Article 5 - Constituent Entities that Are Located in More Than One Jurisdiction

Where a Constituent Entity is located in more than one jurisdiction, and there is a Tax Treaty in force between those jurisdictions, the Constituent Entity shall be deemed as located solely in the jurisdiction where it is resident for the purposes of that Tax Treaty.

Where a Constituent Entity is located in more than one jurisdiction and there is no Tax Treaty in force between the jurisdictions, or where there is a Tax Treaty in force in accordance with which the competent authorities are expected to endeavour to mutually agree the residence of the Constituent Entity and no such agreement has been reached, or where there is a Tax Treaty in force and the Tax Treaty does not provide relief or exemption from tax because the Constituent Entity is resident of both of the contracting states, the location of the Constituent Entity shall be determined as follows:

1. The Constituent Entity shall be deemed as located in the jurisdiction where it paid more Covered Taxes for the Fiscal Year, without taking into account the taxes paid in accordance with a Controlled Foreign Company Tax Regime.

2. If the amount of Covered Taxes paid in both jurisdictions is the same or zero, the Constituent Entity shall be deemed as located in the jurisdiction where it has more Substance-based Income Exclusion computed on a standalone basis for the Fiscal Year.

3. If the amount of Substance-based Income Exclusion in both jurisdictions is the same or zero for the Fiscal Year, the Constituent Entity shall be considered a Stateless Constituent Entity unless the Constituent Entity is the Ultimate Parent Entity of the Multinational Enterprise Group, in which case it shall be deemed as being located in the jurisdiction where it is created.

For the purposes of Clause 2 of Paragraph B of this Article, the Substance-based Income Exclusion is computed on a standalone basis where the provisions of Article 10 of the Law and Article 46 of these Regulations are applied as if the relevant Entity is the only Constituent Entity of a Multinational-Enterprise Group in the Kingdom.