1.  The covered taxes of a constituent entity shall include:

(a)   taxes accrued in the financial accounts of a constituent entity with respect to its income or profits, or its share of the income or profits of a constituent entity in which it owns an ownership interest;

(b)   taxes on distributed profits, deemed profit distributions, and non-business expenses imposed under an eligible distribution tax system;

(c)   taxes imposed in lieu of a generally applicable corporate income tax; and

(d)   taxes levied by reference to retained earnings and corporate equity, including taxes on multiple components based on income and equity.

2. The covered taxes of a constituent entity shall not include:

(a)   the top-up tax accrued by a parent entity under a qualified income inclusion rule;

(b)   the top-up tax accrued by a constituent entity under a qualified domestic top-up tax;

(c)   taxes attributable to an adjustment made by a constituent entity as a result of the application of a qualified UTPR;

(d)   disqualified refundable imputation tax; and

(e)   taxes paid by an insurance company in respect of returns to policyholders.

3.  Covered taxes in respect of any net gain or loss arising from the disposal of immovable property as referred to in the first subparagraph of Article 15, Paragraph 7 in the fiscal year in which the election is made shall be excluded from the computation of the adjusted covered taxes.

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