Singapore legislation
Regulation 44
Regulation 44
Reallocation of tax expenses
Subregulation 1
Where a constituent entity of an MNE group is subject to taxation under a controlled foreign company tax regime on the income of a controlled foreign company for a financial year, the qualifying current tax expense or qualifying deferred tax expense of that constituent entity arising under that regime must be allocated to that controlled foreign company if that controlled foreign company is a constituent entity of that MNE group.
Subregulation 2
Where a constituent entity of an MNE group is subject to taxation under a blended CFC regime on the income of its controlled foreign companies for a financial year that commences on or before 31 December 2025 and ends on or before 30 June 2027 —
the qualifying current tax expense or qualifying deferred tax expense of the constituent entity arising under that regime in respect of each of its controlled foreign companies is determined by the formula —where —
A is the blended CFC allocation key of the constituent entity for the controlled foreign company;
B is the sum of the blended CFC allocation keys of the constituent entity for all its controlled foreign companies; and
C is the qualifying current tax expense or qualifying deferred tax expense (as the case may be) of the constituent entity arising under that regime in respect of all its controlled foreign companies; and
the amount computed in sub‑paragraph (a) in respect of a controlled foreign company must be —
excluded from the adjusted covered taxes of that constituent entity if that controlled foreign company is not a constituent entity of the MNE group; and
allocated under paragraph (1) to that controlled foreign company if it is a constituent entity of the MNE group.
Subregulation 3
[Deleted by S 129/2025 wef 25/02/2025]
Subregulation 4
Where any qualifying current tax expense or qualifying deferred tax expense for a financial year of a constituent entity of an MNE group is in respect of a distribution received (including any deemed distribution in respect of undistributed earnings or capital) from another constituent entity of the MNE group in which that constituent entity has a direct ownership interest, that qualifying current tax expense or qualifying deferred tax expense must be allocated to that other constituent entity.
Subregulation 5
Where —
a constituent entity of an MNE group holds an ownership interest in an entity (X); and
X is a hybrid entity with respect to any of its income (including any income allocated to X from a flow-through entity under paragraph 6(9) or (12) of the First Schedule to the Act) that is attributable to such ownership interest,then any qualifying current tax expense or qualifying deferred tax expense of the constituent entity for a financial year that is in respect of that income must be allocated to X.
Subregulation 5A
Where —
either —
a constituent entity (Y1) of an MNE group is a reference entity in relation to another constituent entity of the MNE group that is a flow-through entity (Z); or
a constituent entity (Y2) of an MNE group holds an indirect ownership interest in another constituent entity of the MNE group that is a flow-through entity (also Z) through a constituent entity (also Y1) of the MNE group that is a reference entity in relation to Z, and Y2 is not a reference entity in relation to Z; and
Z is a reverse hybrid entity with respect to any of its income that is attributable to Y1,then any qualifying current tax expense or qualifying deferred tax expense of Y1 or Y2 for a financial year, to the extent that it is in respect of income that is attributable to Y1, must be allocated to Z.
Subregulation 6
Where any qualifying current tax expense or qualifying deferred tax expense for a financial year of a constituent entity (X1) of an MNE group is to be allocated to another constituent entity (X2) of the MNE group under paragraph (1), (2), (5) or (5A), and the qualifying current tax expense or qualifying deferred tax expense is in respect of passive income, the amount of qualifying current tax expense and qualifying deferred tax expense that must be so allocated is subject to a cap determined by the following formula:where —
D is the relevant effective tax rate for X2 determined without regard to any qualifying current tax expense or qualifying deferred tax expense in respect of passive income, that would otherwise have been allocated to X2 under paragraph (1), (2), (5) or (5A); and
E is the amount of the passive income,and any amount of qualifying current tax expense or qualifying deferred tax expense not allocated is a qualifying current tax expense or qualifying deferred tax expense of X1.
Subregulation 7
In this regulation —
Definition
“applicable rate”, in relation to a blended CFC regime, means the applicable tax rate mentioned in paragraph (c) of the definition of “blended CFC regime”;
Definition
“blended CFC allocation key” has the meaning given by regulation 44A;
Definition
“blended CFC regime” means a controlled foreign company tax regime —
under which the income and losses of the controlled foreign companies of the entity are aggregated for the purposes of calculating the entity’s tax liability under the regime;
that does not take into account the income of the entity, or the constituent entities of its MNE group, arising in the jurisdiction where the entity is located, other than the use of any loss to reduce a tax liability under the regime; and
that operates if the tax rate applicable to the controlled foreign companies is less than a minimum threshold, being a threshold below 15%;
Definition
“controlled foreign company” means the other entity in the definition of “controlled foreign company tax regime”;
Definition
“controlled foreign company tax regime” means a set of tax rules (other than MTT or a qualified IIR) under which an entity with an ownership interest in another entity located in a different jurisdiction is subject to current taxation on its share of part or all of the income of the other entity, whether or not any of that income is distributed to the entity;
Definition
“passive income” means —
dividends or dividend equivalents;
interest or interest equivalents;
rent;
royalties;
annuities; or
net gains from property of a type that produces income described in paragraphs (a) to (e);
Definition
“relevant effective tax rate”, in relation to a constituent entity (X2) of an MNE group, means —
where X2 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 the same jurisdiction as X2, including X2;
where X2 is a stateless entity — its effective tax rate (as determined under section 22);
where X2 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 the same jurisdiction as X2, including X2; and
where X2 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 the same jurisdiction as X2, including X2.
Subregulation 8
For the purposes of this regulation, any amount of qualifying current tax expense or qualifying deferred tax expense of a constituent entity (Z1) of the MNE group that would have been allocated under this regulation to a standalone JV or an entity of a JV group (Z2) that is connected to an MNE group if Z2 were a constituent entity of the MNE group, is to be allocated to Z2.
Subregulation 9
For the purpose of paragraph (8), “relevant effective tax rate” means the effective tax rate (as determined under section 25) for Z2 and any other entities of the JV group located in the same jurisdiction as Z2.
Subregulation 10
In the application under regulation 37(2) of this regulation to the allocation of tax expenses from one entity (Z3) to another entity (Z4) of the same JV group, “relevant effective tax rate” means the effective tax rate (as determined under section 25) for Z4 and any other entities of the JV group located in the same jurisdiction as Z4.