SINGAPORE Law and Practice Contributed by: Yang Shi Yong, Drew & Napier LLC
prior to audits. Taxpayers are advised to keep up to date on their correspondence with the Comptroller and, where given the opportunity to before an audit commences, review their tax affairs conscientiously. In-person visits to business premises may also be made. A taxpayer’s case may be referred for further investigation where the results of their audit are unsat - isfactory to the authorities or disclose wilful intent to evade taxes, at which stage, a raid will be conducted. 9. BEPS 9.1 Adoption of BEPS Recommendations Singapore is a BEPS Associate and has implement - ed the following four minimum standards: counter - ing harmful tax practices (Action 5), preventing treaty abuse (Action 6), transfer pricing documentation and CbC reporting (Action 13), and enhancing dispute resolution mechanisms (Action 14). 9.2 Government Policy and Objectives Approach The Singapore government is generally supportive of the BEPS Project and has agreed to give effect to both Pillars One and Two. The implementation date of Pillar One remains unclear whereas Pillar Two has been enacted through the Multinational Enterprise (Minimum Tax) Act 2024 (the “MTT Act”). The MTT Act implements two components of Pillar Two: the Income Inclusion Rule (also referred to as the Multinational Enterprise Top-up Tax (MTT) in the MTT Act), and the Domestic Top-up Tax (DTT). The implementation of the Undertaxed Profits Rule, another component of Pillar Two, will be considered at a later stage. With effect from 1 January 2025, MTT and DTT of 15% will apply to multinational enterprise (MNE) groups with annual revenue of EUR750 million or more in the consolidated financial statements of the ultimate par - ent entity in at least two of the four financial years immediately preceding the financial year in question. More specifically, MTT will apply a Singapore parent entity’s ownership interest in its relevant entities out - side Singapore and its stateless entities but not to its ownership interest in its Singapore-based entities. The DTT will apply to the Singapore profits of appli - cable MNE groups, which excludes wholly domestic
groups where all members of the group are located in Singapore. There are a number of exclusions and safe harbours which may apply. 9.3 International Tax Singapore places importance on international tax and has implemented the four minimum standards as a BEPS Associate, namely: • countering harmful tax practices; • preventing treaty abuse; • transfer pricing documentation and CbC reporting; and • enhancing dispute resolution. Singapore has also implemented the MTT and DTT from Pillar Two under the MTT Act. 9.4 Competitive Tax Policy Objectives The Singapore government is cognisant of the chal - lenges of remaining attractive to foreign investors in light of the BEPS Project. It remains committed to strengthening Singapore’s non-tax-related competi - tive edge, including the country’s political stability, the ease of doing business locally, and high corporate governance standards. In particular, to enhance Singapore’s attractiveness in the post-BEPS world, Singapore has implemented the Refundable Investment Credit (RIC) programme. Under the RIC Programme, a company incorporated in Singapore or a branch of a foreign company reg - istered in Singapore has up to 31 December 2029 to apply for approval to be given RIC. RIC is awarded at a rate of 10%, 30% or 50% on qualifying expendi - tures incurred to carry out qualifying activities during the qualifying period of up to ten years. RIC can be used to offset a company’s income tax or any penalty, surcharge or interest related to income tax. Unutilised credits may be carried forward or paid to the company as a cash refund. RIC supports six types of qualifying activities which are: • investing in new productive capacity;
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