MTT25320 | Calculating the effective tax rate: Covered tax balance: Recalculation where covered taxes not paid

Where covered taxes have not been paid, a recalculation may be required, in accordance with section 219 of Finance (No.2) Act 2023.

Recalculations are required when:

• an amount of current tax expense that has been included in the covered tax balance of a member has not been paid,

• the amount has not been paid within the period of three years starting with the last day of the accounting period in which the unpaid amount was included in the covered tax balance, and

• the total of unpaid amounts included in the covered tax balance for the member for that period exceeds €1 million.

The following amounts must be recalculated to exclude the unpaid amount:

• the effective tax rate for the member’s territory.

• the top-up amounts of the members in that territory (see MTT31000+).

Where a recalculation results in an additional top-up tax amount, that amount is to be treated in accordance with section 206 of the Act (see MTT33200).