In February 2024, Singapore announced that it would implement the Multinational Enterprise Top-up Tax (“MTT“) and the Domestic Top-up Tax (“DTT“) under Pillar Two of the Base Erosion and Profit Shifting (“BEPS“) 2.0 initiative. The MTT and DTT will impose a minimum effective tax rate (“ETR“) of 15% on the profits of large multinational enterprise (“MNE“) groups from financial years starting on or after 1 January 2025, in line with the Pillar Two Global Anti-Base Erosion (“GloBE“) rules.
Since then, the Multinational Enterprise (Minimum Tax) Bill (“MNE Bill“) was introduced in Parliament for First Reading on 9 September 2024 to implement the MTT and DTT.
On 4 October 2024, the Inland Revenue Authority of Singapore (“IRAS“) announced a public consultation titled “Consultation on the Proposed Multinational Enterprise (Minimum Tax) Regulations – GloBE Safe Harbours and Transition Rules” (“Consultation“). It covers the proposed subsidiary legislation to the MNE Bill that will provide further details on the calculation of the top-up tax, specifically regarding:
- GloBE Safe Harbours to simplify the compliance process; and
- Adjustments in computing adjusted covered taxes under the transition rules that will apply when an MNE group first comes within the scope of the GloBE rules (including MTT or DTT in Singapore).
The Consultation will run from 4 October 2024 to 18 October 2024, and we elaborate on its details below.
For more information, click here to read the full Legal Update.
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