Finance Bill – in a Public Bill Committee at 10:30 am on 28 January 2025.
Amendments made: 1, in schedule 4, page 125, line 28, leave out “untaxed amount” and insert “UK proportion”.
This amendment corrects an error in the calculation of multinational top-up tax payable under the UTPR provisions that would have resulted in an excessive liability.
Amendment 2, in schedule 4, page 125, line 30, leave out “untaxed amount” and insert “UK proportion”.
This amendment corrects an error in the calculation of multinational top-up tax payable under the UTPR provisions that would have resulted in an excessive liability.
Amendment 3, in schedule 4, page 133, line 20, at end insert—
“Use of substituted values
11A (1) After section 137 insert—
“137A Use of substituted values
(1) Where any provision of this Part requires the substitution of a value recorded in the underlying profits accounts of a member of a multinational group for an accounting period, the substituted value—
(a) is to be used for all purposes of this Part instead of the value recorded in the accounts (for example, where the carrying value of an asset has been substituted and the value of that asset is relevant to the member’s deferred tax expense, that substituted value is to be used in connection with determining that expense), and
(b) is to be updated (for example, in making adjustments for depreciation for subsequent accounting periods),
in each case, in accordance with the accounting standard used in determining the underlying profits of the member.
(2) But where the value in question is the value of an asset, no adjustments for impairment are to be made to it.
(3) Where the impaired value of an asset recorded in the underlying profits accounts for any accounting period is less than the substituted value of the asset for that period, use the value from the underlying profits accounts instead for that period and all subsequent periods (and subsection (2) does not apply in relation to that value).”
(2) In section 197 (eligible tangible asset amount), in subsection (3)—
(a) after “means” insert “values”, and
(b) after “parent” insert “(and not values as substituted as a result of any other provision of this Part)”.”.
This amendment clarifies how substituted values are to be used when determining profits for the purposes of multinational top-up tax (and domestic top-up tax).
Amendment 21, in schedule 4, page 135, line 27, leave out “entities”.
This amendment corrects a substitution.
Amendment 22, in schedule 4, page 145, line 28, leave out from beginning to end of line 28 on page 146 and insert—
“198ZA Eligible payroll costs: flow-through entities
(1) A member of a multinational group that is a flow-through entity has a flow-through payroll amount for a territory for an accounting period if the member has costs that would be eligible payroll costs if the member were located in that territory and were not a flow-through entity and—
(a) there is at least one other member of the group—
(i) that is not a flow-through entity,
(ii) that is located in that territory, and
(iii) to whom a proportion of the underlying profits of the flow-through entity for the accounting period are allocated under section 168 (underlying profits of transparent entities) or, where the underlying profits of the entity are nil or less, would be so allocated if the flow-through entity had underlying profits of 100 euros, or
(b) the entity—
(i) is a flow-through entity to some extent for that period as a result of section 169 (certain non tax resident entities to be treated as flow-through entities),
(ii) is not a flow-through entity to some extent for that period, and
(iii) was created in that territory.
(2) Section 196 applies for the purposes of determining a flow-through payroll amount of a flow-through entity for a territory as it applies for the purposes of determining eligible payroll costs but as if—
(a) any reference in that section to the territory of the member were to the territory to which the flow-through payroll amount relates, and
(b) subsection (7) of that section were omitted.
(3) Where a member of a multinational group that is a flow-through entity has a flow-through payroll amount for a territory for an accounting period, the eligible payroll costs of each member of the group falling within subsection (1)(a) for that period (which may be nil) are to be increased by the amount given by multiplying the flow-through payroll amount by the relevant proportion in relation to that member for that period.
(4) The relevant proportion in relation to a member for an accounting period is the proportion of the underlying profits of the flow-through entity for that period—
(a) in a case where the flow-through entity has underlying profits that exceed nil for that period, that is allocated to that member under section 168, or
(b) in a case where the underlying profits of the flow-through entity for that period are nil or less, that would be allocated to that member if the flow-through entity had underlying profits of 100 euros.
(5) Where a flow-through entity—
(a) is a flow-through entity to some extent for an accounting period as a result of section 169,
(b) is not a flow-through entity to some extent for that period, and
(c) was created in a territory for which it has a flow-through payroll amount for that period,
the eligible payroll costs of that entity for that period (which may be nil) are to be increased by the amount given by multiplying that flow-through payroll amount by the relevant proportion in relation to that entity for that period.
(6) The relevant proportion in relation to that entity for an accounting period is the proportion of the underlying profits of the entity for that period—
(a) in a case where the entity has underlying profits that exceed nil for that period, that are not allocated to any other entity under section 168, or
(b) in a case where the underlying profits of the entity for that period are nil or less, that would not be allocated to any other entity under that section if the entity had profits of 100 euros.
(7) For the purposes of applying this section in relation to a multinational group whose ultimate parent is a flow-through entity, the ultimate parent is to be treated as not being a flow-through entity.
198ZB Eligible tangible asset amount: flow-through entities
(1) A member of a multinational group that is a flow-through entity that is not the ultimate parent has a flow-through tangible asset amount for a territory for an accounting period if the member holds one or more assets in that territory and—
(a) there is at least one other member of the group—
(i) that is not a flow-through entity,
(ii) that is located in that territory, and
(iii) to whom a proportion of the underlying profits of the flow-through entity for the accounting period are allocated under section 168 (underlying profits of transparent entities) or, where the underlying profits of the entity are nil or less, would be so allocated if the flow-through entity had underlying profits of 100 euros, or
(b) the entity—
(i) is a flow-through entity to some extent for that period as a result of section 169 (certain non tax resident entities to be treated as flow-through entities),
(ii) is not a flow-through entity to some extent for that period, and
(iii) was created in that territory.
(2) Sections 197 and 197A apply for the purposes of determining a flow-through tangible asset amount of a flow-through entity for a territory as they apply for the purposes of determining an eligible tangible asset amount but as if—
(a) any reference in those sections to the territory of the member were to the territory to which the flow-through tangible asset amount relates, and
(b) subsection (10) of section 197 were omitted.
(3) Where a member of a multinational group that is a flow-through entity has a flow-through tangible asset amount for a territory for an accounting period, the eligible tangible asset amount of each member of the group falling within subsection (1)(a) for that period (which may be nil) is to be increased by the amount given by multiplying the flow-through tangible asset amount by the relevant proportion in relation to that member for that period.
(4) The relevant proportion in relation to a member for an accounting period is the proportion of the underlying profits of the flow-through entity for that period—
(a) in a case where the flow-through entity has underlying profits that exceed nil for that period, that is allocated to that member under section 168, or
(b) in a case where the underlying profits of the flow-through entity for that period are nil or less, that would be allocated to that member if the flow-through entity had underlying profits of 100 euros.
(5) Where a flow-through entity—
(a) is a flow-through entity to some extent for an accounting period as a result of section 169,
(b) is not a flow-through entity to some extent for that period, and
(c) was created in a territory for which it has a flow-through tangible asset amount for that period,
the eligible tangible asset amount of that entity for that period (which may be nil) is to be increased by the amount given by multiplying that flow-through tangible asset amount by the relevant proportion in relation to that entity for that period.
(6) The relevant proportion in relation to that entity for an accounting period is the proportion of the underlying profits of the entity for that period—
(a) in a case where the entity has underlying profits that exceed nil for that period, that are not allocated to any other entity under section 168, or
(b) in a case where the underlying profits of the entity for that period are nil or less, that would not be allocated to any other entity under that section if the entity had profits of 100 euros.
(7) For the purposes of applying this section in relation to a multinational group whose ultimate parent is a flow-through entity, the ultimate parent is to be treated as not being a flow-through entity.
198ZC Eligible payroll costs and eligible tangible asset amount: flow-through ultimate parent
(1) In determining for an accounting period the eligible payroll costs or eligible tangible asset amount of a flow-through entity that is the ultimate parent of a multinational group, the amount given by section 196 or 197 is to be reduced by the section 170 proportion.
(2) In subsection (1), “the section 170 proportion” means the proportion of the adjusted profits of the flow-through entity for the accounting period that—
(a) in a case where subsection (1) of 170 (adjustments for ultimate parent that is a flow-through entity) applies, is excluded under that subsection, or
(b) in a case where that subsection does not apply as a result of the entity having not made a profit for that period, would be excluded under that subsection if the entity had adjusted profits of 100 euros.
(3) In subsection (2), “the adjusted profits” means the adjusted profits before the application of section 170.”.
This amendment secures that eligible payroll costs and eligible tangible asset amounts are allocated from flow-through entities in a manner that is consistent with the Pillar Two model rules.
Amendment 23, in schedule 4, page 146, line 28, at end insert—
“32A In section 196 (eligible payroll costs), after subsection (6) insert—
“(7) A member of a multinational group that is a flow-through entity that is a responsible member of the group but which is not the ultimate parent is to be regarded as having nil eligible payroll costs (subject to the application of section 198ZA).”
32B In section 197 (eligible tangible asset amount), after subsection (9) insert—
“(10) A member of a multinational group that is a flow-through entity that is a responsible member of the group but which is not the ultimate parent is to be regarded as having an eligible tangible asset amount of nil (subject to the application of section 198ZB).””.
This amendment is consequential on Amendment 22.
Amendment 4, in schedule 4, page 146, line 34, at end insert—
“Additional top-up amounts
33A In section 203 (additional top-up amounts where covered taxes less than expected), in subsections (4)(b), (5)(b), (6)(b) and (7)(b), for “reduction by relevant QDT credit” substitute “any reduction”.
33B (1) Section 206 (additional top-up amounts where recalculations required) is amended as follows.
(2) In subsection (1)—
(a) in the words before paragraph (a), after “members” insert “(“the current members”)”, and
(b) in paragraph (b), before “members” insert “current”.
(3) In subsection (2)—
(a) in paragraph (a), for “those members would have for a prior period” substitute “the standard members of the group in the territory in a prior period would have for that period”, and
(b) in the words after paragraph (b), before “members” insert “current”.
(4) In subsection (3)—
(a) in Step 1, for “those members would have had for the prior period” substitute “the standard members of the group in the territory for the prior period would have had for that period”,
(b) in Step 3, after “nil” insert “(and if there are no such results, the result of this step is nil)”, and
(c) in Step 4—
(i) before “members” insert “current””, and
(ii) for “Step 2“ substitute “Step 3”.
(5) In subsection (4)—
(a) for “those members” substitute “the current members”, and
(b) for “in accordance with subsections (5) to (8)” substitute “as follows”.
(6) In subsection (5)—
(a) in paragraph (a)—
(i) for “standard” substitute “current”, and
(ii) before “period” insert “current”,
(b) in paragraph (b), for “members for the members’ territory” substitute “current members”, and
(c) in paragraph (c), for “reduction by relevant QDT credit” substitute “any reduction”.
(7) In subsection (6)—
(a) in paragraph (a)—
(i) for “standard” substitute “current”, and
(ii) before “period” insert “current”,
(b) in paragraph (b), for “standard members in the territory” substitute “current members”, and
(c) in paragraph (c), for “reduction by relevant QDT credit” substitute “any reduction”.
(8) In subsection (7)—
(a) in paragraph (a)—
(i) for “standard” substitute “current”,
(ii) before “period”, in the first place it occurs, insert “current”, and
(iii) for “members for the members’ territory” substitute “the current members”, and
(b) in paragraph (b)—
(i) for “reduction by relevant QDT credit” substitute “any reduction”, and
(ii) for “members for the member’s territory” substitute “current members”.
(9) In subsection (8)—
(a) in paragraph (a)—
(i) for “standard” substitute “current”, and
(ii) for “members for the members’ territory” substitute “the current members”,
(b) in paragraph (b)—
(i) for “reduction by relevant QDT credit” substitute “any reduction”, and
(ii) for “members for the member’s territory” substitute “current members”, and
(c) in the words after paragraph (b) for the words from “amount”, in the second place it occurs, to the end substitute “relevant amount.”
(10) After subsection (8) insert—
“(9) The relevant amount is the amount given by multiplying—
(a) the sum of the amounts of qualifying domestic top-up tax accrued by the current members in the current period, by
(b) the amount given by dividing—
(i) the collective additional amount under this section, by
(ii) the sum of that collective additional amount, any collective additional amount under section 203 and the total top-up amount for the current period.””.
This amendment clarifies how to calculate top-up amounts in cases where amounts for a prior period have had to be recalculated.
Amendment 5, in schedule 4, page 147, line 6, at end insert—
“(e) in paragraph (f), for “of which the entity is a member” substitute “referred to in paragraph (a)”.”.
This amendment forms part of a series of amendments designed to make sure that multinational top-up tax, and domestic top-up tax, apply properly in cases involving joint ventures. See also amendments 6, 7, 8, 9, 10 and 11.
Amendment 6, in schedule 4, page 147, line 12, at end insert—
“(ia) after “Part”, in the second place it occurs, insert “, this Chapter other than this section and section 226”, and”.
This amendment forms part of a series of amendments designed to make sure that multinational top-up tax, and domestic top-up tax, apply properly in cases involving joint ventures. See also amendments 5, 7, 8, 9, 10 and 11.
Amendment 7, in schedule 4, page 147, line 33, leave out “where” and insert “if”.
This amendment forms part of a series of amendments designed to make sure that multinational top-up tax, and domestic top-up tax, apply properly in cases involving joint ventures. See also amendments 5, 6, 8, 9, 10 and 11.
Amendment 8, in schedule 4, page 147, line 35, leave out “of the group has” and insert
“meets Condition A and Condition B for that period”.
This amendment forms part of a series of amendments designed to make sure that multinational top-up tax, and domestic top-up tax, apply properly in cases involving joint ventures. See also amendments 5, 6, 7, 9, 10 and 11.
Amendment 9, in schedule 4, page 147, line 37, after “group” insert “(the “relevant group”)”.
This amendment forms part of a series of amendments designed to make sure that multinational top-up tax, and domestic top-up tax, apply properly in cases involving joint ventures. See also amendments 5, 6, 7, 8, 10 and 11.
Amendment 10, in schedule 4, page 147, line 39, leave out “of the group have,” and insert
“meet Condition C for that period and—
(i) all of those members are located in the United Kingdom, or
(ii) the relevant group is a multinational group (see section 126 in Part 3), and at least one of the members is located in a Pillar Two territory.”.
This amendment forms part of a series of amendments designed to make sure that multinational top-up tax, and domestic top-up tax, apply properly in cases involving joint ventures. See also amendments 5, 6, 7, 8, 9, and 11.
Amendment 11, in schedule 4, page 147, leave out lines 40 and 41.
This amendment forms part of a series of amendments designed to make sure that multinational top-up tax, and domestic top-up tax, apply properly in cases involving joint ventures. See also amendments 5, 6, 7, 8, 9, and 10.
Amendment 24, in schedule 4, page 151, line 19, leave out “(e)” and insert “(d)”.
This amendment corrects an incorrect cross-reference.
Amendment 25, in schedule 4, page 153, line 12, after “establishment” insert
“and that is incurred in the territory of the permanent establishment”.
This amendment ensures the correct allocation of tax of an entity with a permanent establishment.
Amendment 26, in schedule 4, page 154, line 36, leave out “(2)(a)(i)” and insert “(2)(a)(ii)”.
This amendment corrects an incorrect cross-reference.
Amendment 27, in schedule 4, page 159, line 42, leave out “territory” and insert “tax”.
This amendment corrects an error.
Amendment 28, in schedule 4, page 160, line 28, after second “return” insert “notification”.
This amendment ensures the correct document is referred to.
Amendment 29, in schedule 4, page 160, line 29, after “return” insert “or notification”.
This amendment is consequential on Amendment 28.
Amendment 12, in schedule 4, page 161, line 32, at end insert—
“54A In section 211 (transfer of assets or liabilities to a member of a multinational group)—
(a) in subsection (2)—
(i) omit the “and” after paragraph (b), and
(ii) after that paragraph insert—
“(ba) the transferor and the transferee are not members of the same type located in the same territory, and”, and
(b) after subsection (4) insert—
“(5) For the purposes of subsection (2) two members of a multinational group are of the same type if—
(a) they are both standard members of the group,
(b) they are both investment entities, or
(c) they are both members of the same minority subgroup (see section 228).””.
This amendment removes the requirement for a transfer between members of a multinational group to be reflected on the arm’s length basis where the members are of the same type and in the same jurisdiction.
Amendment 13, in schedule 4, page 162, line 7, at end insert—
“58A In section 217(8), for paragraph (a) substitute—
“(a) the aggregate covered tax balance of the standard members of the group in the territory of the member for the prior period is not reduced by 1 million euros or more, and”.
58B In section 220 (top-up amount of investment entity)—
(a) in subsection (1)—
(i) in Step 8, after “entity” insert “, unless the entity has a positive undistributed income amount (see sections 214 and 215) for the period (in which case proceed to Step 9), and
(ii) after that Step insert—
“Step 9
Where this Step applies, the top-up amount for the entity is the sum of—
(a) the result of Step 8, and
(b) the positive undistributed income amount for the entity for the period multiplied by 15%.”, and
(b) omit subsection (2).”.
This amendment secures that a decrease in covered taxes in a previous accounting period is insignificant (and will therefore be ignored) only if the aggregate of covered taxes payable by the standard members is not reduced by 1 million euros or more, and also corrects an error in the calculation of multinational top-up tax payable in relation to investment entities that would have resulted in an excessive liability.
Amendment 30, in schedule 4, page 162, line 16, at end insert—
“62A In Schedule 16A (multinational top-up tax: safe harbours), in paragraph 4(1)(b) omit “members of the group that are”.”.
This amendment secures that the provision amended refers to members of a joint venture group, rather than the members of a group that owns the joint venture.
Amendment 14, in schedule 4, page 162, line 24, at end insert—
“(f) paragraph 58B (top-up amount of investment entity).”.
This amendment is consequential on Amendment 13 (and provides for part of the amendment made by that amendment to have effect for accounting periods beginning on or after
Amendment 31, in schedule 4, page 162, line 34, leave out “by the filing member”.
This amendment clarifies how the retrospection election is to be made.
Amendment 32, in schedule 4, page 162, line 35, leave out “group or qualifying entity” and insert
“a group, or a qualifying entity that is not a member of a group”.
This amendment clarifies how the retrospection election is to be made.
Amendment 33, in schedule 4, page 162, line 40, at end insert—
“(za) is to be made—
(i) in the case of a multinational group or group, by the filing member, or
(ii) in the case of a qualifying entity that is not a member of a group, by that entity,”.
This amendment clarifies how the retrospection election is to be made.
Amendment 34, in schedule 4, page 163, line 6, after “member” insert “, or former member,”.
This amendment clarifies that consent may be required of former members of a group or multinational group where they could have a liability to domestic top-up tax.
Amendment 35, in schedule 4, page 163, line 8, after “tax” insert
“that has top-up amounts or additional top-up amounts for any accounting period commencing before
This amendment and amendment 36 make sure that it is only members of a group actually liable to tax that must give consent for the retrospection election.
Amendment 36, in schedule 4, page 163, line 9, after “entity” insert
“that has top-up amounts or additional top-up amounts for any accounting period commencing before
This amendment and Amendment 35 make sure that it is only members of a group actually liable to tax that must give consent for the retrospection election.
Amendment 37, in schedule 4, page 163, line 22, at end insert—
“(9A) Sub-paragraph (9B) applies where—
(a) the filing member of a multinational group or group has made a retrospection election,
(b) at the time the election was made it was reasonable for the filing member to consider that the consent of a person was not required,
(c) that consent was not given,
(d) the filing member becomes aware that the consent of that person was, or may have been, required, and
(e) the written consent of that person is given within the period of 60 days beginning with the day on which the condition in paragraph (d) is first met.
(9B) The consent of that person is to be treated as having been given before the election was made.”.—
This amendment allows retrospective consent to be given in respect of elections.
