S.L. 123.212 Art. 4Location of a constituent entity. 16 [S.L. 17

(1) For the purposes of these regulations, an entity other than a flow-through entity shall be determined to be located in TAXATION FOR MULTINATIONAL ENTERPRISE GROUPS 123.212 AND LARGE-SCALE DOMESTIC GROUPS

the jurisdiction where it is considered to be resident for tax purposes based on its place of management, its place of creation or similar criteria:

Provided that where it is not possible to determine the location of an entity other than a flow-through entity based on this sub-regulation, it shall be deemed to be located in the jurisdiction where it was created.

(2) A flow-through entity shall be considered to be stateless, unless it is the ultimate parent entity of an MNE group or of a large-scale domestic group or it is required to apply an IIR in accordance with Articles 5, 6, 7 and 8 of the European Union Global Minimum Tax Directive, in which case the flow-through entity shall be deemed to be located in the jurisdiction where it was created.

(3) (a) A permanent establishment as defined in paragraph (a) of such definition under regulation 3 shall be determined to be located in the jurisdiction where it is treated as a permanent establishment and is liable to tax under the applicable tax treaty.

(b) A permanent establishment as defined in paragraph (b) of such definition under regulation 3 shall be determined to be located in the jurisdiction where it is subject to net basis taxation based on its business presence.

(c) A permanent establishment as defined in paragraph (c) of such definition under regulation 3 shall be determined to be located in the jurisdiction where it is situated.

(d) A permanent establishment as defined in paragraph (d) of such definition under regulation 3 shall be considered to be stateless.

(4) (a) Where a constituent entity is located in two (2) jurisdictions and those jurisdictions have an applicable tax treaty, the constituent entity shall be deemed to be located in the jurisdiction where it is considered to be resident for tax purposes under that tax treaty.

(b) Where the applicable tax treaty requires that the competent authorities reach a mutual agreement on the deemed residence for tax purposes of the constituent entity, and no agreement is reached, sub-regulation (5) shall apply.

(c) Where there is no relief for double taxation under the applicable tax treaty due to the fact that a constituent entity is resident for tax purposes in both contracting parties, sub-regulation (5) shall apply.

(5) (a) Where a constituent entity is located in two (2) jurisdictions and those jurisdictions do not have an applicable tax treaty, the constituent entity shall be deemed to be located in the jurisdiction which charged the higher amount of covered taxes for the fiscal year.

(b) For the purpose of computing the amount of covered taxes referred to in paragraph (a), the amount of tax paid in accordance with a controlled foreign company tax regime shall not be taken into consideration.

(c) If the amount of covered taxes due in the two (2) jurisdictions is the same or zero (0), the constituent entity shall be deemed to be located in the jurisdiction where it has the higher amount of substance-based income exclusion computed on an entity basis in accordance with Article 28 of the European Union Global Minimum Tax Directive.

(d) If the amount of the substance-based income exclusion in the two (2) jurisdictions is the same or zero (0), the constituent entity shall be considered to be stateless, unless it is an ultimate parent entity, in which case it shall be deemed to be located in the jurisdiction where it was created.

(6) Where, as a result of applying sub-regulations (4) and (5), a parent entity is located in a jurisdiction where it is not subject to a qualified IIR, it shall be deemed to be subject to the qualified IIR of the other jurisdiction, unless an applicable tax treaty prohibits the application of such rule.

(7) Where a constituent entity changes its location in the course of a fiscal year, it shall be deemed to be located in the jurisdiction where it was deemed to be located under this regulation at the beginning of that fiscal year.

Second Part Administrative Provisions