Step-by-step computation for Macro-step 6 - Revision history

Walid ELJAAFARI: /* Micro-Step 6.3.2. Allocable Share Matrix computation */

2023-12-13T22:15:13Z

Micro-Step 6.3.2. Allocable Share Matrix computation

← Older revision		Revision as of 22:15, 13 December 2023
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	===== Micro-Step 6.1.1. Construction of the DirectIIR Matrix =====		===== Micro-Step 6.1.1. Construction of the DirectIIR Matrix =====
	Let's build an DirectIIR matrix that has 1 on the diagonal if the entity is in a Jurisdiction with IIR and 0 otherwise.		Let's build an DirectIIR matrix that has 1 on the diagonal if the entity :

			* is a Constituent Entity
			* is in a Jurisdiction with IIR and 0 otherwise.

	===== Micro-Step 6.1.2. Construction of the IndirectIIR Matrix =====		===== Micro-Step 6.1.2. Construction of the IndirectIIR Matrix =====
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	The list of Micro-Step is a follows :		The list of Micro-Step is a follows :

	* Micro-Step 1.2.1.		* Micro-Step 6.3.1. Computation of the Inclusion Ratio Matrix
			* Micro-Step 6.3.2. Allocable Share Matrix computation

	===== Micro-Step 6.3.1. Computation of the Inclusion Ratio Matrix =====		===== Micro-Step 6.3.1. Computation of the Inclusion Ratio Matrix =====
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	===== Micro-Step 6.3.2. Allocable Share Matrix computation =====		===== Micro-Step 6.3.2. Allocable Share Matrix computation =====
	The Allocable Share Matrix is simply the [[Matrix Product]] Inclusion Ratio Matrix multiplied by the Diagonal Top-Up Tax Matrix		The Allocable Share Matrix is simply the [[Matrix Product]] Inclusion Ratio Matrix multiplied by the Diagonal Top-Up Tax Matrix

	~~===== Micro-Step 1.2.3. Entity absent from the shareholding structure =====~~
	~~This .~~

	=== Step 6.4. - Exclusion of IIR and Offset mechanism ===		=== Step 6.4. - Exclusion of IIR and Offset mechanism ===

	~~=== Step 6.5. - Final charging mechanism of LTCE's TUT to paying entities ===~~

	==== Purpose ====		==== Purpose ====
	The purpose of the .		The purpose of this step is to determine the impacts of the provisions of the 2.1. articles that excludes some Parent Entities from the IIR, and to apply the offset mechanism and thus avoid any double taxation .

	==== General Logic ====		==== General Logic ====
	This Step 1.2. will consist in .		This Step 6.4. will first consist in the identification of all IPEs and POPEs still susceptible to be liable for Top-Up Tax, given the articles 2.1.3. and 2.1.5. and to compute the impact of these exclusion and of the offset on the Allocable Share Matrix .

	==== Data Input ====		==== Data Input ====
	The Data input for Step 1.2. consists in :		The Data input for Step 6.4. consists in :

	* The ~~list of~~		* The DirectIIR and IndirectIIR Matrices from step 6.1.
			* The Indirect Ownership Interest Matrix from Macro-step 1
			* The Allocable Share Matrix from step 6.3

	The detailed matrix is available in the relevant section of the [[Pillar 2 Data Structure]].		The detailed matrix is available in the relevant section of the [[Pillar 2 Data Structure]].

	==== Data Output ====		==== Data Output ====
	The Data output for Step 1.2. consists in :		The Data output for Step 6.4. consists in :

	* The ~~list of~~		* The Offset Matrix
			* The Allocable Share Matrix With Offset
			* The Top-up Tax to pay per Parent Entity

	The detailed matrix is available in the relevant section of the [[Pillar 2 Data Structure]].		The detailed matrix is available in the relevant section of the [[Pillar 2 Data Structure]].
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	* Micro-Step 1.2.1.		* Micro-Step 1.2.1.

	===== Micro-Step 1.2.1. ~~Unknown subsidiaries~~ =====		===== Micro-Step 6.4.1. IPEs eligible to article 2.1.3. exception =====
	~~This~~ step .		Construct the set of IPE j eligible for §2.1.3. such that:

			If there exists a UPEi such that IIRDirect(i)=1, then all IPEs are eligible.

			If for all UPEi, IIRDirect(i)=0, then for an IPEj:

			* If the sum over all k of (IndirectIIR(k,j)) > 0, then IPEj is eligible for §2.1.3.
			* Otherwise, it remains subject to 2.1.2.

			===== Micro-Step 6.4.2. POPEs eligible to article 2.1.5. exception =====
			Construct the set of POPE j eligible for §2.1.5. such that:

			* Entity j is a POPE according to the identification of POPEs in step 6.2..
			* There exists a POPE i <> j, such that Afinal(i,j)=100% AND IIRDirect(i,i)=1.

			===== Micro-Step 6.4.3. Construction of the Offset Matrix =====
			Let us then calculate the offset matrix such that Offset(i,i) equals:

			* 1 if the entity is a UPE subject to IIR.
			* 1 if the entity is an IPE not eligible for §2.1.3.
			* 1 if the entity is a POPE not eligible for §2.1.5.
			* 0 in all other cases. All entities i for which Offset(i,i)=1 will contribute to the offset mechanism defined in §2.3. by reducing the payable share of their parents as indirect parents.

			===== Micro-Step 6.4.4. Final charging mechanism of LTCE's TUT to paying entities =====
			The final computation can be expressed as the following [[Matrix Product]]:

			<small>AllocableShareWithOffset = (Identity - Offset x IndirectOwnershipInterests) x Offset x AllocableShare</small>

			as we want to compute the Allocable Share With Offset of a parent i in a LTCE j as its Allocable Share provided that it remains affected (product by Offset) to which we substract the sum of its share of the Allocable Share of the LTCE j already accounted for by its subsidiary still under IIR.

			This can be writen as :

			<small>AllocableShareWithOffset(i,j) = Offset(i,i) x (AllocableShare(i,j) - sum<sub>k<>i</sub> (IndirectOwnershipInterest(i,k) x Offset(k,k) x AllocableShare(k,j))</small>

			which can be rewriten as above because <small>IndirectOwnershipInterest(i,i)=0 (Diagonal is empty)</small>

			The Top-Up Tax that a Parent Entity i is due to pay can be computed as follows :

	=~~==== Micro-Step 1.2.2. Unknown parents =====~~		TUTPayable(i)=<sup>T</sup>UnitVector(i) x AllocableShareWithOffset
	~~This .~~

	~~===== Micro-Step 1.2.3. Entity absent from~~ the ~~shareholding structure =====~~		It corresponds to the sum for all j of AllocableShareWithOffset(i,j)
	~~This .~~

Walid ELJAAFARI: /* Step 6.1. - Construction of the "Is in IIR" Matrix */

2023-12-13T21:33:55Z

Step 6.1. - Construction of the "Is in IIR" Matrix

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Walid ELJAAFARI: Title formatting

2023-12-12T11:11:19Z

Title formatting

Walid ELJAAFARI: Creation

2023-12-10T18:59:46Z

Creation

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=== Purpose ===
The purpose of the Charging Mechanisms is to identify the amount of Top-Up Tax attributed to the parent entities of the Low Tax Constituent Entities according to the Income Inclusion Rule.

=== General Logic ===
In order to perform the computation, the different IPEs and POPEs and their Income Inclusion Ratios in their various subsidiaries are first computed. After this initial step, the exception to the IIR are identified along the shareholding chains, before computing the Allocable shares of Top-Up Tax of each Parent Entity still subject to the IIR in their LTCE subsiaries.

=== Data Input ===
The Data input for Macro-step consists in :

* The list of Top-Up Tax computed in Macro-step 5 for each LTCE's ;
* The Matrices of Indirect Ownership interests as well as Controlling Interest;

The detailed matrix is available in the relevant section of the [[Pillar 2 Data Structure]].

=== Data Output ===
The Data output for Macro-step 5 consists in :

* The list of IPEs and POPEs subject to the IIR ;
* The amounts of Top-Up Tax due by these Parent entities;

The detailed matrix is available in the relevant section of the [[Pillar 2 Data Structure]].

=== Detailed Step by step approach ===

==== Step 6.1. - Construction of the "Is in IIR" Matrix ====

==== Step 6.2. - Identification of potential IPE/POPEs ====

==== Step 6.3. - Identification of IPEs and POPEs ====

==== Step 6.4. - Construction of Allocable share matrix ====

==== Step 6.5. - Exclusion of IIR and Offset mechanism ====

==== Step 6.6. - Final charging mechanism of LTCE's TUT to paying entities ====

← Older revision		Revision as of 11:11, 12 December 2023
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	=== Purpose ===		== Purpose ==
	The purpose of the Charging Mechanisms is to identify the amount of Top-Up Tax attributed to the parent entities of the Low Tax Constituent Entities according to the Income Inclusion Rule.		The purpose of the Charging Mechanisms is to identify the amount of Top-Up Tax attributed to the parent entities of the Low Tax Constituent Entities according to the Income Inclusion Rule.

	=== General Logic ===		== General Logic ==
	In order to perform the computation, the different IPEs and POPEs and their Income Inclusion Ratios in their various subsidiaries are first computed. After this initial step, the exception to the IIR are identified along the shareholding chains, before computing the Allocable shares of Top-Up Tax of each Parent Entity still subject to the IIR in their LTCE subsiaries.		In order to perform the computation, the different IPEs and POPEs and their Income Inclusion Ratios in their various subsidiaries are first computed. After this initial step, the exception to the IIR are identified along the shareholding chains, before computing the Allocable shares of Top-Up Tax of each Parent Entity still subject to the IIR in their LTCE subsiaries.

	=== Data Input ===		== Data Input ==
	The Data input for Macro-step consists in :		The Data input for Macro-step consists in :

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	The detailed matrix is available in the relevant section of the [[Pillar 2 Data Structure]].		The detailed matrix is available in the relevant section of the [[Pillar 2 Data Structure]].

	=== Data Output ===		== Data Output ==
	The Data output for Macro-step 5 consists in :		The Data output for Macro-step 5 consists in :

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	The detailed matrix is available in the relevant section of the [[Pillar 2 Data Structure]].		The detailed matrix is available in the relevant section of the [[Pillar 2 Data Structure]].

	=== Detailed Step by step approach ===		== Detailed Step by step approach ==

	==== Step 6.1. - Construction of the "Is in IIR" Matrix ====		=== Step 6.1. - Construction of the "Is in IIR" Matrix ===

	==== Step 6.2. - Identification of potential IPE/POPEs ====		=== Step 6.2. - Identification of potential IPE/POPEs ===

	==== Step 6.3. - Identification of IPEs and POPEs ====		=== Step 6.3. - Identification of IPEs and POPEs ===

	==== Step 6.4. - Construction of Allocable share matrix ====		=== Step 6.4. - Construction of Allocable share matrix ===

	==== Step 6.5. - Exclusion of IIR and Offset mechanism ====		=== Step 6.5. - Exclusion of IIR and Offset mechanism ===

	==== Step 6.6. - Final charging mechanism of LTCE's TUT to paying entities ====		=== Step 6.6. - Final charging mechanism of LTCE's TUT to paying entities ===