MTT21110 - Calculating the effective tax rate: Adjusted profits: Tax expense
Tax expense amounts should not be reflected in a member’s adjusted profits, in accordance with section 138 of Finance (No.2) Act 2023.
Underlying profits should therefore be adjusted to add back debits and exclude credits, where they relate to a tax expense amount.
A ‘tax expense amount’ is an amount of tax expense (including a deferred tax expense) in respect of the following types of tax:
- a covered tax (whether or not the income to which the tax relates is excluded from the adjusted profits)
- MTT, or any equivalent tax (see MTT09970 for qualifying taxes)
- a qualifying domestic top-up tax
- a qualifying undertaxed profits tax
- taxes accrued by an insurance company in respect of returns to policyholders, to the extent that section 152(2) applies in relation to those taxes (see MTT45430)
- a disqualified refundable imputation tax (see MTT25230)