Base Erosion and Profit Shifting 2.0 (BEPS) Initiative

      

The first pillar will, from a tax perspective, re-allocate some profits from jurisdictions where economic activities are carried out to jurisdictions where markets are located. Currently, profits are fully allocated to the jurisdiction where the economic activity takes place, and transfer pricing rules combat tax planning through cross-border transactions by entities in the MNE group.

      

Singapore will introduce two components of the second pillar for the financial years of companies on or after 1 January 2025: The Income Inclusion Rule will subject the overseas profits of Singapore-based MNE groups to a minimum effective tax rate of 15 %, irrespective of where they operate. The Domestic Top-up Tax will apply to Singapore profits of MNE groups operating in Singapore and will top up the effective tax rate in Singapore to 15 %. These will apply to MNEs with a global turnover of at least €750 million per annum.

     

Singapore has announced that it will introduce the first pillar of the BEPS and other components of the second pillar at a later time.