D1.1427 Calculating QNGIE

Corporate tax
Corporate tax | Commentary

D1.1427 Calculating QNGIE

Corporate tax | Commentary

D1.1427 Calculating QNGIE

The concept of QNGIE is only relevant for the purposes of the group ratio method. QNGIE has two main functions covering both of the group ratio method calculations1:


    •     the numerator in the calculation of the group ratio percentage (GRP) which is applied to tax-EBITDA, and


    •     QNGIE itself is generally the group ratio debt cap for the group ratio method.

QNGIE is an accounts-based measure of the group's net external interest expense. It is based on the calculation of 'adjusted net group interest expense' (ANGIE) but with certain downwards adjustments to exclude certain relevant expense matters that would otherwise have been taken into account when computing ANGIE. If QNGIE or ANGIE would otherwise be negative then they are treated as being nil2.

Any of the following situations described in the table below will result in downward adjustments making QNGIE smaller than ANGIE. In fact, QNGIE can equal but never exceed ANGIE.

Expense payments within ANGIE removed from QNGIEStatutory reference
A transaction with, or liability owed to a person who was a related party (see below) of a group member at any time in the period ('just and reasonable' basis used for persons not related to company for whole period of account)TIOPA 2010, ss 414(3)(a), 414(5)
Relates to results-dependent securities unless payments are inversely correlated to business performance (with exception for regulatory capital securities for accounting periods beginning before 1 January 2019)TIOPA 2010, ss 414(3)(b), 415(4)–(5) and TIOPA 2010, s 415(8); SI 2013/3209 for accounting periods

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