusion of dividends
1
The underlying profits of a member of a multinational group are to be adjusted so as to exclude any excluded dividends received or accrued by that member.
2
“Excluded dividends” means—
a
a dividend or other distribution arising as a result of a qualifying interest in a flow-through entity (see section 168), or
b
any other dividend or other distribution arising as a result of a qualifying interest in an entity, other than a dividend or other distribution falling within subsection (3).
3
The following fall within this subsection—
a
a dividend or other distribution arising as a result of a qualifying interest that is a short-term portfolio holding;
b
a dividend or other distribution arising as a result of a qualifying interest in an investment entity that is subject to an election under section 214 (taxable distribution method election);
c
a dividend or other distribution made by a member of a multinational group if—
i
its recipient is a member of the same group, and
ii
payments in respect of the distribution (whether or not the distribution was accounted for as a distribution at the time of payment) are treated as an expense of the member that made it for the purposes of determining the member’s underlying profits, or
d
any other dividend or other distribution to the extent it reflects debt rather than a qualifying interest.
4
For the purposes of subsection (2) a qualifying interest in an entity held by a member of a multinational group is a portfolio holding if, on the vesting date of the distribution, the members of that group do not, between them, have qualifying interests that entitle them to 10% or more of the entity’s—
a
profits,
b
capital,
c
reserves, and
d
voting rights.
5
A portfolio holding held by a member of a multinational group is a short-term portfolio holding if it was held for less than 1 year before the vesting date of the distribution.
6
The vesting date of a distribution is the earlier of—
a
the day on which it is made, and
b
the day on which the person to whom it arises is entitled to have it made.
7
The filing member of a multinational group may elect that all portfolio holdings held by a member of the group specified in the election are to be treated for the purposes of this section as short-term portfolio holdings.
8
Paragraph 1 of Schedule 15 (long term elections) applies to an election under subsection (7).
9
In this section, and in section 142, “qualifying interest” in an entity means—
a
a direct ownership interest in it, or
b
an entitlement to exercise voting rights in relation to it.