On February 14, 2023 Singapore’s Deputy Prime Minister and Minister of Finance, Mr. Lawrence Wong, delivered his Budget Statement for Budget 2023. During this Budget Statement Mr. Wong announced that as part of the broader international move to align minimum global corporate tax rates for large MNE groups Singapore intends to implement Pillar 2 from 2025. When we doing so, Singapore will implement a Domestic Top-up Tax, which will top up the MNE groups’ effective tax rate in Singapore to 15%.
Below you find the part of Mr. Wong’s Budget Statement that with respect to Singapore’s intention to implement Pillar 2 from 2025:
“Our corporate tax system will be affected by BEPS 2.0. Pillar 2 of BEPS will introduce a global minimum effective tax rate of 15% for large MNE groups. However, many jurisdictions have not announced their implementation plans. Some key parameters of Pillar 2 have only been finalised this year while others remain under discussion at the international level.
The EU recently announced its plans to implement Pillar 2 in phases starting effectively from 2024. Other jurisdictions like the UK and Switzerland have announced their intention to do the same. As the rules will be implemented progressively, the full effects will only be felt in 2025 or later.
Given these developments, I intend to implement Pillar 2 from 2025, as part of the broader international move to align minimum global corporate tax rates for large MNE groups. When we do so, we will implement a Domestic Top-up Tax, which will top up the MNE groups’ effective tax rate in Singapore to 15%. At the same time, we will review and update our broader suite of industry development schemes to ensure that Singapore remains competitive in attracting and retaining investments.
That said, the developments on BEPS 2.0 are fluid, and we will continue to monitor international developments. If there are additional delays, we will adjust our implementation timeline. We will continue to engage companies and give them sufficient notice, well ahead of any changes to our tax rules or schemes.”
You can find the full text of Budget Statement for Budget 2023 as delivered by Mr Wong on February 14, 2023 here.
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