The IIR is the primary rule. It imposes a top-up tax on a relevant parent entity of an MNE group with respect to its ownership interests in a low-taxed constituent entity (“LTCE”) that has an ETR (determined for the MNE Group on a jurisdictional basis) below 15%.

The UTPR serves as a backstop to the IIR, where a top-up tax would be collected in the jurisdictions which the MNE group operates and where UTPR has been adopted, if no top-up tax is collected from the parent entity under the IIR (as the parent entity jurisdiction does not implement an IIR). This is done by way of denying deductions or by imposing tax in the form of an equivalent adjustment.