(1)To determine the covered tax balance of a member of a multinational group for an accounting period—
Step 1
Determine the amount of the qualifying current tax expense accrued by the member for that period.
Step 2
Determine whether any amounts need to be excluded from that expense under section 175 (and adjust it accordingly).
Step 3
Determine whether any amounts need to be reflected in that expense under section 176 (and adjust it accordingly).
Step 4
If any amount of covered taxes is taken into account more than once in the covered tax balance expense, adjust it so that the amount is only taken into account once.
(2)For the purposes of this Part, current tax expense is to be expressed—
(a)as a positive number where it represents an expense, and
(b)as a negative number where it represents a credit.
(3)If the result of subsection (1) is a negative amount that amount (expressed as a positive number) is a “negative covered tax balance”.
(4)If the result of subsection (1) is a positive amount, or nil, that amount is a “positive covered tax balance”.
(5)In this Part—
references to the “covered tax balance” of a member of a multinational group are to a positive covered tax balance or a negative covered tax balance;
“qualifying current tax expense” means the amount of the current tax expense as reflected in the member’s underlying profits to the extent the expense relates to covered taxes.