Singapore has enacted new legislation to implement additional corporate taxes

Aligned with the BEPS 2.0 framework, Singapore’s new legislation targets multinational enterprises (MNEs) with consolidated annual revenues of at least 750 million euros in two of the last four financial years.
Published on: 15 Sep, 2024

Singapore has introduced new legislation for a domestic top-up tax, aligning with global tax rule changes. The Multinational Enterprise (Minimum Tax) Bill, presented in Parliament on September 9, mandates a minimum effective tax rate of 15% for large multinational enterprises (MNEs) in Singapore.

 

This legislation adheres to the global minimum tax rate established under the Global Anti-Base Erosion Model Rules of the BEPS 2.0 framework, a global tax agreement endorsed by over 140 countries and jurisdictions. The rules aim to prevent profit shifting to low-tax regions, with Singapore’s commitment to Pillar 2 announced in Budget 2023.

 

Targeting MNEs with consolidated annual revenues of at least 750 million euros (S$1.1 billion) over two of the last four financial years, the law introduces a multinational enterprise top-up tax (MTT) and a domestic top-up tax (DTT). These taxes address situations where an MNE’s effective tax rate falls below 15%, internationally or domestically.

 

The MTT applies to Singapore-based companies with ownership interests in lower-tax jurisdictions, requiring them to pay a top-up tax if those entities’ effective tax rates are below 15%. The DTT ensures that MNEs operating in Singapore are taxed at least 15% on their domestic profits.

 

The Bill also includes penalties for non-compliance, such as failing to submit mandatory tax returns, providing false or misleading information, and engaging in fraudulent tax evasion. Companies may face surcharges of up to 10% of the total top-up tax due for breaches like late registration, with more severe penalties, including fines and prosecution, for serious violations.

 

The Bill will be debated in the next Parliament session.

 

Source: The Business Times