1.  By way of derogation from Article 21, a filing constituent entity may make a qualifying loss election for a jurisdiction according to which a qualifying loss deferred tax asset shall be determined for each fiscal year in which there is a net qualifying loss in the jurisdiction. For that purpose, the qualifying loss deferred tax asset shall be equal to the net qualifying loss for a fiscal year for the jurisdiction multiplied by the minimum rate.

A qualifying loss election cannot be made for a jurisdiction with an eligible distribution tax system as defined in Article 38.

2.  The qualifying loss deferred tax asset determined pursuant to paragraph 1 shall be used in any subsequent fiscal year in which there is net qualifying income for the jurisdiction in an amount equal to the net qualifying income multiplied by the minimum rate or, if lower, the amount of qualifying loss deferred tax asset that is available.

3.  The qualifying loss deferred tax asset shall be reduced by the amount that is used for a fiscal year and the balance shall be carried forward to subsequent fiscal years.

4.  Where a qualifying loss election is revoked, any remaining qualifying loss deferred tax asset shall be reduced to zero as of the first day of the first fiscal year in which the qualifying loss election is no longer applicable.

5.  The qualifying loss election shall be filed with the first top-up tax information return of the MNE group that includes the jurisdiction for which the election is made.

6.  Where a flow-through entity which is the ultimate parent entity of an MNE group makes a qualifying loss election under this Article, the qualifying loss deferred tax asset shall be computed by reference to the qualifying loss of the flow-through entity after reduction pursuant to Article 36, Paragraph 3.

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