Singapore legislation
Regulation 59
Regulation 59
Constituent entity joining or leaving MNE group
Subregulation 1
Where, in a financial year, an entity becomes a constituent entity of an MNE group or leaves an MNE group, then —
subject to sub‑paragraph (c), the entity is to be treated as a constituent entity of that MNE group for the whole of that financial year if any portion of its assets, liabilities, income, expenses or cash flows are included on a line‑by‑line basis in the consolidated financial statements of the ultimate parent entity of that MNE group for that financial year;
for that financial year —
its FANIL;
its adjusted covered taxes; and
its eligible payroll costs (as defined in section 18(4)),are regarded as those of a constituent entity of that MNE group to the extent that such amounts are taken into account in the consolidated financial statements of the ultimate parent entity of that MNE group; and
for that financial year, its tangible asset carve-out amount (as defined in section 18(3)) as a constituent entity of that MNE group is the proportion of that amount for the full financial year that corresponds to the proportion of the financial year when it was a constituent entity of that MNE group.
Subregulation 2
Any purchase accounting consolidation adjustments arising from the transfer of the ownership interests resulting in an entity becoming a constituent entity of an MNE group must be disregarded in determining the FANIL, qualifying current tax expense and qualifying deferred tax expense of that entity as a constituent entity of that MNE group in the financial year in which the transfer occurs, and in subsequent financial years.
Subregulation 3
Paragraphs (4) and (5) apply where an entity that becomes a constituent entity of an MNE group (MNE group A) as a result of a transfer of direct or indirect ownership interests in it, was a constituent entity of another MNE group immediately before the transfer (MNE group B).
Subregulation 4
The amount of any deferred tax asset or liability (not including any special loss deferred tax asset under regulation 47) of the entity that existed immediately before the transfer to be taken into account in relation to that entity as a constituent entity of MNE group A, is the amount that would be taken into account if MNE group A had a controlling interest in the entity at the time the deferred tax asset or liability arose.
Subregulation 5
Where a deferred tax liability of the entity was included in the qualifying deferred tax expense of that entity as a constituent entity of MNE group B —
that deferred tax liability is treated as reversed for that entity as a constituent entity of MNE group B;
the deferred tax liability is treated as arising in the financial year in which the transfer occurs for the purpose of determining the qualifying deferred tax expense of that entity as a constituent entity of MNE group A; and
if the deferred tax liability is recaptured under regulation 46 in a subsequent financial year, any resulting reduction in the qualifying current tax expense of that entity as a constituent entity of MNE group A is only to have effect in the financial year in which the deferred tax liability is recaptured.