Singapore: Two Measures to Implement Effective Tax Rate for Multinational Corporations at 15% from 2025

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Singapore plans to implement two measures to achieve a global minimum effective tax rate of 15% for multinational companies from 2025, in line with the global development of the Anti-Base Erosion and Profit Shifting (BEPS 2.0).

Singapore will continue to monitor the progress of the international tax system and adjust the implementation schedule of the international tax system in due course according to the progress.

At the same time, Singapore will evaluate and update its industry development plans to ensure that Singapore is competitive in attracting and retaining investment.

Singapore's Deputy Prime Minister and Minister of Finance Huang Xuncai announced the above measures in a recent statement on the 2023 fiscal year budget.

Global anti-tax base erosion rules

the global anti-base erosion rules are the Global Anti-Base Erosion (GloBE) rule and the Domestic Supplementary Tax (DTT).

"Our corporate tax system will be affected by the BEPS 2.0. The second pillar of the BEPS 2.0 will impose a minimum global effective tax rate of 15 per cent on large multinational companies. At present, many jurisdictions have not announced their implementation plans. Internationally, some of the main parameters of the second pillar will be finalized this year, while others are still under discussion," said Huang."

recently, the European Union announced that starting from 2024, the second pillar of BEPS 2.0 will be implemented in stages. Jurisdictions such as the UK and Switzerland have expressed the same intention.

Huang Xuncai said that with the gradual implementation of the international tax system, it is expected that its full impact will not be understood until 2025. The Singapore government plans to implement the second pillar from 2025 to unify the global minimum effective tax rate for large multinational companies.

Domestic supplementary tax

singapore will also implement a domestic supplementary tax from 2025 to make up the effective tax rate of multinational enterprises in Singapore to 15%."

he pointed out that Singapore will continue to communicate with multinational companies and give sufficient notice before adjusting any tax rules or plans.

BEPS refers to multinational companies taking advantage of the shortcomings of international tax rules, as well as the differences and loopholes in national tax systems, to reduce their overall global tax burden, and even achieve the effect of double non-taxation, eroding the tax base of each country.

Two years ago, in response to this problem, the Organization for Economic Cooperation and Development (OECD) introduced the BEPS 2.0 framework. The second pillar of BEPS 2.0 stipulates that multinational companies with an annual turnover of 750,000,000 euros (S $1,070,000,000) will be levied a minimum effective tax rate of 15%.

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