Article 40 - Post-filing Adjustments and Tax Rate Changes

Any adjustment to a CE’s Covered Tax liability for a previous Tax Period, as recorded in the Financial Accounts, shall be treated as an adjustment to the Covered Taxes in the Tax Period in which the adjustment is made, unless the adjustment relates to a Tax Period in which there was a decrease in Covered Taxes for the CE located in the State.

In the case of a decrease in the Covered Taxes included in the Adjusted Covered taxes of a CE for a previous Tax Period, the ETR and the Tax (Top-Up Tax) for that Tax Period must be recalculated in accordance with the first paragraph of Article 47 of these ERs, considering the following:

1. The Adjusted Covered Taxes for the Tax Period shall be reduced by the amount of the decrease in Covered Taxes and the GloBE Income determined for that Tax Period.

2. Any overlapping Tax Periods shall be adjusted as necessary and to the appropriate extent.

A DCE may elect, for a Tax Period, to treat an immaterial decrease in Covered taxes as an adjustment in the Tax Period in which the adjustment is made. Immaterial Decrease in covered taxes means a total reduction of less than EUR 1 million (or its equivalent in Kuwaiti Dinar) in the Adjusted Covered Taxes determined in the State for a Tax Period.

Deferred tax expenses resulting from a reduction in the applicable domestic tax rate shall be treated as an adjustment to the CE’s Covered Tax Liability for a previous Tax Period under this Chapter, if that reduction leads to the application of a rate lower than the minimum tax rate.

Deferred tax expenses, when paid, resulting from an increase in the applicable domestic tax rate, shall be treated as an adjustment to the CE’s Covered Tax Liability for a previous Tax Period under this Chapter, if that amount was originally recorded at a rate below the minimum tax rate.

The adjustment referred to in the preceding paragraph of this Article shall be limited to the amount equal to the increase in deferred tax expenses, up to the adjusted deferred tax expense amount determined in accordance with the minimum tax rate.

If more than EUR 1 million (or its equivalent in Kuwaiti Dinar) of the amount accrued by a CE as current tax expense and included in Adjusted Covered Taxes for a Tax Period is not paid within three tax periods of the last day of such period, the ETR and the Tax (Top-up Tax) for the Tax Period in which the unpaid amount was claimed as a Covered Tax must be recalculated in accordance with paragraph (1) of Article 47 of these ERs by excluding such unpaid amount from Adjusted Covered Taxes.