Article 49 - Special Computation Rules for Substance-based Income Exclusion

For the purposes of Article 46 of these Regulations, the Eligible Payroll Costs and Eligible Tangible Assets of a Constituent Entity which is a Permanent Establishment shall be those that are included in its separate financial accounts in accordance with Article 10 of these Regulations, provided that the Eligible Payroll Costs and Eligible Tangible Assets are located in the same jurisdiction as the Permanent Establishment.

Eligible Payroll Costs and Eligible Tangible Assets of a Permanent Establishment shall not be taken into account as Eligible Payroll Costs and Eligible Tangible Assets of the Main Entity.

Where the income of a Permanent Establishment was wholly or partially excluded pursuant to Paragraphs C and F of Article 11 of these Regulations, Eligible Payroll Costs and Eligible Tangible Assets of such Permanent Establishment shall be excluded in the same proportion from the computation under this Article for the Multinational Enterprise Group.

Eligible Payroll Costs of Eligible Employees paid by, and Eligible Tangible Assets owned by, a Flow-through entity that are not allocated under Paragraphs A, B and C of this Article shall be allocated in accordance with Clauses 1 and 2 of this Paragraph, and all other Eligible Payroll Costs and Eligible Tangible Assets of the Flow-through Entity that have not been so allocated shall be deemed not to be Eligible Payroll Costs and Eligible Tangible Assets for the purposes of calculating the Substance-based Income Exclusion:

1. The Constituent Entity-owners of the Flow-through Entity, in proportion to the amount allocated to them pursuant to Article 11 of these Regulations, provided that the Eligible Employees and Eligible Tangible Assets are located in the jurisdiction of the Constituent Entity-owners.

2. The Flow-through Entity if it is the Ultimate Parent Entity, reduced in proportion to the income excluded from the computation of the Constituent Entity Income of the Flow-through Entity pursuant to Article 11 of these Regulations, provided that the Eligible Employees and Eligible Tangible Assets are located in the jurisdiction of the Flow-through Entity.

The Substance-based Income Exclusion of each Stateless Constituent Entity shall be computed, for each Fiscal Year, separately from the Substance-based Income Exclusion of all other Constituent Entities located in the Kingdom.

The Substance-based Income Exclusion of Investment Entities and Insurance Investment Entities shall be computed, for each Fiscal Year, separately from all other Constituent Entities located in the Kingdom in accordance with Article 59 of these Regulations.