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MTT15960 | Scope: Safe harbours: Transitional safe harbour: The routine profits test

From HM Revenue & Customs · Multinational Top-up Tax and Domestic Top-up Tax

The routine profits test is met for a territory for an accounting period if:

  • the aggregate profit (loss) before income tax of the members is nil or a loss, or

  • the aggregate profit (loss) before income tax of the members is equal to or less than the qualified substance based income exclusion (SBIE) amount for the territory.

See MTT15930 and MTT15935 for guidance on determining the profit before income tax.

This is set out in Paragraph 9, Schedule 16 to Finance (No.2) Act 2023.

Qualified substance based income exclusion (SBIE) amount

The qualified SBIE amount is the SBIE amount that would be calculated under the main rules (see MTT32000+), except that the payroll and tangible asset carve-out amounts of a member are only included if the member is:

  • regarded as a constituent entity of the group for CbCR purposes, and

  • regarded as being located in the territory for CbCR purposes.

The same accounts used to prepare the CbC Report should be used to calculate the SBIE amount.

The transitional rate for the applicable year should be used.