Part 3Multinational top-up tax

Chapter 4Calculation of adjusted profits of members of a multinational group

Adjustments of underlying profits

149Arm’s length requirement for certain transactions

1

Subsection (6) applies to a member of a multinational group if any of Conditions A to D are met.

2

Condition A is that—

a

a debit is recorded in the underlying profits accounts of the member that arises from a transaction (“the relevant transaction”) comprising a transfer of an asset between the member and another member of that group,

b

both members are located in the same territory, and

c

the relevant transaction is not recorded on an arm’s length basis.

3

Condition B is that—

a

the member is party to a transaction (“the relevant transaction”) with another member of that group,

b

both members are located in the same territory,

c

one of the members is a minority owned member and the other is not, and

d

the relevant transaction is not recorded in the member’s underlying profits accounts on an arm’s length basis.

4

Condition C is that—

a

the member is party to a transaction (“the relevant transaction”) with another member of that group,

b

both members are located in the same territory,

c

one of the members is an investment entity and the other is not, and

d

the relevant transaction is not recorded in the member’s underlying profits accounts on an arm’s length basis.

5

Condition D is that—

a

the member is party to a transaction (“the relevant transaction”) with another member of that group,

b

both members are located in the same territory, and

c

the recorded value of the relevant transaction is not the same in each member’s underlying profits accounts.

6

Where this subsection applies to a member of a multinational group, the underlying profits of the member are to be adjusted to secure that the relevant transaction is reflected on an arm’s length basis.

7

In this Partarm’s length basis”, in relation to a transaction between members of the same multinational group, means reflecting the conditions of the transaction as would have been obtained had the transaction been conducted between independent enterprises in a comparable transaction under comparable circumstances.