Singapore legislation
Clause 2
Clause 2
Interpretation
(1)
In this Act —
Definition
“acceptable financial accounting standard” means —
the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB);
the generally accepted accounting principles of Australia, Brazil, Canada, Member States of the European Union, Member States of the European Economic Area, Hong Kong (China), Japan, Mexico, New Zealand, the People’s Republic of China, the Republic of India, the Republic of Korea, Russia, Singapore, Switzerland, the United Kingdom, or the United States of America; or
any other financial accounting standard treated as an “acceptable financial accounting standard” under the GloBE rules;
Definition
“adjusted covered taxes” has the meaning given by paragraph 1 of the First Schedule;
Definition
“authorised financial accounting standard”, in relation to an entity, means a set of generally acceptable accounting principles permitted by the body responsible for prescribing, establishing or accepting accounting standards for financial reporting purposes in the jurisdiction the entity is located in;
Definition
“chargeable entity” means —
in relation to any MTT (including an amount of MTT payable pursuant to an assessment under section 49, 50(2) or 51) — the entity chargeable with the MTT under section 12;
in relation to —
any DTT payable in respect of an MNE group for a financial year (including an amount of DTT payable pursuant to an assessment under section 49, 50(3) or 51); or
the balance thereof after deducting any part (amount Y) that an entity (X) is to pay pursuant to an election under section 45, including any addition to amount Y as mentioned in section 45(8),the designated local DTT filing entity of the MNE group; and
in relation to amount Y — X;
Definition
“Comptroller” means the Comptroller of Income Tax, and includes, for all purposes of this Act except the exercise of the powers conferred upon the Comptroller by section 73 or 75, a Deputy Comptroller or Assistant Comptroller appointed under section 3(1) of the ITA;
Definition
“consolidated financial statements” has the meaning given by paragraph 2 of the First Schedule;
Definition
“constituent entity” means an entity that is part of a group, and includes —
a permanent establishment of a main entity that is part of a group where the permanent establishment and the main entity are located in different jurisdictions; and
an entity treated as a constituent entity in accordance with paragraph 5 of the First Schedule,but excludes an excluded entity;
Definition
“controlling interest” means an ownership interest in an entity such that the entity that is the interest holder —
in consolidated financial statements prepared by it in accordance with an acceptable financial accounting standard, consolidated the assets, liabilities, income, expenses and cash flows of the entity on a line‑by‑line basis (called in this definition a line‑by‑line consolidation) in accordance with that financial accounting standard, or was not required to do so solely on size or materiality grounds or on the ground that the entity is held for sale; or
if the interest holder were required by the law or a regulatory body of the jurisdiction it is located in to prepare consolidated financial statements in accordance with an authorised financial accounting standard that is either an acceptable financial accounting standard or another financial accounting standard that is adjusted to prevent any material competitive distortion —
would have been required by that financial accounting standard to carry out a line‑by‑line consolidation in accordance with that financial accounting standard; or
would not have been required by that financial accounting standard to carry out a line‑by‑line consolidation in accordance with that financial accounting standard solely on size or materiality grounds or on the ground that the entity is held for sale,and a main entity is deemed to have a controlling interest in its permanent establishment;
Definition
“covered tax” has the meaning given by paragraph 1(6) of the First Schedule;
Definition
“designated local DTT filing entity” means an entity that has been —
designated as such under section 34(1) or (5) or section 33(7) (as applied by section 34(7)); or
deemed by the Comptroller as such under section 34(3) or that provision as applied by section 34(7);
Definition
“designated local GIR filing entity” means an entity that has been —
designated as such under section 33(1), (5) or (7); or
deemed by the Comptroller as such under section 33(3) or that provision as applied by section 33(8);
Definition
“DTT” or “domestic top‑up tax” means the tax imposed under Part 3 in respect of an MNE group, and (to avoid doubt) includes an amount of that tax that an entity is to pay pursuant to an election under section 45;
Definition
“entity” has the meaning given by paragraph 3 of the First Schedule;
Definition
“excluded dividends” means dividends or other distributions received or accrued in respect of a direct ownership interest in an entity, that is not —
a portfolio shareholding beneficially owned by the constituent entity concerned that received or accrued the dividends or other distributions for less than one year at the date of the distribution; or
a direct ownership interest in an investment entity or insurance investment entity that is subject to an election under the regulations;
Definition
“excluded entity” has the meaning given by paragraph 4 of the First Schedule;
Definition
“excluded equity gain or loss” means any gain, profit or loss included in the FANIL of a constituent entity of an MNE group arising from —
gains and losses from changes in fair value of a direct ownership interest in another entity other than a portfolio shareholding;
profit or loss in respect of a direct ownership interest in another entity included under the equity method of accounting; or
gains and losses from a disposition of a direct ownership interest in another entity other than a portfolio shareholding;
Definition
“FANIL” or “financial accounting net income or loss” has the meaning given by paragraph 6 of the First Schedule;
Definition
“filing entity” means a constituent entity of an MNE group that files a GloBE information return (whether in Singapore or in another jurisdiction) for the purpose of the MTT under this Act or a qualified IIR, as the case may be;
Definition
“financial year” means —
an accounting period for which the ultimate parent entity of the MNE group prepares its consolidated financial statements; or
in the case of consolidated financial statements in sub‑paragraph (d) of the definition of “consolidated financial statements” in paragraph 2 of the First Schedule — a calendar year;
Definition
“GIR” or “GloBE information return” means a return under section 40, or an equivalent return made in a jurisdiction outside Singapore for the purpose of a qualified IIR;
Definition
“GloBE income or loss” has the meaning given by paragraph 6 of the First Schedule;
Definition
“GloBE rules” means the rules set out in the document entitled “Tax Challenges Arising from the Digitalisation of the Economy — Global Anti‑Base Erosion Model Rules (Pillar Two)”, published by the Organisation for Economic Co‑operation and Development (OECD) on 20 December 2021, as amended from time to time, and as further explained in the following documents (as amended from time to time):
the document entitled “Tax Challenges Arising from the Digitalisation of the Economy — Commentary to the Global Anti‑Base Erosion Model Rules (Pillar Two)”, published by the OECD on 14 March 2022;
the document entitled “Tax Challenges Arising from the Digitalisation of the Economy — Global Anti‑Base Erosion Model Rules (Pillar Two) Examples”, published by the OECD on 14 March 2022;
the document entitled “Tax Challenges Arising from the Digitalisation of the Economy — Administrative Guidance on the Global Anti‑Base Erosion Model Rules (Pillar Two)”, published by the OECD on 2 February 2023; (d)the document entitled “Tax Challenges Arising from the Digitalisation of the Economy — Administrative Guidance on the Global Anti‑Base Erosion Model Rules (Pillar Two), July 2023”, published by the OECD on 17 July 2023; (e)the document entitled “Tax Challenges Arising from the Digitalisation of the Economy — Administrative Guidance on the Global Anti‑Base Erosion Model Rules (Pillar Two), December 2023”, published by the OECD on 18 December 2023;
the document entitled “Tax Challenges Arising from the Digitalisation of the Economy — Consolidated Commentary to the Global Anti‑Base Erosion Model Rules (2023)”, published by the OECD on 25 April 2024;
the document entitled “Tax Challenges Arising from the Digitalisation of the Economy — Global Anti‑Base Erosion Model Rules (Pillar Two) Examples”, published by the OECD on 25 April 2024; (h)the document entitled “Tax Challenges Arising from the Digitalisation of the Economy — Administrative Guidance on the Global Anti‑Base Erosion Model Rules (Pillar Two), June 2024”, published by the OECD on 17 June 2024; (i)any other prescribed document;
Definition
“group” —
means a collection of entities that are related through ownership or control such that the assets, liabilities, income, expenses and cash flows of each entity are —
included in the consolidated financial statements of the ultimate parent entity; or
excluded from the consolidated financial statements of the ultimate parent entity solely on size or materiality grounds or on the ground that the entity is held for sale; and
includes a main entity and its permanent establishments where the main entity is located in one jurisdiction and one or more of the permanent establishments are located in a different jurisdiction, but only if the main entity is not a part of another group mentioned in paragraph (a);
Definition
“insurance investment entity” has the meaning given by paragraph 7 of the First Schedule;
Definition
“intermediate parent entity” means a constituent entity of an MNE group (other than an ultimate parent entity, partially‑owned parent entity, permanent establishment, investment entity or insurance investment entity) that holds an ownership interest in another constituent entity of the same MNE group;
Definition
“investment entity” has the meaning given by paragraph 7 of the First Schedule;
Definition
“ITA” means the Income Tax Act 1947;
Definition
“ITA tax” means the income tax imposed under the ITA;
Definition
“material competitive distortion” means an application of a specific principle or procedure under a set of generally accepted accounting principles that results in a total variation greater than EUR 75 million (or its equivalent in other currency as determined under the regulations) in the financial year concerned, as compared to the amount that would have been determined by applying a principle or procedure of the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB) that corresponds to the firstmentioned principle or procedure;
Definition
“minimum rate” has the meaning given by section 7;
Definition
“minority‑owned constituent entity” and “minority‑owned subgroup” have the meanings given by paragraph 9 of the First Schedule;
Definition
“MNE group” means a group that has at least one entity or permanent establishment that is not located in the jurisdiction of the ultimate parent entity;
Definition
“MTT” or “multinational enterprise top‑up tax” means the tax imposed under Part 2;
Definition
“multi‑parent group” means 2 or more groups where —
the ultimate parent entity of each group has entered into an arrangement of a type specified in the regulations; and
at least one constituent entity of all the constituent entities of those groups is located in a different jurisdiction from that of the other constituent entities of those groups;
Definition
“OECD Model Tax Convention” means the Model Tax Convention on Income and on Capital published by the Organisation for Economic Co‑operation and Development (OECD) on 18 December 2017, as amended from time to time;
Definition
“ownership interest” means a direct ownership interest as defined in subsection (5) or an indirect ownership interest as defined in subsection (6);
Definition
“partially‑owned parent entity” means a constituent entity of an MNE group (other than an ultimate parent entity, permanent establishment, investment entity or insurance investment entity) —
that holds an ownership interest in another constituent entity of the same MNE group; and
more than 20% of the ownership interests of whose profits (for the financial year concerned) is held (directly or indirectly) by persons that are not constituent entities of that MNE group;
Definition
“portfolio shareholding” means direct ownership interests in an entity that are held by one or more constituent entities of an MNE group and that, in total, carry rights to less than 10% of the profits, capital, reserves, or voting rights of that entity at the date of distribution or disposition;
Definition
“qualified domestic minimum top‑up tax” means a tax imposed by the law of a jurisdiction other than Singapore that is prescribed in the regulations as being equivalent in effect as the DTT;
Definition
“qualified IIR” means a tax imposed by the law of a jurisdiction other than Singapore that is prescribed in the regulations as being equivalent in effect as the MTT;
Definition
“qualified UTPR” means a tax imposed by the law of a jurisdiction other than Singapore that is prescribed in the regulations as an undertaxed profits tax that is equivalent in effect as the tax imposed by the UTPR in the GloBE rules;
Definition
“qualifying competent authority agreement”, in relation to a jurisdiction, means an agreement between the competent authority of Singapore and the competent authority of that jurisdiction for the automatic exchange of GloBE information returns;
Definition
“regulations” means regulations made under section 84;
Definition
“relevant entity”, in relation to a chargeable entity, has the meaning given by section 12(d);
Definition
“section 29(b) entity” means an entity described in section 29(b);
Definition
“special entity” means a constituent entity of a group that is —
an investment entity;
an insurance investment entity;
a minority‑owned constituent entity; or
a stateless entity,and includes a joint venture and a JV subsidiary;
Definition
“stateless entity” has the meaning given by paragraph 10 of the First Schedule;
Definition
“tax” means a compulsory unrequited payment to —
the central government of a jurisdiction or an agency whose operations are under that government’s effective control; or
a state or local government;
Definition
“transition year”, in relation to an MNE group, means the first financial year —
the MNE group comes within the scope of the law of any jurisdiction imposing a qualified IIR or a qualified UTPR; or
for which the MNE group is liable to be registered under Part 4,whichever is earlier;
Definition
“ultimate parent entity” means —
an entity that owns directly or indirectly a controlling interest in any other entity and is not owned, directly or indirectly with a controlling interest, by another entity; or
the main entity of a group comprising the main entity and all of its permanent establishments, one or more of which are located in a different jurisdiction from that of the main entity, but only if the main entity is not a part of another group in paragraph (a) of the definition of “group”,and —
excludes an entity that is not to be regarded as an ultimate parent entity under subsection (2); but (d)includes an entity regarded as an ultimate parent entity under subsection (3).
(2)
In this Act, a governmental entity that has as its principal purpose the purpose in paragraph 4(3)(b)(ii) of the First Schedule is not to be regarded as the ultimate parent entity of a group and is to be disregarded for the purposes of this Act.
(3)
Accordingly, an entity (A) which is not itself a governmental entity described in subsection (2), but in which such governmental entity has a controlling interest as a result of a direct ownership interest, is to be regarded as the ultimate parent entity of a group consisting of —
A itself; and
the entities that A has a controlling interest in.
(4)
In this Act —
“joint venture”, “standalone JV”, “JV group”, “entity of a JV group” and “JV subsidiary” have the meanings given by paragraph 8 of the First Schedule; and
paragraph 8(1)(c) or (3)(d) of the First Schedule applies to determine if a joint venture (including one that is an entity of a JV group) or JV subsidiary is “connected to” an MNE group.
(5)
In this Act, an entity or individual (A) holds a direct ownership interest in an entity (B) if —
A has an interest (whether by way of shares or other security or otherwise) that gives rise to rights in a share of the profits, capital or reserves of B; and
that interest would, ignoring any requirement to consolidate the assets, liabilities, income, expenses and cash flows of B in the consolidated financial statements of A, be accounted for as equity in those statements,and in this Act, A is a “direct owner” of B.
(6)
In this Act, an entity or individual (C) holds an indirect ownership interest in an entity (D) if C holds a direct ownership interest in —
an entity that holds a direct ownership interest in D; or
an entity that holds (as a result of a single or repeated application of this subsection) an indirect ownership interest in D.
(7)
Where a term in this Act has a meaning for accounting purposes, it has that meaning in this Act.ExamplesDeferred tax assetDeferred tax liability.
(8)
Any term in this Act that is not defined in this Act but defined in the GloBE rules, has the meaning given to it in the GloBE rules, as explained or modified in the regulations.