Multinational Enterprise (Minimum Tax) Regulations 2024

1Citation and commencement

2General definitions

2(1)

Defines terms used in the Regulations.

• "first in-scope year" for an entity X: the first financial year in which any one of four things happens — X falls under a foreign qualified IIR or qualified UTPR, a chargeable entity becomes liable for MTT for X (or would be if X were a relevant entity), X falls under a foreign qualified domestic minimum top-up tax, or (if X is in Singapore or is a section 29(b) entity) the group must register under Part 4 of the Act. Take the earliest of the four. If X uses the Transitional CbCR Safe Harbour, the first in-scope year is instead the first year X loses that eligibility or no election is made for it.
• "June 2024 Administrative Guidance" means the OECD document published on 17 June 2024.
• "non-marketable transferable tax credit": a credit that is not a qualified refundable tax credit and is not marketable. For an originator it must also be transferable to another person.
• "originator": the entity the credit was first granted to. "purchaser": the entity that buys the credit.
• "other comprehensive income": income and expense items not shown in the profit and loss account under the accounting standard used for the parent's consolidated statements.
• "qualified refundable tax credit": a credit payable in cash within 4 years of the entity meeting the conditions. It excludes qualified imputation tax and disqualified refundable imputation tax.

2(2)

An entity is a hybrid entity for income, expenditure, profit or loss attributable to an ownership interest if it is not a flow-through entity but is fiscally transparent under the owner's jurisdiction.

2(3)

A credit is a transferable tax credit if the law of the granting jurisdiction lets the originator transfer it to an unrelated party in the year of grant or within 15 months after that year. For a purchaser, the credit must be transferable to an unrelated party in the same year it was bought, under restrictions no stricter than those on the originator.

2(4)

A transferable credit is a marketable transferable tax credit if the price is at least 80% of its net present value. For an originator this applies where the credit is transferred to an unrelated party within 15 months of the end of the grant year. If it is not transferred, or is transferred to a related party, the test is whether credits of the same type typically trade between unrelated parties at 80% or more of net present value in that period. For a purchaser, the credit must be bought from an unrelated party at 80% or more of net present value.

2(5)

Net present value uses the return on government debt of the granting jurisdiction. The debt must have a maturity similar to the credit's use period, capped at 5 years, and be issued in the year of transfer (or the year of grant if there is no transfer).

2(6)

The credit amount is its face value or the remaining creditable amount. The cash flow projection uses the maximum amount usable each year under the credit's legal design.

2(7)

Two parties are related if one owns 50% or more of the other (ownership interests and voting rights), if a third party owns 50% or more of both, or if one controls the other, or if others control both. Otherwise they are unrelated.

2(8)

A reference to a section means a section of the Act.

3Which Parts apply to section 29 top-up amounts

4Adjustments to consolidated group revenue

4(1)

For section 8(1), start with the revenue in the parent's consolidated financial statements. Then make four adjustments:

• (a)add revenue of group entities from ordinary activities if not already in
• (b)add back cost of sales and other operating expenses already deducted
• (c)add net investment gains shown in the profit and loss statement if not already in
• (d)add income or gains shown as extraordinary or non-recurring if not already in

4(2)

"Net investment gains" means investment gains less investment losses, but not below nil, where gains and losses are shown separately.

4AGroup revenue after a merger of 2 or more groups

4A(1)

This regulation applies when all or substantially all entities of two or more groups become one MNE group (the merged group).

4A(2)

Defines first financial year (the merged group's year containing the merger date), pre-merger FY (each of the four 12-month periods before that year, ending in the same calendar month), and merger FY (the period from the day after the first pre-merger FY to the end of the first financial year). An example follows.

4A(3)

The merger FY counts as a financial year of the merged group.

4A(4)

For years before the merger FY: each pre-merger FY counts as a financial year, and revenue is the sum of each constituent group's consolidated group revenue for that period. It does not matter if a constituent group did not exist for the whole period.

4A(5)

For the merger FY: add each constituent group's consolidated group revenue for its financial year ending in the merger FY, plus the merged group's consolidated group revenue for its first financial year. A worked example follows.

4A(6)

If a constituent group's year ends in a different calendar month, use its consolidated group revenue for the financial year that ends inside the pre-merger FY.

4BGroup revenue after a merger involving entities that belong to no group

4B(1)

This applies when a merged group is formed either (a) from two or more entities that belong to no group, or (b) from one or more such entities plus the entities of one or more groups.

4B(2)

Uses the same definitions of first financial year, merger FY and pre-merger FY as regulation 4A.

4B(3)

The merger FY counts as a financial year of the merged group.

4B(4)

For years before the merger FY, each pre-merger FY counts as a financial year of the merged group. Revenue is:

• for case (a), the sum of all the entities' revenue from their own financial statements
• for case (b), the sum of those entities' revenue plus each constituent group's consolidated group revenue

Existence for the whole period is not required.

4B(5)

For the merger FY, add the entities' revenue for their financial years ending in the merger FY, plus (in case (b)) each constituent group's consolidated group revenue for its year ending in the merger FY, plus the merged group's consolidated group revenue for its first financial year.

4B(6)

If an entity's or a constituent group's year ends in a different calendar month, use the figures for its financial year that ends inside the pre-merger FY. A worked example follows.

4B(7)

"Merger" here means an arrangement described in paragraph (1)(a) or (b).

4CSection 8(1) after a demerger

4C(1)

This applies to an MNE group that results from a demerger (the demerged group).

4C(2)

Defines demerger (entities of a relevant MNE group split into two or more groups so they no longer appear in the same parent's consolidated statements), FY1 to FY4 (the first to fourth financial years after the demerger date), and relevant MNE group (a group the Act applies to in the demerger year, or one a qualified IIR applies to for a year starting before 1 January 2025).

4C(3)

The Act applies to the demerged group as follows. For FY1: if FY1 revenue meets the section 8(2) threshold. For FY2: if both FY1 and FY2 meet it. For FY3: if at least 2 of FY1, FY2 and FY3 exceed it. For FY4: if at least 2 of FY1 to FY4 exceed it.

5Converting an amount into the presentation currency

5(1)

Applies where an amount used to work out a relevant entity's GloBE income or loss, or top-up amount, is not in the presentation currency and must be converted under section 9(1). X can be a relevant entity, or a standalone JV or JV group entity treated as a relevant entity under section 25.

5(2)

It also applies to such an amount that goes into a GloBE information return filed under section 40.

5(3)

Convert using the rules in the applicable financial accounting standards, including any hyperinflation guidance.

5(4)

Paragraph (3) applies even if those standards do not require the conversion.

5(5)

"Applicable financial accounting standards" means:

• (a)the standard used for the parent's consolidated statements, where X's FANIL comes from paragraph 6(3)(a) of the First Schedule
• (b)the acceptable or authorised standard used to find that net income or loss, where FANIL comes from paragraph 6(3)(b)

6Converting a functional-currency amount for DTT

7Converting an amount into Singapore dollars

7(1)

Applies where top-up tax in a presentation currency other than Singapore dollars must be converted into Singapore dollars under section 9(9), to find the MTT or DTT payable.

7(2)

Use the average rate of exchange published by the Monetary Authority of Singapore, calculated from the month-end rates for that financial year. If MAS publishes no such average, use the rate the Comptroller determines.

8Converting into the presentation currency for a euro comparison

8(1)

Applies where an amount for an entity Y is not in the presentation currency and must first be converted into it under section 9(10)(a), to compare with a euro figure in the Act.

8(2)

Convert under the applicable financial accounting standards, including hyperinflation guidance.

8(3)

This applies even if those standards do not require the conversion.

8(4)

"Applicable financial accounting standards" has the meaning in regulation 5(5), reading Y for X.

9Converting the presentation currency into euros for a euro comparison

9(1)

Applies where an amount in a presentation currency other than euros must be converted into euros under section 9(10)(b).

9(2)

Use the average rate of exchange for December of the calendar year immediately before the financial year the consolidated statements cover.

9(3)

That average rate is, in order:

• (a)the average of daily European Central Bank rates for that month
• (b)if none, the average of daily MAS rates
• (c)if neither, the average of daily rates from the institution that manages the presentation currency

10Purpose and application of Part 4

10(1)

This Part sets out the changes that must or may be made to a constituent entity's FANIL, to find its GloBE income or loss for a financial year.

10(2)

For a standalone JV or a JV group entity, read the Part with these changes:

• "MNE group" means the standalone JV or JV group
• "filing entity of an MNE group" means the filing entity of the MNE group the JV is connected to
• "ultimate parent entity" means the standalone JV or the joint venture
• "constituent entity" means the standalone JV or the entity

Other changes in the regulations also apply.

11FANIL must be stated before tax

12FANIL must not show a share acquisition adjustment

12(1)

Adjust FANIL so it does not reflect any share acquisition adjustment.

12(2)

A "share acquisition adjustment" is a purchase accounting adjustment in the parent's consolidated statements that arises because an existing constituent entity acquired ownership interests in another entity, which then became a constituent entity.

12(3)

The regulation does not apply to an adjustment from an acquisition before 1 December 2021 if the group's records cannot identify the adjustment with reasonable accuracy.

13Excluded dividends are taken out

13(1)

Adjust FANIL to remove excluded dividends received or accrued, subject to (2) and (3).

13(2)

Do not remove:

• a dividend or distribution from another constituent entity of the same group that is treated as an expense in that entity's FANIL
• a dividend on a debt interest
• a distribution on additional tier one capital

13(3)

The filing entity may elect, in a GloBE information return filed in Singapore or elsewhere, that dividends from portfolio shareholdings are not treated as excluded dividends.

13(4)

That election cannot be revoked for the year it is made or the next 4 financial years. A revocation inside that period has no effect.

13(5)

If the election is revoked for a year, no new election can be made for that entity for that year or the next 4 financial years. Such an election has no effect.

13(6)

A "debt interest" is an interest that is economically a debt obligation and is not an ownership interest.

14Excluded equity gain or loss

14(1)

Adjust FANIL for excluded equity gain or loss in three cases:

• (a)fair value change or impairment of a direct ownership interest, other than a portfolio shareholding — remove the gain, add back the loss
• (b)profit or loss on a direct ownership interest under the equity method — remove the profit, add back the loss
• (c)gain or loss on disposal of a direct ownership interest, other than a portfolio shareholding — remove the gain, add back the loss

Cases (a) and (c) are treated as if they related to an entity described in paragraph (2).

14(2)

That entity is one in which the group members together hold direct ownership interests giving 10% or more of profits, capital, reserves and voting rights at the relevant time.

14(3)

The "relevant time" is the end of the financial year the gain, profit or loss arose for (a) and (b), and the moment immediately before disposal for (c).

15Included revaluation method gain or loss

15(1)

Add any gain and subtract any loss for an included revaluation method gain or loss for the year.

15(2)

An "included revaluation method gain or loss" is a pre-tax gain or loss from an accounting method that periodically restates property, plant and equipment to fair value, records the change in other comprehensive income, and never recycles it through profit and loss. "Property, plant and equipment" means a tangible asset held for producing or supplying goods or services, for rental, or for administration, and expected to last more than one financial year.

16Asymmetric foreign exchange gains or losses

16(1)

Applies where the entity's accounting currency and tax currency differ.

16(2)

Where a gain or loss comes from movement between the accounting currency and the tax currency, and it appears differently in taxable income and in FANIL, adjust FANIL to match the taxable income treatment.

16(3)

Where a gain or loss comes from movement between the accounting currency and a third currency, appears in FANIL, and appears differently in taxable income, remove it from FANIL.

16(4)

Where a gain or loss comes from movement between the tax currency and a third currency and appears differently in FANIL, adjust FANIL so the gain or loss is fully reflected there. This applies whether or not it appears in taxable income.

16(5)

Defines accounting currency (the functional currency of the financial statements), tax currency (the currency used to determine profits for covered taxes where the entity is located), taxable income (income subject to covered taxes) and third currency (any other currency).

17Illegal payments, fines and penalties

17(1)

Remove from FANIL expenses for illegal payments, and expenses for fines or penalties of EUR 50,000 or more.

17(2)

A payment is illegal if making it is, or forms part of conduct that is, an offence where the constituent entity is located or where the ultimate parent entity is located.

17(3)

Add together fines or penalties that accrue for the same conduct or for continuing conduct.

18Accounting policy changes and prior period errors

19Accrued pension expense

19(1)

Applies in a year where the entity contributes to a pension fund, receives an amount from it, or has any pension fund income or expense in FANIL.

19(2)

Deduct A + B − C from FANIL. A is the accrued pension income (positive) or expense (negative) in FANIL. B is contributions made to the fund in the year. C is amounts received from the fund in the year.

20Treatment of tax credits

20(1)

Adjust FANIL so that:

• (a)qualified refundable tax credits count as income, not as negative tax expense
• (b)marketable transferable tax credits count as income or loss under paragraphs (2), (3) or (4), not as negative tax expense
• (c)other tax credits count as a negative tax expense in adjusted covered taxes under paragraph 1 of the First Schedule, and are taken out of FANIL so far as the consolidated statements included them as income

Point (c) is subject to paragraph (5).

20(2)

Timing of income for (a) and (b): if the entity is the originator, the credit relates to acquiring or building assets, and the entity's accounting policy reduces asset carrying value or recognises deferred income, follow that policy. Otherwise treat the face value as income in the year the entitlement accrues.

20(3)

Originator of a marketable transferable credit:

• (a)if transferred in the grant year or within 15 months after it, treat the consideration as income of the grant year
• (b)if not transferred in that period, treat the value as income when it accrues under the entity's accounting policy
• (c)if transferred after that period for less than the remaining value, treat the shortfall as a loss in the transfer year
• (d)if the credit expires, treat the unused value as a loss, or as an increase in asset carrying value where paragraph (2)(a) applies, in the expiry year

20(4)

Purchaser of a marketable transferable credit:

• (a)when part of the credit is used, income for that year is (A ÷ B) × (B − C), where A is the amount used, B is the full value, and C is the price paid
• (b)when the credit is transferred, income or loss is (D + E) − (F + G), where D is the consideration received, E is the amount used in that year and all earlier years, F is the price paid, and G is the total already counted as income under (a)
• (c)if the credit expires, the loss is (F + G) − E

20(5)

A purchaser of a non-marketable transferable tax credit that makes a net loss on transferring it, computed by the formula in regulation 41(2)(b), records that loss in the transfer year.

20(6)

A purchaser of a qualified refundable tax credit that makes a net loss under the formula in paragraph (4)(c) on expiry records that loss in the expiry year.

21Arm's length requirement

21(1)

Applies where a constituent entity transacts with a group entity in a different jurisdiction and the transaction is either not on arm's length conditions or not recorded at the same amount by both entities.

21(2)

It also applies to a sale or transfer of an asset to a group entity in the same jurisdiction, where the seller's FANIL includes a loss and the transaction is not on arm's length conditions.

21(3)

Adjust FANIL so both parties record the same amount and so the transaction is treated as if made on arm's length conditions.

21(4)

No adjustment is made under (3) if the tax authority where entity A is located makes a transfer pricing adjustment for A but no matching adjustment is made for B where B is located.

21(5)

For Part 3 of the Act, if the Comptroller disagrees with how an entity applied paragraph (3), the Comptroller may adjust that entity's FANIL to an arm's length outcome.

21(6)

A "relevant constituent entity" for a year is one in a jurisdiction with a nominal income tax rate below 15% for that year, and whose relevant effective tax rate for either of the previous 2 financial years was below 15%. Which effective tax rate applies depends on the entity type: section 17 for ordinary constituent entities, section 22 for stateless entities, section 23 for minority-owned constituent entities, and section 24 for investment entities or insurance investment entities.

21(7)

"Arm's length conditions" are the conditions that would apply between the parties if they were not in the same MNE group and dealt independently in comparable circumstances.

21(8)

For a standalone JV or JV group entity, the test in (6) uses the effective tax rate determined under section 25 for either of the previous 2 financial years.

22Adjustments for insurers

22(1)

A life insurer removes from FANIL amounts charged to policyholders for taxes the insurer pays on amounts accruing or paid to those policyholders. This does not apply if the insurer already treats those taxes as an expense in FANIL, other than as a regulation 11(f) tax expense.

22(2)

A life insurer includes returns to policyholders that match increases or decreases in its policyholder liability shown in FANIL, if not already included.

22(3)

An insurer removes expense from a change in insurance reserves where the change is economically matched by excluded dividends, net of investment management fees paid out of them, from a security held for a policyholder.

22(4)

An insurer removes expense from a change in insurance reserves where the change is economically matched by an excluded equity gain or loss from a security held for a policyholder.

23Intra-group financing arrangement expenses

23(1)

Where an intra-group financing arrangement can reasonably be expected, over its life, to raise a low tax constituent entity's expenses without a matching rise in a high tax constituent entity's taxable income, remove those expenses from the low tax entity's FANIL.

23(2)

Paragraph (1) does not apply if regulation 24 requires the low tax entity to include those expenses.

23(3)

Defines high tax constituent entity (relevant effective tax rate of 15% or more, ignoring intra-group financing), intra-group financing arrangement (a high tax entity provides credit to or invests in a low tax entity, directly or indirectly), low tax constituent entity (rate below 15% on the same basis), and relevant effective tax rate (section 17, 22, 23 or 24, depending on the entity type).

23(4)

For a standalone JV or JV group entity, the relevant effective tax rate is the one determined under section 25.

24Additional tier one capital

24(1)

Where an entity records an equity decrease for distributions paid or payable on additional tier one capital it issued, and the same amount is not in FANIL, add that amount to FANIL as an expense.

24(2)

Where an entity records an equity increase for distributions received or receivable on additional tier one capital it holds, and the same amount is not in FANIL, add that amount to FANIL as income.

24(3)

"Additional tier one capital" is an instrument issued under banking or insurance regulatory requirements that converts to equity or is written down on a pre-set trigger event, and that has other features designed to absorb losses in a financial crisis.

25International shipping income and ancillary international shipping income

25(1)

Adjust FANIL as follows:

• (a)if either amount is below nil, remove it
• (b)if international shipping income is positive, remove it
• (c)if ancillary international shipping income is positive, remove the specified amount of it

25(2)

Paragraph (1) applies only if the strategic or commercial management of the ship producing the income is effectively carried on in the jurisdiction where the entity is located.

25(3)

International shipping income is net income or loss from international shipping activities, after direct costs and the relevant proportion of indirect costs.

25(4)

Ancillary international shipping income is calculated the same way for ancillary activities.

25(5)

The "relevant proportion" is revenue from the relevant activities divided by total revenue for the year.

25(6)

The specified amount in (1)(c) is A × (B ÷ C). A is the lower of C and the group's ancillary international shipping income cap for that jurisdiction. B is the entity's positive ancillary income, otherwise nil. C is the sum of positive ancillary income of all the group's entities in that jurisdiction.

25(7)

Defines the terms. Ancillary international shipping activities include bareboat leasing to an unrelated shipping enterprise for up to 3 years, selling tickets for the domestic leg of an international voyage run by another enterprise, leasing containers, storing containers temporarily, providing engineering, maintenance, cargo handling, catering and customer relations services to shipping enterprises, and ancillary investment activities integral to shipping operations. The ancillary international shipping income cap is 50% of the sum of international shipping income of the group's entities in that jurisdiction if positive, otherwise nil. International shipping is transport of passengers or cargo by ship, but excludes ships operated only inside one jurisdiction, and excludes towing and dredging. International shipping activities include operating international shipping, leasing a fully equipped and crewed ship or bareboat leasing to a group entity, slot-chartering, and selling a ship held for use for at least one year.

26Adjustment for a main entity

27Allocating a permanent establishment loss to the main entity

27(1)

Where a permanent establishment's adjusted FANIL is a loss, allocate that loss to the main entity so far as the loss is treated as an expense of the main entity where it is located, and is not set off against income taxed in both jurisdictions.

27(1A)

Use Chapter 3.2.2 of the June 2024 Administrative Guidance to decide how much of the loss is treated as an expense of the main entity.

27(2)

Where a loss A was allocated under (1) and the permanent establishment later has positive adjusted FANIL, allocate that FANIL to the main entity until the total allocated equals A. This can run across several financial years.

28Constituent entity owners of a flow-through entity

29Election for a company in distress

29(1)

Applies where all of these hold:

• the entity is released from a debt
• income from the release appears in its FANIL
• the release happens under insolvency or similar proceedings, or under an arrangement with an unconnected creditor where an independent expert says the entity cannot meet payments to unconnected persons in the next 12 months, or (in other cases) is granted by an unconnected creditor when liabilities exceed the fair market value of assets
• the filing entity elects in a GloBE information return that this regulation applies

29(2)

Where the insolvency or expert-opinion case applies, remove from FANIL income from the release by an unconnected creditor, and income from a release by a connected creditor if that release is part of the same arrangement.

29(3)

Where the third case applies, deduct the lowest of:

• the income recognised on the release
• the amount by which liabilities exceeded the fair market value of assets before the release
• the amount of tax attributes reduced because of the release

29(4)

"Tax attributes" means any loss, deduction, allowance, credit or similar tax-reducing attribute recognised where the entity is located.

30Election to use the realisation principle

30(1)

The filing entity may elect that all the group's constituent entities in a jurisdiction, or all those that are investment entities, use the realisation principle for gains and losses on (a) all assets and liabilities under fair value or impairment accounting, or (b) only tangible assets under such accounting.

30(2)

Where the election applies, adjust FANIL so that (a) fair value and impairment gains and losses on the covered items are removed, and (b) the carrying value used for any gain or loss is the value at the later of the start of the first year the election applies, and the time the asset was acquired or the liability incurred.

30(3)

If the election is revoked, include the "relevant amount" as income or loss in the first year the election stops applying.

30(4)

The election cannot be revoked for the year it is made or the next 4 financial years. Such a revocation has no effect.

30(5)

After a revocation, no new election can be made for entities in that jurisdiction for that year or the next 4 financial years.

30(6)

The "relevant amount" is the total of A − B for each item still held on the first day of the first year the election stops. A is the item's fair value on that day. B is its carrying value under paragraph (2)(b).

31Election to use the tax deduction for stock-based compensation

31(1)

The filing entity may elect that the group's constituent entities in a jurisdiction treat the tax-deductible amount of stock-based compensation as the expense, in place of the accounting expense.

31(2)

Where the election applies:

• (a)the tax deduction for the year replaces the accounting expense
• (b)if an option expires unexercised, the total expense recognised in earlier years under (a) becomes income

31(2A)

Where a deducted stock-based compensation expense is added to an asset's carrying value, exclude that added amount when determining GloBE income or loss from that asset.

31(3)

If accounting expenses recognised before the election exceed what would have been recognised under (2)(a), include the excess as income in the first year the election applies.

31(4)

On revocation, if compensation with a recognised expense is still unpaid on the first day of the first year the election stops, and the recognised expense exceeds what would have been recognised without the election, include the excess as income in that year.

31(5)

The election cannot be revoked for the year it is made or the next 4 financial years.

31(6)

After revocation, no new election can be made for entities in that jurisdiction for that year or the next 4 financial years.

32Election to spread gains over 5 years

32(1)

The filing entity may elect that the net gain from disposals of local tangible assets by the group's entities in jurisdiction X in year FY5 is spread over FY5 and the previous 4 years. Those 5 years are the carry-back period.

32(2)

Allocation order: (a) first to entities with a net loss on such disposals in the first year of the carry-back period, if that year is a loss year. If the gain covers all those net losses, each entity gets an amount up to its own net loss. If the gain is smaller, it is split in proportion to each entity's net loss. Sub-paragraphs (b) to (e) repeat this for the second, third, fourth and fifth years of the period. (f) Any gain still unallocated goes to entities with a net gain on such disposals in the fifth year: 20% is assigned to each year of the carry-back period, then split in proportion to those entities' net gains. (g) If no such entity has a net gain in the fifth year, the 20% for that year is split equally between the entities in that jurisdiction for that year.

32(3)

The election does not apply to gains or losses on transfers of assets inside the same MNE group.

32(4)

Adjust each entity's FANIL for each year of the carry-back period to include the gain allocated to it.

32(5)

After that adjustment, recompute for that year the effective tax rate for the group's entities in jurisdiction X (under section 17, including as applied by section 22, 23 or 25, or under section 24) and their top-up amounts. Section 21(4), or that provision as applied by sections 22 to 25, then applies.

32(6)

Defines local tangible asset (immovable property in the jurisdiction of the disposing entity), loss year (a year where at least one entity in jurisdiction X has a net loss on such disposals and total net losses exceed total net gains), net gain and net loss (both exclude intra-group transfer gains and losses, and net loss is reduced by any relevant gain already allocated under paragraph (2)).

33Election to remove intra-group transactions

33(1)

The filing entity may elect that the group's entities located in the same jurisdiction and inside a tax consolidation group apply the parent's consolidated accounting treatment, and so eliminate income, expenses, gains and losses on transactions between them.

33(2)

Adjust their FANIL for each year the election is effective.

33(3)

In the first year the election applies, adjust FANIL so the election creates no duplication and no omission of income, expenses, gains or losses.

33(4)

Make the same kind of adjustment in the first year after a revocation.

33(5)

Entities are in a "tax consolidation group" if local law lets their income, expenses, gains or losses be aggregated, surrendered, shared or transferred between them because of a connection between them.

33(6)

The election cannot be revoked for the year it is made or the next 4 financial years.

33(7)

After revocation, no new election can be made for entities in that jurisdiction for that year or the next 4 financial years.

34Election to include excluded equity gains and losses

34(1)

The filing entity may elect that the excluded equity gains or losses in paragraph (3) are put back into the FANIL of the group's entities in a jurisdiction.

34(2)

Adjust their FANIL for each year the election is effective.

34(3)

The election covers:

• (a)excluded equity gains or losses subject to covered taxes where the entity is located
• (b)fair value changes or impairments of direct ownership interests that are not subject to covered taxes, where a gain or loss on disposal of those interests would be subject to covered taxes there

34(4)

Even with the election, excluded equity gains or losses on a qualified ownership interest, as defined in regulation 42(5), must not go into FANIL as income.

34(5)

A revocation does not take effect for gains, profits or losses on direct ownership interests where a loss on those interests has already been included in GloBE income or loss and would otherwise have been excluded under regulation 14. The election keeps applying to those interests.

34(6)

The election cannot be revoked for the year it is made or the next 4 financial years.

34(7)

After revocation, no new election can be made for entities in that jurisdiction for that year or the next 4 financial years.

35Election for foreign exchange risk hedges

35(1)

The filing entity may elect that a constituent entity's FANIL excludes the exchange gains or losses in paragraph (3).

35(2)

Adjust that entity's FANIL for each year the election is effective.

35(3)

The election covers exchange gains or losses where all of these hold:

• the gain or loss belongs to an instrument meant to hedge currency risk in ownership interests held by the entity, other than a portfolio shareholding
• the gain or loss is recorded in other comprehensive income in the parent's consolidated statements
• the instrument counts as an effective net investment hedge under the accounting standard used
• the economic and accounting effect of the hedge sits with the constituent entity, whether the entity holds the instrument or the effect was transferred to it

35(4)

The election cannot be revoked for the year it is made or the next 4 financial years.

35(5)

After revocation, no new election can be made for that entity for that year or the next 4 financial years.

36Election where assets and liabilities are restated to fair value for tax

36(1)

The filing entity may elect that a constituent entity with a relevant tax adjustment in a year adjusts its FANIL under paragraph (2).

36(2)

Where the election applies:

• (a)the entity has an adjustment amount for each asset or liability subject to the relevant tax adjustment
• (b)for that year and later years, the item's value for FANIL is its fair value immediately after the triggering event

36(3)

The adjustment amount is the fair value immediately after the event minus the carrying value immediately before it. If the event produces a non-qualifying gain, as defined in regulation 61(9), reduce the result by that gain. If it produces a non-qualifying loss, increase the result by that loss, stated as a positive number.

36(4)

The entity may include the whole adjustment amount in FANIL in the year of the relevant tax adjustment, or split it into 5 equal parts across that year and the next 4 years.

36(5)

If the entity takes the 5-year route and leaves the MNE group before the end of the fourth later year, it includes the unrecognised balance in FANIL in the year it leaves.

36(6)

A "relevant tax adjustment" is a restatement of assets or liabilities to fair value that local tax law requires or permits on a triggering event. It excludes transfer pricing adjustments and the sale of trading stock in the ordinary course of trade. "Trading stock" has the meaning in section 10J(9) of the Income Tax Act 1947.

37Purpose and application of Part 5

37(1)

This Part sets out the changes that must or may be made to reach a constituent entity's adjusted covered taxes.

37(2)

For a standalone JV or a JV group entity, read "MNE group" as the standalone JV or JV group, read "filing entity" as the filing entity of the connected MNE group, and read "constituent entity" as the standalone JV or the entity. Other changes in this Part also apply.

38Amounts taken out of qualifying current tax expense

38(1)

Remove the amounts in paragraph (2) so far as they would otherwise be included.

38(2)

The amounts are:

• (a)current tax expense on income or gains left out of GloBE income or loss
• (b)current tax expense on an uncertain tax position
• (c)any reduction of current tax expense for a qualified refundable tax credit or a marketable transferable tax credit
• (d)current tax expense not expected to be paid within 3 years after the end of the financial year
• (e)current tax expense on a gain or loss from disposing of local tangible assets where a regulation 32(1) election is made
• (f)a credit or refund of covered taxes that is neither a qualified refundable nor a marketable transferable tax credit and has not already been counted
• (g)any other credit or refund for a tax credit that is neither of those two types
• (h)current tax expense for a previous financial year

38(3)

The exclusion in (2)(h) is subject to regulation 40(1) and (3).

38(4)

Refundable tax credits that accrued before the entity's transition year, as defined in regulation 88, must not reduce qualifying current tax expense in the transition year or any later year.

38(5)

"Refundable tax credit" here means a credit payable in cash to the entity after its covered tax liability is reduced or discharged, or where it has no covered tax liability.

39Amounts added to qualifying current tax expense

39(1)

Make the adjustments in paragraph (2) so far as they are not already made.

39(2)

The adjustments are:

• (a)add positive and subtract negative covered taxes that would appear in FANIL but for regulation 11 and are not in qualifying current tax expense
• (b)add covered taxes paid, and subtract covered taxes refunded, in the year for an uncertain tax position excluded in an earlier year
• (c)add positive and subtract negative covered taxes recorded in equity or other comprehensive income that relate to amounts in GloBE income or loss and are subject to covered taxes where the entity is located

39(3)

No amount of covered taxes may be counted more than once.

40Post-filing adjustments and tax rate changes

40(1)

Where an adjustment recorded this year relates to an earlier year's adjusted covered taxes, and making it in that earlier year would not have reduced the total adjusted covered taxes of the group's entities in that jurisdiction, count the adjustment in this year's adjusted covered taxes.

40(2)

Where such an adjustment would have reduced that total, recompute for the earlier year and every affected later year, up to the year of the adjustment:

• (a)the entity's adjusted covered taxes
• (b)the entity's GloBE income or loss, where the decrease comes from a reduction in it, but only so far as needed to stop the top-up amounts from falling
• (c)the effective tax rate for the group's entities in that jurisdiction
• (d)their top-up amounts

Section 21(4), or as applied by sections 22 to 25, then applies.

40(3)

If the decrease in paragraph (2) is under EUR 1 million, the filing entity may elect in a GloBE information return to count the adjustment in the year it was made instead.

40(4)

Where no such election is made and the entity carries a loss back against an earlier year's income for tax purposes, the loss is treated as creating a deferred tax asset in the loss year, and that asset is deemed used in the earlier year. Regulation 45 applies to both steps.

40(5)

Amounts counted under (1) and (3) must be adjusted under regulation 45(3) or (4) where those apply.

40(6)

Where a covered tax rate falls below the minimum rate, treat any resulting negative deferred tax expense as an adjustment made in that year that reduces the earlier year's qualifying deferred tax expense. Paragraphs (2) and (3) then apply.

40(7)

Where a covered tax rate rises, treat any resulting positive deferred tax expense as an adjustment that increases the earlier year's qualifying deferred tax expense. Make the adjustment in the year the related deferred tax liability reverses, when the deferred tax is paid. The increase is capped at A − B, where A is the deferred tax expense computed at the minimum rate and B is its original amount. Paragraph (1) then applies.

40(8)

If qualifying current tax expense is unpaid 3 years after the end of the financial year and the unpaid amount exceeds EUR 1 million, deduct it from that year's adjusted covered taxes, then recompute for that year the effective tax rate for the group's entities in that jurisdiction and their top-up amounts. Section 21(4), or as applied by sections 22 to 25, then applies.

41Non-marketable transferable tax credits

41(1)

An originator that transfers such a credit in the year treats the consideration as a negative tax expense, and treats the credit as used.

41(2)

A purchaser adjusts as follows:

• (a)multiply the amount of credit used against covered taxes by (A − B) ÷ A, where A is the full value and B is the price paid, and treat the result as a negative tax expense
• (b)if the credit is transferred in the year, treat any positive result of (C + D) − (E + F) as a negative tax expense, where C is the consideration received, D is the credit used in that and earlier years, E is the price paid, and F is the total negative tax expense already recognised under (a)
• (c)treat any other amount of the credit excluded from adjusted covered taxes as a positive tax expense

42Qualified flow-through tax benefits

42(1)

Where a regulation 34(1) election is effective, adjust adjusted covered taxes to:

• (a)treat qualified flow-through tax benefits from a qualified ownership interest as a positive tax expense, so far as excluded
• (b)treat other, non-qualified flow-through tax benefits from that interest as a negative tax expense, so far as not already counted
• (c)treat qualified refundable tax credits and any proceeds and distributions from that interest as negative tax expenses, capped so their cumulative total does not exceed the cumulative amount under (a)

42(2)

The amount of qualified flow-through tax benefits is:

• (a)under the proportional amortisation method, whether applied for accounting or by irrevocable election — the benefits received in the year, reduced (but not below nil) by any excess of total proceeds, distributions and benefits over that year's amortisation expense
• (b)in any other case — the benefits received in the year, but only so far as the cumulative proceeds, distributions and benefits do not exceed the investment in the interest

42(3)

The filing entity may elect to use the proportional amortisation method for a qualified ownership interest.

42(4)

The election must be made in the later of the year the entity acquired the interest and the entity's first in-scope year.

42(5)

Defines flow-through tax benefits (tax credits other than qualified refundable ones, plus the value of deductible losses made available to the owner), proportional amortisation method (the investment is amortised over its term in proportion to benefits received against benefits expected, and the gap between benefits received and amortisation expense is shown as tax expense), and qualified ownership interest. A qualified ownership interest requires all of:

• the flow-through entity is not a reverse hybrid for the relevant amounts
• the investment counts as equity both for tax where the investor is located and under the accounting standard where the flow-through entity operates
• the flow-through entity is not a constituent entity of the group
• the expected return would be negative without the tax benefits
• the investor has a genuine economic interest and is not protected from loss
• the benefits are available whether or not the group is subject to MTT or a qualified IIR

43Permanent establishments

43(1)

Where a permanent establishment's GloBE income or loss is allocated to the main entity under regulation 27(2), allocate the related qualifying current tax expense to that main entity too.

43(2)

The allocated amount is capped at that GloBE income or loss multiplied by the highest corporate tax rate on ordinary income where the main entity is located.

43(3)

Ignore any deferred tax asset arising under the permanent establishment's local tax law for a loss allocated to the main entity under regulation 27(1), when determining the permanent establishment's adjusted covered taxes.

44Reallocation of tax expenses

44(1)

Where an entity is taxed under a controlled foreign company (CFC) regime on a CFC's income, allocate that current or deferred tax expense to the CFC, if the CFC is a constituent entity of the same group.

44(2)

For a blended CFC regime, for a financial year starting on or before 31 December 2025 and ending on or before 30 June 2027:

• (a)split the tax expense per CFC using A ÷ B × C, where A is the blended CFC allocation key for that CFC, B is the sum of the keys for all its CFCs, and C is the total tax expense under the regime
• (b)then remove that amount from the entity's adjusted covered taxes if the CFC is not a constituent entity, or allocate it to the CFC under paragraph (1) if it is

44(3)

Deleted.

44(4)

Tax expense on a distribution received, including a deemed distribution on undistributed earnings or capital, from another constituent entity the entity directly owns, is allocated to that other entity.

44(5)

Where a constituent entity owns an interest in entity X, and X is a hybrid entity for income attributable to that interest, allocate the related tax expense to X. This includes income allocated to X from a flow-through entity under paragraph 6(9) or (12) of the First Schedule.

44(5A)

Where Y1 is a reference entity for a flow-through constituent entity Z, or Y2 holds an indirect interest in Z through Y1 and is not itself a reference entity for Z, and Z is a reverse hybrid for income attributable to Y1, allocate the tax expense of Y1 or Y2 on that income to Z.

44(6)

Where tax expense on passive income is allocated from X1 to X2 under (1), (2), (5) or (5A), cap the allocation at (15% − D) × E. D is X2's relevant effective tax rate, computed without the passive-income tax expense that would be allocated. E is the passive income. Any amount not allocated stays with X1.

44(7)

Defines the terms. Blended CFC regime: a CFC regime that aggregates CFC income and losses, ignores home-jurisdiction income except to use losses, and applies when the CFC tax rate is below a threshold under 15%. CFC tax regime: rules, other than MTT or a qualified IIR, that tax an owner currently on its share of a foreign entity's income, whether or not distributed. Passive income: dividends, interest, rent, royalties, annuities, and net gains from property producing such income, and their equivalents. Relevant effective tax rate: section 17, 22, 23 or 24 depending on X2's type.

44(8)

Tax expense that would have been allocated to a standalone JV or JV group entity Z2, had Z2 been a constituent entity, is allocated to Z2.

44(9)

For paragraph (8), the relevant effective tax rate is the section 25 rate for Z2 and other JV group entities in the same jurisdiction.

44(10)

For allocations between JV group entities Z3 and Z4, the relevant effective tax rate is the section 25 rate for Z4 and other JV group entities in the same jurisdiction.

44ABlended CFC allocation key

44A(1)

The key for constituent entity X and its CFC Y is Y's income in its jurisdiction attributable to X under the regime, multiplied by (A − B). A is the regime's applicable rate. B is:

• (i)if Y is a GloBE entity, the effective tax rate for GloBE entities in Y's jurisdiction of the same class as Y
• (ii)if Y is not a GloBE entity but GloBE entities exist in that jurisdiction, the effective tax rate for the class with the highest total income attributable to X under the regime
• (iii)otherwise, the effective tax rate for all entities in that jurisdiction that X owns an interest in and that the regime taxes, based on their financial statements

44A(2)

The laws used for B are section 17 (including as applied by section 22, 23 or 25) or section 24, and any equivalent foreign law, in each case with the changes in paragraph (3).

44A(3)

The changes are:

• ignore tax arising under the blended CFC regime
• and, where the regime credits qualified domestic minimum top-up tax on the same basis as covered taxes, include that top-up tax in adjusted covered taxes

44A(4)

If B is 15% or more, or B is at least A, the key is nil.

44A(5)

If the Transitional CbCR Safe Harbour is elected for Y or a relevant Y2, use the simplified effective tax rate under regulation 72(2) instead.

44A(6)

If the QDMTT Safe Harbour is elected for Y or a relevant Y2, use (D + E) ÷ F instead. D is the adjusted covered taxes used for the QDMTT effective tax rate. E is the qualified domestic minimum top-up tax payable that could be included under paragraph (3)(b). F is the GloBE income or loss used for QDMTT purposes.

44A(7)

Subject to (5) and (6), if no effective tax rate needs to be determined for Y or all relevant Y2s, use the simplified effective tax rate under regulation 72(2), reading the reference to the qualifying country-by-country report as a reference to qualified financial statements under regulation 68.

44A(8)

GloBE entity classes are:

• ordinary constituent entities
• stateless entities
• minority-owned constituent entities that are not investment entities
• members of a minority-owned subgroup that are not investment entities
• investment entities and insurance investment entities
• standalone JVs
• JV group entities

44A(9)

Applicable rate, blended CFC regime and controlled foreign company take their regulation 44(7) meanings. A GloBE entity is a constituent entity of X's group, or a joint venture or JV subsidiary connected to it.

44BCross-border allocation of current tax expenses under cross-crediting regimes

44B(1)

Where current tax expense of an entity in a cross-crediting jurisdiction is allocated to a group entity elsewhere under regulation 44(1), (4), (5) or (5A), or is treated as a permanent establishment's expense under paragraph 1(4) of the First Schedule, follow the cross-crediting regime methodology.

44B(2)

Where the regime allows cross-crediting only inside particular income categories, apply the methodology category by category.

44B(3)

A cross-crediting regime is one where taxes paid on income from one foreign jurisdiction generate credits usable against income from another.

44B(4)

The methodology is the cross-crediting guidance in Chapter 3.1 of the June 2024 Administrative Guidance, applied with the necessary changes.

44CCross-border allocation of deferred tax expenses

44DCross-border allocation elections

44D(1)

The filing entity may elect that this regulation applies to all the group's entities in a jurisdiction for a financial year.

44D(2)

Where the election applies, deferred tax expense that would move from entity W in that jurisdiction to entity X under regulation 44(1), (4), (5) or (5A) is removed from W and is not allocated to X.

44D(3)

Deferred tax expense of entity Y in that jurisdiction that would be treated as its permanent establishment Z's expense under paragraph 1(4) of the First Schedule is not so treated.

44D(4)

The election cannot be revoked for the year it is made or the next 4 financial years.

44D(5)

After revocation, no new election can be made for entities in that jurisdiction for that year or the next 4 financial years.

44EDivergence between GloBE and accounting values

44E(1)

Applies where the Act or these Regulations require FANIL or GloBE income or loss for an asset or liability to use a value (the GloBE carrying value) that differs from the value in the financial statements (the accounting carrying value).

44E(2)

Unless stated otherwise, for adjusted covered taxes:

• (a)update the GloBE carrying value under the accounting standard used for FANIL
• (b)determine the deferred tax asset or liability by reference to that updated GloBE carrying value, and adjust qualifying deferred tax expense to match

44E(3)

Do not update the GloBE carrying value of an asset for an impairment.

44E(4)

Paragraph (3) does not apply where the accounting carrying value after impairment is below the GloBE carrying value. In that case update the GloBE carrying value to that post-impairment accounting value.

44E(5)

Paragraph (2) applies to any divergence caused by regulation 21(3), 30(2), 31(2), 36(2) or 61(2)(a), (3) or (8).

45Adjustments to qualifying deferred tax expense

45(1)

Make these adjustments, but only after any regulation 44E adjustments:

• (a)remove expense on items left out of GloBE income or loss
• (b)remove expense reflecting a disallowed accrual or an unclaimed accrual
• (c)remove the effect of a valuation or accounting recognition adjustment on a deferred tax asset
• (d)remove expense from re-measurement on a tax rate change
• (e)remove expense reflecting the creation or use of tax credits
• (f)add any unclaimed accrual from an earlier year, excluded under (b) then, that is paid this year
• (g)subtract any amount not recognised as a deferred tax asset for a loss purely because recognition criteria were not met
• (h)include expense for a qualifying foreign tax credit under paragraph (2), but only so far as the credit offsets tax on income inside GloBE income or loss
• (i)add any recaptured deferred tax liability under regulation 46 that is paid this year
• (j)remove expense on gains or losses from disposals of local tangible assets where a regulation 32(1) election is made
• (k)subtract a special foreign tax asset for the year and add any special foreign tax asset used, in each case only so far as it offsets tax on income inside GloBE income or loss

45(2)

The qualifying foreign tax credit amount is the lower of the credit itself, and the domestic loss used against relevant foreign income multiplied by the applicable tax rate where the entity is located.

45(3)

Where a deferred tax asset for a loss that would have entered GloBE income or loss was computed at a rate below 15%, the entity may restate it at 15%. Subtract the increase from qualifying deferred tax expense for that year.

45(4)

Where deferred tax expense relates to covered taxes at a rate above 15%, restate it at 15%.

45(4A)

Use Chapter 1 of the June 2024 Administrative Guidance to decide whether an amount reflects an unclaimed accrual, with the necessary changes. For example, a reference there to an Unclaimed Accrual Five-Year Election means an election under regulation 46A(1)(b).

45(5)

Defines the terms. Disallowed accrual: a movement in deferred tax expense relating to an uncertain tax position, or to distributions from another constituent entity. Qualifying foreign tax credit: a credit for foreign income tax in a jurisdiction that requires domestic losses to be offset against relevant foreign income first, and then lets the credit be used against tax on domestic profits to that extent. Relevant foreign income: income of a CFC taxed on the entity, income of a hybrid or reverse hybrid entity in another jurisdiction the entity has an interest in, or income of a permanent establishment in another jurisdiction. Special foreign tax asset: the domestic loss used against relevant foreign income multiplied by the lower of 15% and the local applicable rate, in a jurisdiction that requires that offset, caps annual foreign tax credit use, and permits re-characterising domestic income as foreign income to allow more credit use. Unclaimed accrual: an increase in a deferred tax liability the filing entity elected under regulation 46A not to include.

45(6)

Paragraph (1)(a) to (e) does not apply to deferred tax assets or liabilities arising before the transition year.

45(7)

No item may be counted more than once.

46Recaptured deferred tax liabilities

46(1)

An entity has a recaptured deferred tax liability where a deferred tax liability, other than an excluded liability, counted in qualifying deferred tax expense for the initial year has not reversed by the last day of the fifth financial year after that year.

46(2)

Where that happens:

• (a)remove the amount from the initial year's qualifying deferred tax expense
• (b)recompute for the initial year the effective tax rate for the group's entities in that jurisdiction and their top-up amounts

Section 21(4), or as applied by sections 22 to 25, then applies.

46(3)

"Excluded liability" covers tax expense from changes in deferred tax liabilities for:

• cost recovery allowances on tangible assets
• the cost of a government licence for immovable property or natural resources that requires significant tangible investment
• research and development expenses
• decommissioning and remediation expenses
• fair value accounting on unrealised net gains
• foreign exchange net gains
• insurance reserves and deferred acquisition costs
• gains on the sale of local tangible property reinvested in local tangible property
• extra amounts accrued from accounting principle changes on any of these

46(4)

Use Chapter 1 of the June 2024 Administrative Guidance to decide whether such a liability has failed to reverse in time, with the necessary changes.

46AUnclaimed accrual elections

46A(1)

For an increase in a deferred tax liability that would appear in FANIL but for regulation 11, the filing entity may elect in a GloBE information return to leave it out of qualifying deferred tax expense, either (a) because the increase is not expected to reverse within 5 financial years, or (b) because the liability is tracked in a general ledger account or an aggregate deferred tax liability category, whether or not reversal is expected.

46A(2)

Where a paragraph (1)(b) election is made for a liability DTL1, a follow-up paragraph (1)(b) election must be made for that year and at least the next 4 years for any increase in DTL1 or another liability tracked in the same account or category. Such an election is treated as made even if it is not.

46A(3)

Paragraph (2) does not apply where the first election was itself a follow-up election.

46A(4)

If no follow-up election is made for a year FYX after the 5-year run FY5, no paragraph (1)(b) election may be made for that entity for FYX or the next 4 years. Any such election has no effect.

46A(5)

An aggregate deferred tax liability category covers two or more general ledger accounts under the same balance sheet or sub-balance sheet account, consistent with the entity's chart of accounts. A general ledger account is a single account in that chart.

47GloBE loss election

47(1)

The filing entity may elect that this regulation applies to all the group's entities in a jurisdiction.

47(2)

The election must be made for the transition year of an entity in that jurisdiction, and cannot be made for a jurisdiction with an eligible distribution tax system.

47(3)

Where the election applies:

• (a)none of those entities has any qualifying deferred tax expense for the year
• (b)if their combined GloBE income or loss is nil or negative, that amount multiplied by 15% becomes their "special loss deferred tax asset"

47(4)

Where the combined GloBE income or loss is positive and an unused special loss deferred tax asset exists from an earlier year, use part of that asset to increase the qualifying current tax expense of the entities with positive GloBE income.

47(5)

The amount used is the lower of the asset and 15% of the combined GloBE income or loss. Any balance stays available for later years.

47(6)

Split the amount used between the entities with positive GloBE income in proportion to their GloBE income or loss.

47(7)

On revocation, any unused special loss deferred tax asset is reduced to nil on the first day of the first year the revocation applies.

47(8)

If the ultimate parent entity is a flow-through entity in that jurisdiction, apply paragraphs (3) to (7) as if it were the only entity of a separate MNE group in that jurisdiction, and not part of the group there.

48Deemed distribution tax election

48(1)

Where a jurisdiction has an eligible distribution tax system, the filing entity may elect that this regulation applies to the group's entities there for a financial year.

48(2)

Where the election applies:

• (a)those entities have a deemed distribution tax amount, being the lower of the amount that would lift their effective tax rate to 15%, and the tax that would have been due locally had they distributed all their profits for the year
• (b)their combined adjusted covered taxes increase by that amount
• (c)a recapture amount equal to it is recognised for the next financial year

48(3)

Reduce the recapture amount, but not below nil, in this order:

• first by tax paid in the year on actual or deemed distributions
• then, if the entities have a combined GloBE loss, by that loss stated as a positive number multiplied by 15%
• by any unused remainder of such a loss-based amount from an earlier year

Older recapture amounts are reduced before newer ones.

48(4)

If a recapture amount remains at the end of the fourth financial year after it was first recognised, then for the year it was first recognised: deduct it from the combined adjusted covered taxes, recompute the effective tax rate, and recompute the top-up amounts. Section 21(4), or as applied by sections 22 to 25, then applies.

48(5)

Tax used to reduce a recapture amount under (3)(a) is removed from that entity's adjusted covered taxes for that year.

48(6)

Where in a year an entity leaves the group, transfers all or substantially all its assets to a non-group entity or an individual, or transfers them to a group entity in another jurisdiction, and there are earlier recapture years, then for each recapture year:

• deduct the recapture amount, after any (3)(a) reduction, from the combined adjusted covered taxes
• recompute the effective tax rate
• recompute the top-up amounts, then adjust them by the relevant ratio for each entity

Section 21(4), or as applied by sections 22 to 25, then applies.

48(7)

The relevant ratio is the leaving entity's GloBE income or loss for the year divided by the group's total GloBE income or loss for that year. A result below nil counts as nil, and a result above 1 counts as 1.

48(8)

"Eligible distribution tax system" has the meaning in paragraph 1(7) of the First Schedule to the Act.

48(9)

This regulation does not apply for Part 3 of the Act.

49Modifications for Part 3 of the Act

49(1)

For Part 3 of the Act, and despite the rest of Part 5, these tax expenses must not be allocated to a Singapore constituent entity:

• (a)a foreign main entity's tax expense on the income of its Singapore permanent establishment
• (b)tax expense arising under a CFC regime where the Singapore entity is the controlled foreign company
• (c)a foreign entity Y's tax expense on a distribution, including a deemed distribution, from Singapore entity X, other than withholding tax imposed by the Income Tax Act
• (d)foreign entity Y's tax expense on the income of Singapore entity X where X is a hybrid entity and Y is taxed on that income, other than tax recorded in Y's accounts arising under the Income Tax Act
• (e)the tax expense of Y1 or Y2 on the income of Singapore entity X where X is a reverse hybrid entity and Y1 or Y2 is taxed on that income, with the same Income Tax Act exception
• (f)the same rule where X is a section 29(b) entity

49(2)

Controlled foreign company and controlled foreign company tax regime have the same meanings as in regulation 44(7): rules other than MTT or a qualified IIR that tax an owner currently on its share of a foreign entity's income, whether or not distributed.

50Definitions for Part 6

51Application of Part 6

52Payroll costs left out of eligible payroll costs

52(1)

For section 18, eligible payroll costs exclude:

• (a)payroll costs directly attributable to international shipping income
• (b)payroll costs directly attributable to ancillary international shipping income excluded from FANIL under regulation 25(1)(a) or (c)
• (c)the paragraph (2) share of payroll costs only indirectly attributable to international shipping income
• (d)the paragraph (3) share of payroll costs only indirectly attributable to that excluded ancillary income

52(2)

The share in (1)(c) is revenue from international shipping activities divided by total revenue.

52(3)

The share in (1)(d) is A × (B ÷ C), divided by total revenue. A is revenue from ancillary international shipping activities. B is the ancillary international shipping income excluded from FANIL under regulation 25(1)(a) or (c). C is the total ancillary international shipping income.

53Carrying value left out of eligible tangible assets

53(1)

For section 18, the carrying value of eligible tangible assets excludes:

• (a)assets used only to earn international shipping income
• (b)for assets used only to earn ancillary international shipping income, the share equal to the excluded ancillary income over total ancillary income
• (c)for other assets, the paragraph (2) share attributable to international shipping income
• (d)for other assets, the paragraph (3) share attributable to the excluded ancillary income

53(2)

The share in (1)(c) is revenue from international shipping activities divided by total revenue.

53(3)

The share in (1)(d) is A × (B ÷ C), divided by total revenue, using the same A, B and C as regulation 52(3).

54Employees working inside and outside the entity's jurisdiction

55Assets located inside and outside the entity's jurisdiction

56Leased property as an eligible tangible asset

56(1)

Property held as lessor is an eligible tangible asset of the lessor, and not the lessee, where the lessee is another group entity in the same jurisdiction.

56(2)

In that case, adjust the lessor's carrying value for any elimination adjustments for inter-company leases on that property.

56(3)

Subject to (1), property held as lessor under an operating lease is an eligible tangible asset of the lessor if it is in the lessor's jurisdiction.

56(4)

The lessor's carrying value in that case is:

• (a)where the property is not short-term rental property and the lessee is a group entity — the excess, if any, of the lessor's carrying value over the lessee's
• (b)where it is not short-term rental property and the lessee is outside the group — the excess, if any, of the lessor's carrying value over the average undiscounted remaining lease payments, including renewals or extensions counted under the accounting standard used for the lessor's FANIL
• (c)where it is short-term rental property — the lessor's full carrying value

56(5)

That average is the average of the undiscounted remaining payments at the start and at the end of the financial year.

56(6)

Where part of a property is leased out and part is kept for the entity's own use, treat the parts as separate assets and split the carrying value on a just and reasonable basis.

56(7)

An operating lease does not transfer substantially the obsolescence, risks and rewards of ownership to the lessee. Short-term rental property is leased regularly to different lessees, with an average lease period per lessee, including renewals and extensions, of 30 days or less.

57Payroll costs and tangible assets of a permanent establishment

57(1)

Subject to section 18(7) and paragraphs (2) and (3), for section 18(6):

• (a)treat costs and assets counted in the permanent establishment's FANIL under paragraph 6(6) of the First Schedule as its own
• (b)exclude costs and assets not counted there
• (c)treat costs and assets counted under paragraph 6(7) of the First Schedule as nil

57(2)

Where a share of the FANIL of a permanent establishment X is excluded under paragraph 6(12)(d) of the First Schedule, exclude the same share of X's eligible payroll costs and tangible asset carrying value. This covers X as a permanent establishment of a flow-through ultimate parent entity D, and X as a permanent establishment of a flow-through entity E that D owns directly or through fiscally transparent flow-through entities, where E is fiscally transparent in D's jurisdiction.

57(3)

For section 18(2) and (3), where a share of a flow-through ultimate parent entity F's FANIL is allocated to its permanent establishment Y under paragraph 6(12)(e) of the First Schedule, and F's eligible employees or tangible assets are in Y's jurisdiction, allocate the same share of F's eligible payroll costs or tangible asset carrying value to Y.

58Purpose and application of Part 7

58(1)

This Part sets out the adjustments required for (a) GloBE income or loss, (b) adjusted covered taxes, and (c) the substance-based income exclusion used to find the top-up amount, where a constituent entity (d) joins or leaves the MNE group, or (e) transfers or acquires an asset or liability.

58(2)

For a standalone JV or JV group entity, read "MNE group" as the standalone JV or JV group, "ultimate parent entity" as the standalone JV or the joint venture, and "constituent entity" as the standalone JV or the entity.

59Entity joining or leaving the group

59(1)

Where an entity joins or leaves a group during a year:

• (a)treat it as a constituent entity for the whole year if any part of its assets, liabilities, income, expenses or cash flows appears line by line in the parent's consolidated statements, subject to (c)
• (b)its FANIL, adjusted covered taxes and eligible payroll costs count as those of a constituent entity so far as those amounts appear in the parent's consolidated statements
• (c)its tangible asset carve-out amount is the full-year amount multiplied by the fraction of the year it was a constituent entity

59(2)

Ignore purchase accounting consolidation adjustments from the transfer of ownership interests when determining that entity's FANIL, qualifying current tax expense and qualifying deferred tax expense, in the year of transfer and later years.

59(3)

Paragraphs (4) and (5) apply where the entity joins group A by a transfer of ownership interests and was a constituent entity of group B immediately before.

59(4)

A deferred tax asset or liability existing immediately before the transfer, other than a special loss deferred tax asset under regulation 47, is carried into group A at the amount that would apply if group A had held a controlling interest when it arose.

59(5)

Where a deferred tax liability was in the entity's qualifying deferred tax expense in group B:

• (a)treat it as reversed in group B
• (b)treat it as arising in the year of transfer for group A's qualifying deferred tax expense
• (c)if it is recaptured under regulation 46 later, any resulting reduction in group A's qualifying current tax expense applies only in the recapture year

60Transfer of a controlling interest treated as a transfer of assets and liabilities

60(1)

Where a controlling interest in a constituent entity is bought or sold, and local law treats that in the same or a similar way as a transfer of the entity's assets and liabilities, and that jurisdiction taxes the seller on the gain or deemed gain, treat the deal as an acquisition or disposal of the entity's assets and liabilities. Regulation 59 does not apply to it. For a flow-through entity, the relevant law is that of the jurisdiction where the assets are located. In other cases it is the law where the entity is located.

60(2)

Include that covered tax in the constituent entity's qualifying current tax expense for that year.

61Transfer of assets or liabilities

61(1)

A transferor includes any gain or loss on the transfer in its GloBE income or loss.

61(2)

An acquirer determines gain or loss on the acquired item using:

• (a)fair value at the time of transfer, where regulation 60 applies and the transferor used fair value
• (b)otherwise, the carrying value under the accounting standard used for the parent's consolidated statements

61(3)

For a transfer between group entities in the course of a reorganisation:

• (a)exclude the transferor's gain or loss from its FANIL, except so far as it is a non-qualifying gain or loss
• (b)determine gain or loss on a later transfer by the transferee using the transferor's carrying value immediately before the first transfer, adjusted for any non-qualifying gain or loss

61(4)

A transfer is in the course of a reorganisation if it results from a merger, demerger, liquidation, change of entity form or similar event, and conditions A, B and C are met.

61(5)

Condition A: if there is consideration, it consists wholly or in significant part of cancelled equity interests in the liquidated entity (for a liquidation) or equity interests issued by the transferee or a connected person (otherwise). If there is no consideration, issuing equity would have had no economic significance because beneficial ownership does not change.

61(6)

Condition B: the transferor's gain or loss on the transfer is not subject to tax, in whole or in part.

61(7)

Condition C: under the transferee's local law, the item's value for taxable income is the transferor's tax basis value, adjusted for any non-qualifying gain or loss of the transferor.

61(8)

Where a transfer between group entities is not on arm's length conditions, as defined in regulation 21(7), adjust the gain or loss in the transferor's GloBE income or loss to an arm's length outcome.

61(9)

A "non-qualifying gain or loss" is a gain no greater than both the gain taxed where the transferor is located and the gain in the transferor's FANIL, or a loss no greater than both the loss recognised for tax there and the loss in the transferor's FANIL.

61AArrangements that make a multi-parent group

61A(1)

An arrangement described in paragraph (2) or (3), entered into by the ultimate parent entities of two or more groups, counts for paragraph (a) of the definition of "multi-parent group" in section 2(1).

61A(2)

The first arrangement is a stapled-structure style combination by contract, not by cross-ownership, where all of these hold:

• each parent distributes to its owners on a fixed ratio, for dividends and on liquidation
• the combined businesses are managed as one economic entity while each parent keeps its own legal personality
• the ownership interests in each parent are quoted, traded or transferred independently on different capital markets
• each parent prepares consolidated financial statements that present all the groups as a single economic unit and that a regulatory regime requires an external auditor to audit

61A(3)

The second arrangement is one where at least 50% of the ownership interests in each parent are combined and cannot be transferred or traded independently, because of the form of ownership, transfer restrictions or other terms. where those combined interests, if listed anywhere, are quoted at a single price. where one of the parents prepares audited consolidated financial statements presenting all the groups as a single economic unit.

61BHow the Act applies to a multi-parent group

61B(1)

For Parts 2 and 3 of the Act and the supporting regulations:

• (a)all the groups count as one MNE group, and "MNE group" means the multi-parent group
• (b)each group's parent counts as the ultimate parent entity of the multi-parent group, with two exceptions — in section 31(2) and regulations 17(2)(b), 70(2) and 86(4)(a) the reference is to any one of those parents, and in regulation 33(1) it is to the parent that prepares the consolidated statements under regulation 61A(2)(b)(iv) or (3)(c)
• (c)section 13(2)(a) is replaced so that it reads "any of the ultimate parent entities of the groups comprising the multi-parent group, that holds an ownership interest in X is not a responsible member of the multi-parent group"
• (d)an entity of each group is a member of the single MNE group
• (e)an entity Y that is not an excluded entity is a constituent entity if one or more entities of the single group hold a controlling interest in it
• (f)a controlling interest exists where those entities hold an ownership interest in Y and Y's assets, liabilities, income, expenses and cash flows are consolidated line by line in the single group's consolidated statements, or would have been but for size, materiality or held-for-sale grounds
• (g)the regulation 61A statements are the single group's consolidated financial statements
• (h)the accounting standards used for them count as an acceptable financial accounting standard

61B(2)

Part 4 of the Act and section 50(1)(a), with their supporting regulations, apply in the same way as paragraph (1)(a) to (f), subject to (3) and (4).

61B(3)

The ultimate parent entity of every group is liable for the section 36 surcharge for a failure to register the single MNE group. They bear that liability in equal shares.

61B(4)

In sections 34(2) and 38, "the ultimate parent entity of an MNE group" means whichever of the parents the multi-parent group determines.

61CExtension to Part 3

62Application of Part 8

63Tax transparency election

63(1)

The filing entity may elect that:

• (a)a named investment entity or insurance investment entity A is treated as a flow-through entity, whether or not it already is one
• (b)a named constituent entity B with an interest in A's profits is treated as holding direct ownership interests in A
• (c)A is deemed not to be a reverse hybrid entity where B is located

63(2)

Where the election applies:

• (a)B's share of direct ownership interests matches B's share of A's profits
• (b)allocate to B the matching share of the FANIL, qualifying current tax expense and qualifying deferred tax expense that would otherwise go to A
• (c)if B uses a fair value method for income or loss on its interests in A, remove that amount from B's GloBE income or loss so far as it is in B's FANIL
• (d)allocate the same share of A's eligible payroll costs or eligible tangible asset carrying value to B, if A's eligible employees or assets are in B's jurisdiction

63(3)

In (2)(d), eligible employees, eligible payroll costs, carrying value and eligible tangible assets take their section 18(4) meanings, read with regulations 52 to 57.

63(4)

The election works only if no regulation 64 election is made for A and B, and either B is taxed where it is located on fair value increases in its interests in A at a rate of at least 15%, or B is a regulated or authorised insurer wholly owned by its own policyholders.

63(5)

On revocation, A's gain or loss on disposing of an asset or liability is measured against:

• (a)for the first year the election no longer applies, fair value on the first day of that year
• (b)for later years, if no new election is made, fair value on that same day where A uses realisation accounting, or fair value on the last day of the previous year where A uses fair value accounting

63(6)

The election cannot be revoked for the year it is made or the next 4 financial years.

63(7)

After revocation, no new election naming the same entities can be made for that year or the next 4 financial years.

64Taxable distribution method election

64(1)

The filing entity may elect that a named constituent entity C with direct ownership interests in a named investment entity or insurance investment entity D is treated under this regulation.

64(2)

The election works only if no regulation 63 election is in effect for C and D, C is not itself an investment entity or insurance investment entity, and C can reasonably be expected to be taxed where it is located on distributions from D at 15% or more, counting taxes on distributions and taxes D incurs on the distributed income.

64(3)

Where the election applies for a year (the subject FY):

• (a)include any distribution or deemed distribution from D to C in C's FANIL
• (b)adjust C's FANIL so that C's tax credit for tax D pays on the distributed income counts as income, not as negative tax expense, and so that D's tax goes into C's qualifying current tax expense rather than D's
• (c)treat C's share of D's undistributed income amount for the third year before the subject FY as D's GloBE income for the subject FY, and treat that share times the minimum rate as a top-up amount for D
• (d)ignore C's share of D's GloBE income or loss for the subject FY when computing D's top-up amount under section 24, and ignore the related adjusted covered taxes when computing effective tax rates under section 24 or section 17, apart from the (b) treatment

64(4)

D's undistributed income amount for the third year before the subject FY is D's GloBE income or loss for that year, less:

• covered taxes payable by D for that year
• distributions and deemed distributions by D to shareholders that are not investment entities, over the subject FY and the 3 preceding years
• any negative GloBE income or loss of D for each year in that period
• any negative GloBE amount left over from an earlier application

No amount is deducted twice, and a negative result counts as zero.

64(5)

"Deemed distribution" includes D's income that is not distributed but that C's jurisdiction treats as realised by C and taxes C on.

64(6)

A deemed distribution also arises when C transfers part of its direct interest in D to a person outside the group. Its amount is E × (F ÷ G). E is the sum of C's share of D's undistributed income amount for the transfer year and the 2 years before it. F is the value of the interest transferred. G is the value of all C's interests in D before the transfer.

64(7)

For E in paragraph (6), D's undistributed income amount for a year is D's GloBE income or loss less:

• covered taxes payable for that year
• distributions and deemed distributions, excluding the paragraph (6) deemed distribution, to non-investment-entity shareholders over a period running from that year up to the transfer year
• negative GloBE income or loss for each year in that period
• leftover negative GloBE amounts from earlier applications

No double deduction, and a negative result counts as zero.

64(8)

The election cannot be revoked for the year it is made or the next 4 financial years.

64(9)

On revocation, the sum of C's share of D's undistributed income amount for the 3 years before the first year the election stops, multiplied by the minimum rate, is treated as a top-up amount for D in that first year.

64(10)

For paragraph (9), D's undistributed income amount for each of those years is computed the same way as in paragraph (7), using periods running from that year to FY-1. No double deduction, and a negative result counts as zero.

64(11)

After revocation, no new election naming the same entities can be made for that year or the next 4 financial years.

64(12)

C's share of D's undistributed income amount is based on C's ownership interests in D in that year.

65Application of Part 9

65(1)

Divisions 2 and 3 apply when determining a relevant entity's top-up amount for Part 2 of the Act.

65(2)

Division 4 applies for the same purpose, but not to a joint venture or JV subsidiary connected to an MNE group.

65(3)

Division 2 applies when determining, for Part 3 of the Act, the top-up amount of a Singapore constituent entity, or of a joint venture or JV subsidiary in Singapore.

65(4)

Division 4 applies for the same Part 3 purpose, but only to Singapore constituent entities, not to joint ventures or JV subsidiaries.

66Definitions for Division 2

67"Qualifying country-by-country report"

67(1)

A qualifying country-by-country report is one prepared from the group's qualified financial statements.

67(2)

A country-by-country report is one prepared under the law of a jurisdiction implementing the OECD country-by-country guidance.

67(3)

A partial country-by-country report, even where local law permits one, does not count as a country-by-country report here.

67(4)

For a multi-parent group, the report must cover all the constituent groups.

68"Qualified financial statements"

68(1)

These are either (a) the accounts used to prepare the parent's consolidated financial statements, or (b) statements of constituent entities prepared under an acceptable or authorised accounting standard, but only if the information is reliable.

68(2)

Reliability is judged by reference to the GloBE rules.

68(3)

Where an entity is left out of the consolidated statements only on size or materiality grounds, the accounts used for the group's qualifying country-by-country report count as part of those statements.

68(4)

Where a permanent establishment has no statements of its own, the separate statements its main entity prepares for financial reporting, regulatory, tax reporting or internal management purposes count instead.

68(5)

Accounts containing purchase price accounting (PPA) adjustments are not qualified financial statements unless the paragraph (6) condition is met.

68(6)

The condition is that no qualifying country-by-country report for that jurisdiction, for any financial year starting after 31 December 2022, was submitted using accounts without the PPA adjustments. There is an exception where local law required the entity to change its accounts to include them.

69Entities eligible for the Transitional CbCR Safe Harbour

69(1)

Subject to (2) and (3), every constituent entity in a jurisdiction is eligible if the regulation 70 conditions are met.

69(2)

An investment entity or insurance investment entity X is eligible only if all group entities with direct ownership interests in X are in that jurisdiction, and no regulation 63 or 64 election is made for X that year.

69(3)

Where the ultimate parent entity Y is a flow-through entity, entities in Y's jurisdiction are eligible only if Y's GloBE income or loss would be nil through paragraph 6(12) of the First Schedule, and no permanent establishment FANIL would be allocated to Y under regulation 27.

70Conditions for the Transitional CbCR Safe Harbour

70(1)

Eligible entities in jurisdiction Z qualify only if all of these hold:

• (a)the financial year starts between 1 January 2025 and 31 December 2026 and ends on or before 30 June 2028
• (b)a qualifying country-by-country report has been prepared for jurisdiction Z for that year
• (c)for every earlier year in which any entity there came within a qualified IIR or qualified UTPR, or for which the group had to register under Part 4 of the Act, an election was made to apply this safe harbour or its foreign equivalent to the entities there
• (d)no regulation 48(1) deemed distribution tax election was made for any entity there that year
• (e)at least one of the de minimis test, the simplified effective tax rate test and the routine profits test is met

70(2)

Where jurisdiction Z requires no country-by-country report, condition (1)(b) counts as met if the filing entity puts the information such a report would have carried into the GloBE information return that makes the election. The information follows the country-by-country law of the parent's jurisdiction, or the OECD guidance itself where there is no such law.

71De minimis test

71(1)

Met if, on the qualifying country-by-country report, total revenue in the jurisdiction is under EUR 10 million and total profit before income tax is under EUR 1 million, or there is a loss.

71(2)

Include the revenue of an entity held for sale if it is not already counted.

72Simplified effective tax rate test

72(1)

Met if the simplified effective tax rate is at least 16% for a year beginning in 2025, or at least 17% for a year beginning on or after 1 January 2026.

72(2)

That rate is total simplified income tax expense divided by total profit or loss before income tax as reported on the qualifying country-by-country report.

73Routine profits test

73(1)

Met if the qualified substance-based income exclusion amount for the jurisdiction is at least the profit or loss before income tax reported on the qualifying country-by-country report, or if that reported figure is nil or an overall loss.

73(2)

The "qualified substance-based income exclusion amount" is the substance-based income exclusion under section 18, including as applied by section 23 or 24(12), ignoring the payroll and tangible asset carve-out amounts of any entity that the qualifying country-by-country report does not treat as a group entity, or does not treat as located in that jurisdiction.

73(3)

Payroll carve-out amount and tangible asset carve-out amount take their section 18(2) and (3) meanings.

74Source of the figures used for the three tests

74(1)

Subject to regulations 75 and 76, use revenue, profit or loss before income tax, simplified income tax expense, payroll costs and asset carrying value from one of the documents in paragraph (2).

74(2)

That document is whichever qualified financial statements were used to prepare the qualifying country-by-country report — those under regulation 68(1)(a) or those under 68(1)(b) — together with anything treated as part of them under regulation 68(3) and (4).

74(3)

All the figures for a given test must come from one single set of documents.

74(4)

If those figures are not available in the group's qualified financial statements for a jurisdiction, no election may be made for that jurisdiction.

75Adjustments

75(1)

This regulation sets out adjustments to the regulation 74(1) figures.

75(2)

Where the group's entities in a jurisdiction have a net unrealised fair value loss above EUR 50 million, remove that loss from profit or loss before income tax.

75(3)

A net unrealised fair value loss exists so far as fair value losses on relevant ownership interests exceed fair value gains on them.

75(4)

An ownership interest is "relevant" unless, at year end, the group's direct interests in that entity carry under 10% of its profits, capital, reserves or voting rights.

75(5)

Profit or loss before income tax, revenue and income tax expense of an investment entity or insurance investment entity X count only in the figures of the group entities that directly own X, in proportion to their ownership interests.

75(6)

Where regulation 68(5) applies and the regulation 68(6) condition is met, add back any income reduction from goodwill impairment on transactions after 30 November 2021, for the routine profits test, and for the simplified effective tax rate test only if the accounts do not also show a reversal of a deferred tax liability or a recognised or increased deferred tax asset for that impairment.

76Further adjustments for certain arrangements

76(1)

These adjustments cover deduction/non-inclusion arrangements, duplicate loss arrangements and duplicate tax recognition arrangements entered into after 15 December 2022.

76(2)

Remove expense or loss from a deduction/non-inclusion or duplicate loss arrangement from profit or loss before income tax.

76(3)

For a duplicate loss arrangement under paragraph (9)(a), where the entities carrying the expense are in the same jurisdiction, one of them need not make that adjustment.

76(4)

Remove income tax expense from a duplicate tax recognition arrangement from simplified income tax expense.

76(5)

An arrangement counts as entered into after 15 December 2022 if, after that date, it is amended or transferred, performance of a right or obligation changes (including reduced or ceased payments that increase a liability balance), or its accounting treatment changes.

76(6)

A "deduction/non-inclusion arrangement" is one where entity A provides credit to or invests in another group entity, producing an expense or loss in some group entity B's statements, so far as A has no matching revenue or gain, or A is not reasonably expected over the arrangement's life to have a matching increase in taxable income.

76(7)

It is not such an arrangement so far as the expense or loss relates only to additional tier one capital.

76(8)

A is treated as having no matching increase in taxable income so far as the included amount is offset by a tax attribute carrying a valuation or recognition adjustment, judged without regard to any entity's ability to use it against these three arrangement types, or where the same payment also produces a deduction or loss for a group entity in B's jurisdiction that is not counted as an expense there.

76(9)

A "duplicate loss arrangement" is one producing an expense or loss in entity A's statements that also appears in another entity B1's statements, or that also produces a duplicate deduction for another entity B2 under another jurisdiction's law.

76(10)

It is not a duplicate loss arrangement so far as the expense is offset against revenue included in both A's and B1's statements, or against revenue or income included in both A's statements and B2's taxable income.

76(11)

A "duplicate tax recognition arrangement" is one where more than one group entity includes part or all of the same income tax expense in its adjusted covered taxes or in its simplified effective tax rate, unless the arrangement also puts the related income in each of those entities' relevant financial statements.

76(12)

It is not such an arrangement if it arises only because entity A's simplified effective tax rate needs no adjustment for tax expenses that would be allocated to another entity in computing A's adjusted covered taxes.

77Division 2 applied to joint ventures and JV subsidiaries

77(1)

Division 2 applies to joint ventures and JV subsidiaries connected to a group as it does to constituent entities.

77(2)

With these changes:

• (a)regulation 70(1)(b) is omitted
• (b)the regulation 68(3) reference to accounts used for the group's report means the accounts that would be used had a report been prepared for the standalone JV or the JV group
• (c)the "qualified substance-based income exclusion amount" in regulation 73(1) is the section 18 exclusion, as applied by section 25, for the joint ventures or JV subsidiaries there
• (d)separate elections under regulation 70(1)(c) are needed for each standalone JV, or for each JV group's entities, apart from the election for the group's constituent entities

78Entities eligible for the QDMTT Safe Harbour

78(1)

An ordinary constituent entity in a jurisdiction is eligible if the group comes within that jurisdiction's qualified domestic minimum top-up tax, that tax is one listed in regulation 96 as one this regulation applies to, and no regulation 80 disqualifying condition applies.

78(2)

A joint venture or JV subsidiary is eligible if (1)(a) and (b) are met and no regulation 81 disqualifying condition applies.

78(3)

An investment entity or insurance investment entity is eligible if (1)(a) and (b) are met and no regulation 82 disqualifying condition applies.

78(4)

A minority-owned constituent entity is eligible if (1)(a) and (b) are met and no regulation 83 disqualifying condition applies.

79Separate elections

80Disqualifying conditions for ordinary constituent entities

80(1)

Conditions A, B, C, D and E are the disqualifying conditions for regulation 78(1)(c).

80(2)

Condition A: the group has a responsible member in the jurisdiction that is not the ultimate parent entity and is a flow-through entity, and the local qualified domestic minimum top-up tax law never charges a flow-through responsible member.

80(3)

Condition B: the local law says the tax does not apply to a group in the initial phase of its international activity, that provision is not limited to cases where the entities are outside a qualified IIR, and it applies to this group.

80(4)

Condition C: the enforceability of an amount of that tax accruing to a group entity there is in question.

80(4A)

Condition D: a group entity there is a securitisation entity and either securitisation entities fall outside the local tax, or they fall inside it but the law puts the liability for a securitisation entity X's income on another, non-securitisation group entity and does not fall back to X when that liability cannot be collected.

80(4B)

Condition E: a group entity there has a deferred tax asset or liability arising as described in regulation 91(1)(b)(i) or (ii) or (2), and the local law either makes no provision matching regulation 91(1)(b) and (2) and the related exclusion from simplified income tax expense, or makes such provision inconsistently with the OECD's 15 January 2025 Administrative Guidance on Article 9.1.

80(5)

Enforceability is in question if the amount is contested in judicial or administrative proceedings there, or the local tax authority has determined it is not assessable or collectible, on constitutional or similar grounds or under a specific agreement with that government limiting the entity's liability.

81Disqualifying conditions for joint ventures and JV subsidiaries

81(1)

Conditions A to E in regulation 80, as modified, plus Condition F, apply for regulation 78(2)(b).

81(2)

Conditions C and D are read with the group references pointing to the standalone JV or the JV group, and the constituent entity references pointing to the joint venture or JV subsidiary.

81(3)

Condition F: the local qualified domestic minimum top-up tax law does not tax the joint venture or JV subsidiary.

82Disqualifying conditions for investment entities and insurance investment entities

82(1)

Conditions A to E in regulation 80, as modified, plus Condition F, apply for regulation 78(3)(b).

82(2)

In Condition C, read references to a constituent entity as references to an investment entity or insurance investment entity.

82(3)

Condition F: investment entities and insurance investment entities fall outside the local qualified domestic minimum top-up tax.

83Disqualifying conditions for minority-owned constituent entities

83(1)

Conditions A to E in regulation 80, as modified, apply for regulation 78(4)(b).

83(2)

In Condition C, read references to a constituent entity as references to a minority-owned constituent entity.

84"Non-material constituent entity" (NMCE)

84(1)

An NMCE is a constituent entity, other than one consisting only of a main entity and its permanent establishment, that is left out of the parent's consolidated statements only on size or materiality grounds and that meets conditions A, B and C.

84(2)

Condition A: the consolidated statements follow an acceptable financial accounting standard, or carry adjustments that prevent material competitive distortions.

84(3)

Condition B: the consolidated statements are externally audited.

84(4)

Condition C: if the entity's revenue exceeds EUR 50 million for the year, the accounts used for the country-by-country report follow an acceptable or authorised financial accounting standard.

84(5)

A permanent establishment is an NMCE only if its main entity is one.

85Conditions for the Simplified Calculations Safe Harbour

85(1)

Every entity of a sub-group in a jurisdiction is eligible if at least one entity of that sub-group there is an NMCE with a regulation 86(1) election, and the sub-group meets at least one of: the routine profits test (sub-groups 1, 2 and 3), the de minimis test (sub-group 4), or the effective tax rate test (sub-groups 1, 2 and 3).

85(2)

Routine profits test: the section 18 substance-based income exclusion for those entities is at least their GloBE income or loss.

85(3)

De minimis test: the 3-year average of adjusted revenue across FY, FY-1 and FY-2 is under EUR 10 million, and the 3-year average of GloBE income or loss is under EUR 1 million.

85(4)

If none of the entities had adjusted revenue or GloBE income or loss in FY-1 or FY-2, leave that year out of the averages.

85(5)

If a year is longer or shorter than 12 months, scale the sums by 365 divided by the number of days in that year.

85(6)

Effective tax rate test: the effective tax rate for the sub-group's entities, under section 17, including as applied by section 23, or section 24, is at least 15%.

85(7)

Paragraphs (2), (3) and (6) are subject to regulation 86.

85(8)

Adjusted revenue is revenue counted in FANIL after the regulation 95 adjustments. The four sub-groups are:

• sub-group 1, every constituent entity that is not a special entity
• sub-group 2, every minority-owned constituent entity that is not an investment entity or insurance investment entity
• sub-group 3, every investment entity and insurance investment entity
• sub-group 4, every constituent entity that is not an investment entity or insurance investment entity

85ATop-up amount under the Simplified Calculations Safe Harbour

86Simplified calculations for an NMCE

86(1)

For the regulation 85(2), (3) and (6) tests, the filing entity may elect to use, for an NMCE:

• (a)total revenue under the relevant CbC regulations as its GloBE income or loss
• (b)the same total revenue as its adjusted revenue
• (c)accrued current tax expense under those regulations as its adjusted covered taxes in the effective tax rate

86(2)

The election is made in that year's GloBE information return.

86(3)

A separate election is needed for each NMCE.

86(4)

"Relevant CbC regulations" means the country-by-country law of the parent's jurisdiction. failing a filing there, the law of the surrogate parent entity's jurisdiction. failing both, the October 2015 BEPS Action 13 Final Report together with the OECD's May 2024 implementation guidance.

86(5)

"Country-by-country report" has its regulation 67(2) meaning.

87Application of Part 10

88"Transition year"

88(1)

For Part 2 of the Act, an entity X's transition year is the earlier of the first year that X or another group entity in the same jurisdiction comes within a qualified IIR or qualified UTPR, and the first year a chargeable entity is liable for MTT for X or such an entity, or would be if it were a relevant entity. If, from that year, X is eligible for the Transitional CbCR Safe Harbour or the de minimis exclusion in section 19(4) applies, the transition year is instead the first year in which X loses that eligibility, or no election is made for it, and the de minimis exclusion no longer applies.

88(2)

For Part 3 of the Act, for a Singapore constituent entity X, the transition year is the earlier of the first year any Singapore group entity comes within a qualified IIR or qualified UTPR, and the first year the group must register under Part 4 of the Act. The same safe harbour and de minimis deferral in (1) applies.

88(3)

For Part 3 of the Act, for a section 29(b) entity X, the transition year is the earlier of the first year X comes within a qualified IIR or qualified UTPR, and the first year the group must register under Part 4 of the Act.

89Opening deferred tax assets and liabilities

89(1)

For paragraph 1(1)(d) of the First Schedule, take into account every deferred tax asset and liability shown or disclosed in the entity's accounts at the start of its transition year, and in every later year. Items arising from a blended CFC regime are excluded.

89(2)

Apply these rules:

• (a)a deferred tax asset recorded at a domestic rate below the minimum rate is taken at that domestic rate, unless paragraph (3) applies
• (b)a deferred tax liability recorded below the minimum rate is taken at that domestic rate
• (c)an asset or liability recorded at or above the minimum rate is taken at the minimum rate
• (d)exclude the effect of any valuation or accounting recognition adjustment on a deferred tax asset

89(3)

In a paragraph (2)(a) case, if the entity can show the asset would be attributable to a loss counted in its GloBE income or loss had it computed that for a pre-transition year, take the asset at the minimum rate.

90Deferred tax asset relating to a tax credit

90(1)

Applies where the regulation 89(1) deferred tax asset relates to a tax credit and is recorded at a domestic rate at or above the minimum rate.

90(2)

Despite regulation 89(2)(c), take the asset at A × B. A is the recorded amount of the asset divided by the rate at which it was recorded in the year immediately before the transition year. B is the minimum rate.

90(3)

If that recorded rate changes in a later year (the re-application year), re-apply the formula to the outstanding balance at the start of that year, and use the result for that year and every later year.

90(4)

On re-application, replace the rate in (2)(a)(ii) with the rate used in the accounts in the re-application year.

91Deferred tax assets and liabilities that are ignored

91(1)

Despite regulation 89, ignore a deferred tax asset of entity X where it:

• (a)arises from a transaction between 1 December 2021 and the end of the last year before X's transition year, on an item that would not have entered X's GloBE income or loss for that year
• (b)arises in that same window from either a tax credit or relief made available under a governmental arrangement concluded or amended after 30 November 2021 that does not exist independently of it, or from an election or choice by X that retrospectively changes taxable income on a transaction
• (c)is attributable to a loss earlier than the fifth year before corporate income tax came into force where X is located, in a jurisdiction that had no corporate income tax before 1 December 2021 and introduced one on or after that date

91(2)

Also ignore a deferred tax asset or liability that arises in that same window, from a difference between the value X used for corporate income tax and the value in its accounts, in such a newly taxing jurisdiction.

91(3)

Despite (1) and (2), where such an asset arose from an event or a corporate income tax that occurred or came into force on or before 18 November 2024, and it reverses in a year inside the applicable grace period, the deferred tax expense from that reversal may go into X's adjusted covered taxes. It may do so only so far as it is consistent with the local law in force on or before 18 November 2024, X's accounting method on that date, the governmental arrangement's terms on that date, or the election or choice made or modified on or before that date.

91(4)

The total so included in a year cannot exceed X's grace period amount.

91(5)

Defines the terms. The applicable grace period for a paragraph (1)(b) asset is every year beginning on or after 1 January 2024 and before 1 January 2026, excluding a year ending after 30 June 2027. For a paragraph (2) asset it is every year beginning on or after 1 January 2025 and before 1 January 2027, excluding a year ending after 30 June 2028. A governmental arrangement is an agreement, ruling, decree, grant or similar arrangement with a central, state or local government or a controlled agency. The grace period amount is the sum of 20% of each qualifying deferred tax asset, as first recorded and taken at the lower of the minimum rate and the domestic rate, less any deferred tax expense already included under paragraph (3) or not excluded from simplified income tax expense in an earlier year.

92Assets transferred between group entities before the transition year

92(1)

For regulation 89(1), value the deferred tax asset or liability from a transfer of assets, other than inventory, between group entities after 30 November 2021 and before the transferor X's first in-scope year, using X's carrying value at the time of transfer.

92(2)

"Transfer of assets" includes a transaction between group entities and a transaction inside one constituent entity that does not change ownership but has a similar accounting effect. In the second case, that entity is both transferor and transferee.

92(3)

Where X paid covered tax on the transfer anywhere, or that tax would have counted in X's adjusted covered taxes had the transfer been after its transition year, or where a loss of X in or at the start of the transfer year was offset against taxable income and the related deferred tax asset would otherwise have counted, then the sum of that covered tax and that deferred tax asset is treated as the value of the deferred tax asset. That sum is capped at the difference between X's carrying value at transfer and the value the transferee used for covered tax, multiplied by 15%.

92(4)

Where the transferee's transition year begins after the transfer, adjust the value for later capitalised expenditure on the assets, and for the amortisation and depreciation the transferor would have recognised.

92(5)

Where the paragraph (3) sum equals or exceeds that cap, the transferee need not apply paragraph (1) to that transfer.

92(6)

The transferee's GloBE income or loss from the transfer also uses X's carrying value at transfer. Paragraphs (2) to (5) apply here too.

93DTT adjustments where there is a new transition year

93(1)

Applies where the Act first applies to an MNE group with a Singapore constituent entity or section 29(b) entity X, where in that year no Singapore group entity (or, for a section 29(b) entity, X itself) is within a foreign qualified IIR or qualified UTPR, and where an entity in the corresponding row of the table later comes within such a law. The table pairs "X is a Singapore constituent entity" with "any Singapore constituent entity of the group", and "X is a section 29(b) entity" with X itself. Rows 3 and 4 are deleted.

93(1A)

If, from that first year, X is eligible for the Transitional CbCR Safe Harbour or the section 19(4) de minimis exclusion applies, read the year in (1)(aa) as the first year X loses that eligibility, or no election is made for it, and the de minimis exclusion no longer applies.

93(2)

DTT computation means finding X's adjusted covered taxes to get X's effective tax rate for computing DTT. The new transition year is the year the paragraph (1)(b) event happens.

93(3)

Eliminate any negative tax carried forward for X under section 17(4) or 21(2) at the start of the new transition year.

93(4)

Regulation 46(2) does not apply to a deferred tax liability counted for DTT that arose before the new transition year and was not recaptured before it. It does apply to one arising in the new transition year or later.

93(5)

Eliminate any special loss deferred tax asset under regulation 47(3)(b) from a year before the new transition year. The filing entity may make a fresh regulation 47(1) election for the new transition year.

93(6)

Eliminate every deferred tax asset and liability counted for DTT for years before the new transition year. Determine them again under regulations 89, 90, 91 and 92 at the start of the new transition year.

93(7)

Ignore a deferred tax asset shown in X's accounts from a transaction entered into after 30 November 2021 and before the new transition year, on an item that would not have entered X's GloBE income or loss for that year.

93(8)

Paragraph (7) does not apply to a deferred tax asset that is attributable to a tax loss that produced an additional current top-up amount under section 21(1) and that arises from a transaction on which DTT is payable in Singapore.

93(9)

The regulation applies to a Singapore standalone JV or JV group entity connected to an MNE group as it does to a Singapore constituent entity. References to a constituent entity within a foreign qualified IIR or UTPR mean the standalone JV itself, or any entity of the JV group.

94Formula for top-up amounts

94(1)

This regulation gives the formula for the section 16(3) top-up amounts where the entities have both an additional current top-up amount under section 21(1) (C) and one under section 21(4) (D), or where they have only D and D comes from recalculations for more than one earlier year.

94(2)

The top-up amount is the sum of:

• (a)the section 16(3)(a) formula, with A replaced by C − (K × C ÷ (C + D))
• (b)for each earlier year recalculated under section 21(4), the section 16(3)(b) formula, with A replaced by D1 − (K × D1 ÷ (C + D))

K has its section 16(4)(d) meaning, as modified by section 30(2)(b) for Part 3. D1 is the section 21(4) amount for that earlier year.

94(3)

The same applies to investment entities and insurance investment entities under section 24(4), reading section 24(4)(a) and (b) for section 16(3)(a) and (b), section 21(1) and 21(4) as applied by section 24(13), and K as defined in section 24(5)(d).

94(4)

Paragraphs (1) to (3) apply to a standalone JV or JV group entity for section 25(2), reading "constituent entity" as that entity.

95"Adjusted revenue" for the de minimis exclusion

96Qualified domestic minimum top-up taxes

96(1)

A tax imposed by a law listed in the "Domestic law" column of the "Qualified Domestic Minimum Top-up Tax Rules and QDMTT Safe Harbours" table on the prescribed webpage is prescribed as equivalent in effect to the DTT.

96(2)

It is also a tax regulation 78 applies to if that table shows "yes" in the "QDMTT Safe Harbour" column for it.

96(3)

Both apply from the date in the "Effective date" column for that law.

96(4)

The prescribed webpage is the OECD's "Central Record of Legislation with Transitional Qualified Status", or any replacement name, on https://www.oecd.org, as amended from time to time.

97Qualified IIR

97(1)

A tax imposed by a law listed in the "Domestic law" column of the "Qualified Income Inclusion Rules" table on that webpage is prescribed as equivalent in effect to MTT.

97(2)

It applies from the date in the "Effective date" column for that law.

98Other documents forming the GloBE rules