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June 28, 2024

Singapore releases draft legislation on BEPS 2.0 Pillar Two for public consultation

On 10 June 2024, the Singapore Ministry of Finance (MOF) released the draft legislation containing a bill to enact a new act in Singapore called the Multinational Enterprise (Minimum Tax) Bill (the "proposed Bill") and subsidiary legislation called the Multinational Enterprise (Minimum Tax) Regulations 2025.

The proposed Bill and subsidiary legislation will implement a Qualifying Domestic Minimum Top-up Tax (QDMTT) and the Income Inclusion Rule (IIR) under Pillar Two of the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) 2.0 initiative, as announced in Singapore's 2024 Budget Statement on 16 February 2024.

The Ministry is seeking public feedback on the proposed legislation from 10 June to 5 July 2024.

Key highlights

Scope of legislation

The draft legislation introduces the following key changes that would apply to in-scope multinational enterprise (MNE) groups1 to ensure that the effective tax rate imposed on the constituent entities is at least 15%:

  1. Apply a QDMTT, referred to as Domestic Top-up Tax (DTT), to group entities that are operating in Singapore.
  2. Apply the IIR, referred to as Multinational Enterprise Top-up Tax (MTT), to in-scope MNE groups parented in Singapore in respect of group entities that are operating outside Singapore.

The timing and design of the Undertaxed Profits Rule (UTPR) are not included in the proposed Bill. An update on the UTPR is expected to be issued later, taking into account wider developments internationally.

The DTT and MTT are proposed to be effective for financial years commencing on or after 1 January 2025. The proposed Bill, if passed into law, will be construed as one with the Income Tax Act 1947 (the main corporate income tax legislation).

The draft legislation currently contains content from the Global Anti-Base Erosion (GloBE) Model Rules and has yet to reflect content in the administrative guidance released to date. The draft legislation does, however, acknowledge the intent to take into account the administrative guidance as well as supplementary material from the OECD.

Technical considerations

Singapore will be adopting the local financial accounting standard as an exception to the financial accounting standard used for the preparation of the consolidated financial statements of the MNE group's ultimate parent entity (UPE), to determine the financial accounting net income or loss for DTT purposes, subject to meeting conditions.

The draft legislation contains general provisions relating to GloBE Safe Harbors but does not include Singapore-specific details (e.g., the transitional country-by-country reporting (CbCR) safe harbors (TCSH)). These details are expected to be reflected in subsequent regulations.


There are registration requirements for an MNE group that comes within the scope of MTT and/or DTT. The filing due date is within 15 months after the end of the financial year (or 18 months after the end of the transition year).

The payment of MTT and DTT must be made in Singapore dollars no later than one month after the relevant filing due dates. Subject to conditions being met, an MNE group may elect to pay the top-up tax attributable to a constituent entity by that entity.

Surcharges or penalties apply in the event of noncompliance, including for failure to register, failure to furnish the relevant returns and mistakes made in the returns.

Observations and takeaways

Although some differences are evident between the legislative draft and the GloBE Model Rules, it is too early to say whether these differences will lead to material deviations in the interpretation and application of the rules. The differences may be clarified as part of the consultation process, although some uncertainty around the application of the rules to specific fact patterns should be expected.

In-scope MNEs should take this opportunity to review the draft legislation, assess the potential impact of the Pillar Two top-up tax on their Singapore operations and, where possible, review planning strategies for managing the top-up tax exposure before the legislation is implemented.

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1 In-scope MNE groups are those with consolidated group revenue of €750m or more in at least two of the four preceding financial years.

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Contact Information

For additional information concerning this Alert, please contact:

Ernst & Young Solutions LLP, International Tax and Transaction Services, Singapore       

Ernst & Young Solutions LLP, Business Incentives Advisory, Singapore      

Ernst & Young LLP (United States), Singapore Desk, New York and Chicago

Ernst & Young LLP (United States), ASEAN Tax Desk, New York

Ernst & Young LLP (United States), Asia Pacific Business Group, New York

Ernst & Young LLP (United States), Asia Pacific Business Group, Chicago

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor