111AI. Qualified domestic top-up tax safe harbour

(1) In this section—

“OECD peer review process” means the review process developed, and undertaken, under the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, in respect of the domestic top-up tax of a jurisdiction;

“QDTT Safe Harbour” shall be construed in accordance with subsection (2);

“QDTT Safe Harbour standards” means the standards referred to as ‘Standards for a QDMTT Safe Harbour’ set out in the document referred to in paragraph (e) of the definition, in section 111B, of ‘OECD Pillar Two guidance’;

“QDTT subgroup” means a group, constituent entity, joint venture or joint venture affiliate that is subject to a separate qualified domestic top-up tax calculation under the tax law of the jurisdiction implementing that qualified domestic top-up tax;

“specified return date” has the meaning assigned to it in section 111AAF.

(2) Notwithstanding section 111AD(3), and subject to subsections (3) to (6), on the making of an election by a filing constituent entity in respect of a QDTT subgroup for a fiscal year, jurisdictional top-up tax in respect of the QDTT subgroup for the fiscal year concerned shall be deemed to be zero (in this section, referred to as the ‘QDTT Safe Harbour’) where the qualified domestic top-up tax implemented under the tax law of that jurisdiction is determined to have met the QDTT Safe Harbour standards under an OECD peer review process prior to the specified return date in respect of that fiscal year.

(3) The QDTT Safe Harbour for a jurisdiction shall not apply where a qualified domestic top-up tax in respect of that jurisdiction—

(a) is subject, directly or indirectly, to a challenge by the MNE group in judicial or administrative proceedings, or

(b) has been determined as not assessable or collectible by the tax authority of the jurisdiction implementing the qualified domestic top-up tax,

based on—

(i) constitutional grounds,

(ii) other superior law, or

(iii) a specific agreement with the government of the jurisdiction limiting the MNE group’s tax liability.

(4) The QDTT Safe Harbour for a jurisdiction shall not apply in respect of an MNE group where—

(a) the ultimate parent entity of the MNE group is—

(i) a flow-through entity, and

(ii) located in a jurisdiction where qualified domestic top-up tax is not charged under the laws of that jurisdiction on an ultimate parent entity that is a flow-through entity,

(b) the members of the MNE group include a flow-through entity that is required to apply an IIR top-up tax and is located in the jurisdiction where qualified domestic top-up tax is not charged under the laws of that jurisdiction on that flow-through entity, or

(c) a transitional exclusion consistent with the rules laid down in Article 49 of the Directive applies to qualified domestic top-up tax applied by that jurisdiction and that exclusion is not limited to where a qualified IIR does not apply in respect of the constituent entities located in that jurisdiction.

(5) The QDTT Safe Harbour for a jurisdiction shall not apply in respect of an investment entity, that is not an excluded entity, of an MNE group where qualified domestic top-up tax is not charged under the laws of that jurisdiction on that investment entity.

(6) The QDTT Safe Harbour for a jurisdiction shall not apply in respect of a joint venture group where qualified domestic top-up tax is not charged under the laws of that jurisdiction on the members of the joint venture group.

(7) All relevant information concerning the application of the QDTT Safe Harbour shall be included in the top-up tax information return for the fiscal year in accordance with section 111AAI.