Singapore legislation
Regulation 76
Regulation 76
Further adjustments for certain arrangements
Subregulation 1
This regulation sets out further adjustments that must be made to the information in regulation 74(1) with respect to any of the following arrangements entered into after 15 December 2022:
a deduction/non-inclusion arrangement;
a duplicate loss arrangement;
a duplicate tax recognition arrangement.
Subregulation 2
Any expense or loss arising as a result of a deduction/non‑inclusion arrangement or duplicate loss arrangement entered into after 15 December 2022 must be excluded from the profit or loss before income tax.
Subregulation 3
However, where, in the case of a duplicate loss arrangement arising under paragraph (9)(a), the constituent entities that include in their financial statements the expense or loss resulting from the arrangement are located in the same jurisdiction, the adjustment described in paragraph (2) need not be made to the profit or loss before income tax of one of those constituent entities.
Subregulation 4
Any income tax expense arising as a result of a duplicate tax recognition arrangement entered into after 15 December 2022 must be excluded from the simplified income tax expense.
Subregulation 5
In this regulation, an arrangement is considered as having been entered into after 15 December 2022 if, after that date —
the arrangement is amended or transferred to another party;
the performance of any right or obligation under the arrangement differs from the performance thereof before that date (including where payments are reduced or ceased with the effect of increasing the balance of a liability); or
there is a change in the accounting treatment with respect to the arrangement.
Subregulation 6
In this regulation, a “deduction/non-inclusion arrangement” is an arrangement under which one constituent entity (A) directly or indirectly provides credit or otherwise makes an investment in another constituent entity that results in an expense or loss in the financial statements of any constituent entity (B) (which may or may not be the same entity as the second-mentioned entity) to the extent that —
there is no commensurate increase in the revenue or gain in the financial statements of A; or
A is not reasonably expected over the life of the arrangement to have a commensurate increase in its taxable income.
Subregulation 7
However, an arrangement is not a “deduction/non‑inclusion arrangement” to the extent that the relevant expense or loss is solely with respect to any additional tier one capital.
Subregulation 8
In paragraph (6)(b), A is not considered to have a commensurate increase in its taxable income to the extent that —
the amount included in taxable income is offset by a tax attribute (such as a loss carry forward or an unused interest carry forward) with respect to which a valuation adjustment or accounting recognition adjustment has been made or would have been made if the adjustment determination were made without regard to any constituent entity’s ability to use the tax attribute with respect to a deduction/non‑inclusion arrangement, a duplicate loss arrangement, or a duplicate tax recognition arrangement entered into after 15 December 2022; or
the payment that gives rise to the expense or loss also gives rises to a taxable deduction or loss of any constituent entity located in the same jurisdiction as B without being included as an expense or loss in determining the profit or loss before income tax for that jurisdiction (including as a result of being an expense or loss in the financial statements of a flow‑through entity owned by a constituent entity located in the same jurisdiction as B).
Subregulation 9
In this regulation, a “duplicate loss arrangement” is an arrangement that results in an expense or loss being included in the financial statements of a constituent entity (A) to the extent that —
the expense or loss is also included as an expense or loss in the financial statements of another constituent entity (B1); or
the arrangement also gives rise to a duplicate amount that is deductible for the purpose of determining the taxable income of another constituent entity (B2) under the law of another jurisdiction.
Subregulation 10
However —
an arrangement is not a “duplicate loss arrangement” under paragraph (9)(a) to the extent that the amount of the relevant expense is offset against revenue which is included in the financial statements of both A and B1; and
an arrangement is not a “duplicate loss arrangement” under paragraph (9)(b) to the extent that the amount of the relevant expense is offset against revenue or income which is included in both —
the financial statements of A; and
the taxable income of B2.
Subregulation 11
In this regulation, a “duplicate tax recognition arrangement” is an arrangement that results in more than one constituent entity of the MNE group including part or all of the same income tax expense in its —
adjusted covered taxes; or
simplified effective tax rate as described in regulation 72(2) for the purposes of meeting the simplified effective tax rate test,unless such arrangement also results in the income on which the tax is payable being included in the relevant financial statements of each such constituent entity.
Subregulation 12
However, an arrangement is not a “duplicate tax recognition arrangement” if it arises solely because the simplified effective tax rate described in paragraph (11)(b) of a constituent entity (A) does not require adjustments for income tax expenses which would be allocated to another constituent entity in determining A’s adjusted covered taxes.