Singapore legislation
Regulation 44A
Regulation 44A
Blended CFC allocation key
Subregulation 1
In regulation 44, “blended CFC allocation key”, in relation to a constituent entity (X) for a controlled foreign company (Y) of X, means the amount of Y’s income in the jurisdiction where it is located that is attributable to X under the blended CFC regime in question, multiplied by the difference between A and B, where —
A is the applicable rate for the blended CFC regime; and
B is —
in a case where Y is a GloBE entity — the effective tax rate for those GloBE entities (collectively called Y1) that are located in the same jurisdiction as Y and that belong to the same class of GloBE entities in paragraph (8)(a) to (g) as Y, as determined by the operation of any of the laws mentioned in paragraph (2);
in a case where Y is not a GloBE entity, and there is one or more GloBE entities (each called Y2) that are located in the same jurisdiction as Y — the effective tax rate (as determined by the operation of any of the laws mentioned in paragraph (2)) for the Y2 or Y2s belonging to the class of GloBE entities in paragraph (8)(a) to (g) with the highest total amount of income attributable to X under the blended CFC regime (each called a relevant Y2); or
in any other case — the effective tax rate for all entities located in the same jurisdiction as Y —
in which X holds an ownership interest; and
that are subject to taxation under the blended CFC regime,based on their total income and taxes for the financial year concerned as reflected in their financial statements.
Subregulation 2
The laws mentioned in paragraph (1)(b)(i) and (ii) are —
section 17 (or that section as applied by section 22, 23 or 25) or section 24, whichever is applicable, with the modifications in paragraph (3); and
any law equivalent to the applicable provision in sub-paragraph (a), with the modifications in paragraph (3).
Subregulation 3
The modifications mentioned in paragraph (2) are —
any tax arising under the blended CFC regime is disregarded; and
where the blended CFC regime provides credit for any qualified domestic minimum top-up tax payable in Y’s jurisdiction on the same basis as covered taxes payable in that jurisdiction, any qualified domestic minimum top-up tax payable in that jurisdiction is included in the adjusted covered taxes for those constituent entities.
Subregulation 4
For the purpose of paragraph (1), where B is equal to or greater than 15% or A, then the blended CFC allocation key is nil.
Subregulation 5
For the purpose of paragraph (1)(b)(i) and (ii), if an election is made to apply for the financial year in question the Transitional CbCR Safe Harbour under regulation 69 or its equivalent under the law of any other jurisdiction to Y (in the case of paragraph (1)(b)(i)) or any relevant Y2 (in the case of paragraph (1)(b)(ii)), the reference to the effective tax rate determined in accordance with paragraph (1)(b)(i) or (ii) is to the simplified effective tax rate determined in accordance with regulation 72(2).
Subregulation 6
For the purpose of paragraph (1)(b)(i) or (ii), if an election is made to apply for the financial year in question the QDMTT Safe Harbour under regulation 78 or its equivalent under the law of any other jurisdiction to Y (in the case of paragraph (1)(b)(i)) or any relevant Y2 (in the case of paragraph (1)(b)(ii)), the reference to the effective tax rate determined in accordance with paragraph (1)(b)(i) or (ii) is to an amount determined by the formula where —
D is the sum of the adjusted covered taxes used to determine the effective tax rate for Y1 (in the case of paragraph (1)(b)(i)) or the relevant Y2 or Y2s (in the case of paragraph (1)(b)(ii)) for the purposes of determining the amount of qualified domestic minimum top-up tax imposed by the law of that jurisdiction;
E is the amount of qualified domestic minimum top-up tax payable in that jurisdiction for that financial year that could be included in the adjusted covered taxes for Y1 (in the case of paragraph (1)(b)(i)) or the relevant Y2 or Y2s (in the case of paragraph (1)(b)(ii)) under paragraph (3)(b); and
F is the sum of the GloBE income or loss for that financial year of Y1 (in the case of paragraph (1)(b)(i)) or the relevant Y2 or Y2s (in the case of paragraph (1)(b)(ii)) for the purposes of determining the amount of qualified domestic minimum top-up tax imposed by the law of that jurisdiction.
Subregulation 7
For the purpose of paragraph (1)(b)(i) or (ii), and subject to paragraphs (5) and (6), if an effective tax rate need not be determined for Y (in the case of paragraph (1)(b)(i)) or all relevant Y2s (in the case of paragraph (1)(b)(ii)) under any of the laws mentioned in paragraph (2), the reference to the effective tax rate determined in accordance with paragraph (1)(b)(i) or (ii) is to the simplified effective tax rate determined in accordance with regulation 72(2), and for this purpose the reference to the MNE group’s qualifying country-by-country report in regulation 72(2)(b) is to its qualified financial statements as defined in regulation 68.
Subregulation 8
In paragraph (1)(b)(i) and (ii), GloBE entities are classified as follows:
constituent entities other than special entities;
stateless entities;
minority-owned constituent entities (not being investment entities or insurance investment entities);
members of a minority-owned subgroup (not being investment entities or insurance investment entities);
investment entities and insurance investment entities;
standalone JVs;
entities of a JV group.
Subregulation 9
In this regulation —
Definition
“applicable rate”, “blended CFC regime” and “controlled foreign company” have the meanings given by regulation 44(7);
Definition
“GloBE entity” means a constituent entity of the same MNE group as X or a joint venture or JV subsidiary that is connected to the same MNE group as X.