Singapore legislation
Regulation 46
Regulation 46
Recaptured deferred tax liabilities
Subregulation 1
A constituent entity of an MNE group has a recaptured deferred tax liability if it has a deferred tax liability, other than an excluded liability, taken into account in its qualifying deferred tax expense for a financial year (called the initial year) that is not reversed by the last day of the fifth financial year after the initial year.
Subregulation 2
Where a constituent entity of an MNE group has a recaptured deferred tax liability —
the amount included in its qualifying deferred tax expense for the initial year in relation to that recaptured deferred tax liability must be excluded for that financial year; and
the following must be recalculated for the initial year:
the effective tax rate (as determined under section 17, including that section as applied by section 22, 23 or 25, or section 24, as the case may be) for the constituent entity and the other constituent entities of the MNE group located in the same jurisdiction;
the top-up amounts that those constituent entities would have,and section 21(4) (or that section as applied by section 22, 23, 24 or 25, as the case may be) applies accordingly.
Subregulation 3
In paragraph (1), “excluded liability” means a tax expense attributable to changes in deferred tax liabilities in respect of —
cost recovery allowances on tangible assets;
the cost of a licence or similar arrangement from the government for the use of immovable property or exploitation of natural resources that entails significant investment in tangible assets;
research and development expenses;
de-commissioning and remediation expenses;
fair value accounting on unrealised net gains;
foreign currency exchange net gains;
insurance reserves and insurance policy deferred acquisition costs;
gains from the sale of tangible property located in the same jurisdiction as the constituent entity that are reinvested in tangible property located in the same jurisdiction; or
additional amounts accrued as a result of accounting principle changes with respect to anything falling within sub‑paragraphs (a) to (h).
Subregulation 4
The guidance in Chapter 1 of the June 2024 Administrative Guidance applies for the purpose of determining whether a constituent entity of an MNE group has a deferred tax liability (other than an excluded liability) taken into account in its qualifying deferred tax expense for the initial year that is not reversed by the last day of the fifth financial year after the initial year, and that guidance is to apply with the necessary modifications for that purpose (for example, a reference to an Unclaimed Accrual Five-Year Election is to an election mentioned in regulation 46A(1)(b)).