As part of the effective tax rate calculations for each member of the group, it is necessary to determine which taxes, referred to as 'covered taxes', are to be included and how these taxes will be adjusted and allocated between those members1. Broadly speaking, the adjusted covered tax balance includes current taxes for the year, plus a permitted amount of deferred tax, with both being subject to adjustments and restrictions. The calculations can be complex, however the key points are outlined below.
What are covered taxes?
Covered taxes of a member include the following2:
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•ÌýÌýÌýÌý taxes on the profits of a member in its territory, including taxes on income or profits of other members in which it has an ownership interest
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•ÌýÌýÌýÌý taxes imposed under an eligible distribution tax system (a regime of taxation on companies that is usually only payable when a company distributes, or is deemed to distribute, its profits to its members, or when it incurs certain non-business expenses. The rate of taxation must be at least
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