Singapore legislation
Regulation 91
Regulation 91
Deferred tax asset or liability not to be taken into account in certain circumstances
Subregulation 1
Despite regulation 89, a deferred tax asset reflected or disclosed in the financial accounts of a constituent entity (X) of an MNE group must not be taken into account in determining the adjusted covered taxes of the constituent entity if the deferred tax asset —
arises as a result of a transaction entered in the period between 1 December 2021 and the last day of a financial year that is before the commencement of X’s transition year, and in respect of an item that would not be taken into account in computing X’s GloBE income or loss in a financial year (FY0) in that period, had X been required to determine its GloBE income or loss for FY0 under paragraph 6 of the First Schedule to the Act;
arises because of the occurrence of either of the following in the period between 1 December 2021 and the last day of a financial year that is before the commencement of X’s transition year:
the making available of a tax credit, or other tax relief, pursuant to a governmental arrangement concluded or amended after 30 November 2021, and which does not arise independently of such governmental arrangement;
the making (or modifying) of an election or of another choice by X where the effect of the election or choice is to change the taxable income attributable to a transaction retrospectively; or
is attributable to a loss occurring before the fifth financial year before the financial year in which a corporate income tax came into force in the jurisdiction in which X is located, where the jurisdiction did not have a corporate income tax before 1 December 2021 and where one is introduced on or after that date.
Subregulation 2
Despite regulation 89, a deferred tax asset or a deferred tax liability reflected or disclosed in the financial accounts of a constituent entity (X) of an MNE group must not be taken into account in determining X’s adjusted covered taxes if the deferred tax asset or deferred tax liability arises —
in the period between 1 December 2021 and the last day of a financial year that is before the commencement of X’s transition year;
because of a difference between the value of an asset or liability upon which X based its computation of its corporate income tax, and the value of the asset or liability as recorded in its financial accounts; and
in circumstances where a corporate income tax came into force in the jurisdiction in which X is located, where the jurisdiction did not have a corporate income tax before 1 December 2021 and where one is introduced on or after that date.
Subregulation 3
Despite paragraphs (1) and (2), where —
any deferred tax asset arose as described in paragraph (1)(b) or (2), where the event mentioned in paragraph (1)(b) or the corporate income tax mentioned in paragraph (2) that gave rise to it occurred or came into force on or before 18 November 2024; and
the deferred tax asset is then reversed for a financial year in an applicable grace period,the amount of any deferred tax expense attributable to such reversal may be included in X’s adjusted covered taxes for that financial year for the purposes of regulation 89, but only to the extent that such amount is consistent with the following (as applicable):
a law in the jurisdiction in which X is located that is in force on or before 18 November 2024;
the accounting method or practice used by X with respect to the deferred tax asset on that date;
the terms of the governmental arrangement mentioned in paragraph (1)(b)(i) on or before that date;
the effect of an election or choice mentioned in paragraph (1)(b)(ii) made (or modified) by X on or before that date.
Subregulation 4
The total amount of deferred tax expenses for all deferred tax assets that may be included in X’s adjusted covered taxes for that financial year under paragraph (3) must not exceed X’s grace period amount.
Subregulation 5
In this regulation —
Definition
“applicable grace period” means —
in relation to a deferred tax asset that arises as described in paragraph (1)(b)(i) or (ii) — all financial years beginning on or after 1 January 2024 and before 1 January 2026 but not including a financial year that ends after 30 June 2027; and
in relation to a deferred tax asset that arises as described in paragraph (2) — all financial years beginning on or after 1 January 2025 and before 1 January 2027 but not including a financial year that ends after 30 June 2028;
Definition
“governmental arrangement” means any agreement, ruling, decree, grant or similar arrangement with a central government or an agency whose operations are under that government’s effective control, or a state or local government;
Definition
“grace period amount”, in relation to X, means an amount that is equal to the sum of 20% of the value of each deferred tax asset that arose as described in paragraph (1)(b) or (2) where the event mentioned in paragraph (1)(b) or the corporate income tax mentioned in paragraph (2) that gave rise to it occurred or came into force on or before 18 November 2024 —
as first reflected or disclosed in X’s financial accounts; and
taken into account at the lower of the minimum rate and the applicable domestic tax rate,less any deferred tax expense that had been included in X’s adjusted covered taxes under paragraph (3), or not excluded in computing its simplified income tax expense under paragraph (c) of the definition of that term in regulation 66, for a previous financial year.