MTT52900 - Administration: The information return: Transitional reporting election

The information return being developed with international partners at the OECD will require information on the adjustments to arrive at each members’ adjusted profits and covered tax balance to be reported for each member of the group in all circumstances. It also requires the reporting of the additions and reductions for each adjustment.

The OECD Inclusive Framework has agreed a simplification which allows a group to elect to report under the transitional simplified jurisdictional reporting framework for an interim period. More information on this framework can be found in the GloBE Information Return document published in July 2023 on the OECD website.

The election is set out in paragraph 13, schedule 16 to Finance (No.2) Act 2023.

Conditions

The election can only be made in respect of an accounting period that begins on or before 31 December 2028 and ends before 1 July 2030.

In addition, one of the following conditions must be met for the territory for that period:

  • there are no top-up amounts or additional top-up amounts.
  • there are top-up amounts or additional top-up amounts, but they do not need to be allocated to different members, because there is only one responsible member responsible for all the members in the territory.
  • there are top-up amounts or additional top-up amounts and multiple responsible members, but each responsible member is responsible for every member in the territory, and has the same inclusion ratio for each of those members.

See MTT61050 for further guidance on the allocation of the top-up charge between responsible members

Effect of the election

For each territory in respect of which an election is made, the group is not required to report all adjustments to the underlying profits, current tax expense or deferred tax expense on an individual member basis. These adjustments can be reported on a net basis.

Some adjustments will still need to be reported on a member-by-member basis, even when the transitional reporting election has been made. The notes to the information return will specify these adjustments.

The election does not remove the necessity for groups to maintain an accounting system that enables them to accurately and reliably undertake the MTT calculations, nor the necessity to have processes which allocate accounting information to each territory.

The transitional reporting election is an annual election. See MTT52200 for guidance on elections.