Singapore legislation
Regulation 23
Regulation 23
Exclusion of intra-group financing arrangement expenses
Subregulation 1
Where an intra-group financing arrangement could be reasonably expected, over the expected duration of the arrangement, to increase the expenses of a low tax constituent entity of an MNE group for a financial year without a corresponding increase in the income of a high tax constituent entity of that MNE group for that financial year that is taxable in the jurisdiction in which the high tax constituent entity is located, the FANIL of the low tax constituent entity for that financial year must be adjusted to exclude those expenses.
Subregulation 2
Paragraph (1) does not apply if the low tax constituent entity is required to include those expenses in its FANIL under regulation 24.
Subregulation 3
In this regulation —
Definition
“high tax constituent entity” means a constituent entity of an MNE group located in a jurisdiction where the relevant effective tax rate for that constituent entity would, ignoring intra‑group financing arrangements, be 15% or more;
Definition
“intra-group financing arrangement” means an arrangement between 2 or more constituent entities of an MNE group under which a high tax constituent entity directly or indirectly provides credit or otherwise makes an investment in a low tax constituent entity;
Definition
“low tax constituent entity” means a constituent entity of an MNE group located in a jurisdiction where the relevant effective tax rate for that constituent entity would, ignoring intra‑group financing arrangements, be less than 15%;
Definition
“relevant effective tax rate”, in relation to a constituent entity of an MNE group located in a jurisdiction, means —
where the constituent entity is not a special entity — the effective tax rate (as determined under section 17) for the constituent entities (not being special entities) of that MNE group located in that jurisdiction;
where it is a stateless entity — its effective tax rate (as determined under section 22);
where it is a minority-owned constituent entity — the effective tax rate (as determined under section 23) for the constituent entities of that MNE group that are minority‑owned constituent entities located in that jurisdiction; or
where it is an investment entity or insurance investment entity — the effective tax rate (as determined under section 24) for the constituent entities of that MNE group that are investment entities or insurance investment entities located in that jurisdiction.
Subregulation 4
In the application under regulation 10(2) of this regulation to a standalone JV or an entity of a JV group located in a jurisdiction, the relevant effective tax rate for the standalone JV or entity is the effective tax rate (as determined under section 25) for the standalone JV or entities of the JV group located in that jurisdiction.