Singapore legislation
Regulation 35
Regulation 35
Election for foreign exchange risk hedges
Subregulation 1
The filing entity of an MNE group may make an election in a GloBE information return (whether filed in Singapore or in another jurisdiction) in accordance with the GloBE rules that the FANIL of a constituent entity of the MNE group is to be adjusted to exclude the gains or losses in paragraph (3) of that constituent entity.
Subregulation 2
Where an election under paragraph (1) is effective for a financial year, the FANIL for that financial year of that constituent entity must be adjusted accordingly.
Subregulation 3
An election in paragraph (1) applies to gains or losses of a constituent entity arising from fluctuations in exchange rates to the extent that —
a gain or loss is attributable to an instrument intended to act as a hedge against currency risk in ownership interests in any entity held by the constituent entity of the MNE group, not being a portfolio shareholding;
the gain or loss is recorded in other comprehensive income in the consolidated financial statements of the ultimate parent entity of the MNE group;
the instrument is considered an effective net investment hedge under the authorised financial accounting standard upon which those statements are prepared;
where the instrument is held by the constituent entity, the economic and accounting effect of the hedge has not been transferred to any other entity; and
where the instrument is not held by the constituent entity, the economic and accounting effect of the hedge has been transferred to the constituent entity.
Subregulation 4
An election under paragraph (1) must not be revoked for the financial year for which it is made or for any of the subsequent 4 financial years, and any such revocation has no effect.
Subregulation 5
If an election under paragraph (1) is revoked for a financial year, another election under that paragraph must not be made (whether in Singapore or in another jurisdiction) in respect of that constituent entity for that or any of the subsequent 4 financial years, and any such election has no effect.