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 Part “arm’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.