Singapore legislation
Regulation 36
Regulation 36
Election where assets and liabilities adjusted to fair value for tax purposes
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 for a financial year of a constituent entity of the MNE group, that has a relevant tax adjustment in that financial year, is to be adjusted in accordance with paragraph (2).
Subregulation 2
Where an election in paragraph (1) is effective for a financial year —
that constituent entity has an adjustment amount in respect of each of its assets or liabilities that are subject to a relevant tax adjustment in that financial year; and
the value of an asset or liability that is subject to a relevant tax adjustment is to be treated, for the purpose of determining the FANIL of that constituent entity for that and any subsequent financial year, as its fair value immediately after the occurrence of the event that caused, or enabled, the relevant tax adjustment to be made.
Subregulation 3
In paragraph (2)(a), the adjustment amount is the amount given —
by subtracting the carrying value of the asset or liability immediately before the event that caused, or enabled, the relevant tax adjustment to be made from the fair value of the asset or liability immediately after the occurrence of that event; and
if that event results in a non-qualifying gain or loss (as defined in regulation 61(9)) for the constituent entity —
in the case of a non-qualifying gain — by reducing the result of sub‑paragraph (a) by the amount of that gain; or
in the case of a non‑qualifying loss — by increasing the result of sub‑paragraph (a) by the amount of that loss (expressed as a positive number).
Subregulation 4
A constituent entity may —
include the adjustment amount in paragraph (2)(a) in its FANIL for the financial year in which the relevant tax adjustment is made; or
split that adjustment amount into 5 equal amounts to be included in its FANIL for that financial year and the subsequent 4 financial years.
Subregulation 5
If paragraph (4)(b) applies and the constituent entity ceases to be a constituent entity of the same MNE group before the end of the fourth subsequent financial year, any amount of the adjustment amount that has not been included in its FANIL for a previous financial year is to be included in its FANIL for the financial year in which it ceases to be a constituent entity of that MNE group.
Subregulation 6
In this regulation —
Definition
“relevant tax adjustment” means an adjustment to the value of assets or liabilities of a constituent entity of an MNE group located in a jurisdiction to reflect the fair value of those assets or liabilities, that is required or permitted to be made for tax purposes under the law of that jurisdiction on the occurrence of an event, but does not include adjustments made in connection with transfer pricing, or the sale of trading stock in the course of carrying on a trade;
Definition
“trading stock” has the meaning given by section 10J(9) of the Income Tax Act 1947.