Part 3Multinational top-up tax

Chapter 5Covered tax balance

Dealing with deferred tax assets etc

182Total deferred tax adjustment amount

1

The total deferred tax adjustment amount for a member of a multinational group for an accounting period is the deferred tax expense relating to covered taxes reflected in the member’s underlying profits, adjusted as follows.

2

The deferred tax expense is to be adjusted to exclude the following—

a

any amount of that expense that reflects items not reflected in the member’s adjusted profits;

b

any amount of that expense that reflects disallowed accruals or unclaimed accruals;

c

the impact of a valuation adjustment or accounting recognition adjustment with respect to a deferred tax asset;

d

any amount of that expense arising from a re-measurement with respect to a change in the rate of tax;

e

any amount of that expense that reflects the generation or use of tax credits (but see section 183 which permits the inclusion of qualifying foreign tax credits).

3

Where a deferred tax liability is reversed in an accounting period, and that deferred tax liability was treated as an unclaimed accrual in a previous accounting period, the deferred tax expense is to be increased by the amount of the deferred tax liability that has reversed.

4

Where a deferred tax asset is not reflected in the deferred tax expense only as a result of the recognition criteria not being met, that deferred tax asset is to be reflected in the total deferred tax adjustment amount.

5

Where the amount of a deferred tax asset is adjusted as a result of section 186, an amount equal to that adjustment is to be reflected in the total deferred tax adjustment amount.

6

Where an amount of recaptured deferred tax liability (see section 184) that was determined for a previous accounting period is reversed during the accounting period, that amount is to be reflected in the total deferred tax adjustment amount.

7

Where the deferred tax expense relates to covered taxes where the rate is greater than 15%, the amount of that expense (after adjustment under subsections (2) to (6)) is to be adjusted so that it reflects the amount it would have been had the rate been 15%.

8

For the purposes of this section—

  • “disallowed accrual” means—

    1. a

      any movement in deferred tax expense reflected in the member’s underlying profits which relates to an uncertain tax position, or

    2. b

      any movement in deferred tax expense reflected in those profits which relates to distributions from another member of that group;

  • “unclaimed accrual” means an increase in a deferred tax liability reflected in the member’s underlying profits for an accounting period—

    1. a

      that is not expected to be reversed before the end of the fifth accounting period after that period, and

    2. b

      in respect of which the filing member has elected not to include in the total deferred tax adjustment amount for that period.

    Paragraph 2 of Schedule 15 (annual elections) applies to an election not to include an unclaimed accrual in the total deferred tax adjustment amount.