(1) A financial instrument deduction without inclusion mismatch outcome shall arise in respect of a payment where it would be reasonable to consider that -
(a) there is, or but for this section would be, a deduction in the payer territory, without a corresponding amount being included in the payee territory, and
(b) the satisfaction of the condition described in paragraph (a) is attributable to differences between domestic tax and foreign tax in the characterisation of -
(i) a financial instrument, or
(ii) payments made under a financial instrument.
(2) A financial instrument deduction without inclusion mismatch outcome shall be neutralised as follows:
(a) where the State is the payer territory, notwithstanding any other provision of the Tax Acts and the Capital Gains Tax Acts, the payer shall be denied a deduction for the payment for the purposes of domestic tax, to the extent a corresponding amount has not been included for the purposes of foreign tax;
(b) where -
(i) the State is th
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