Singapore will join the inclusive framework for the global implementation of the BEPS Project. The inclusive framework was proposed by OECD and endorsed by G20 in February 2016. By joining this framework, Singapore will work with other participating jurisdictions to ensure the consistent implementation of measures under the BEPS Project, and a level playing field across jurisdictions.
Singapore supports the key principle underlying the BEPS Project, namely that profits should be taxed where the real economic activities generating the profits are performed and where value is created. Our tax policies are designed to support substantive economic activities, in order to create skilled jobs and build new and enduring capabilities in Singapore. We do not condone activities aimed at base erosion and profit shifting.
As a BEPS Associate, Singapore will work with other jurisdictions to help develop the implementation and monitoring phase of the BEPS Project. As a participant at the OECD’s Committee on Fiscal Affairs since 2013, we have been active in providing input to the design of BEPS Project. We have also worked with the OECD and G20 to ensure that the new framework for implementing BEPS Project is inclusive.
Singapore is committed to implementing the four minimum standards under the BEPS Project, namely the standards on countering harmful tax practices, preventing treaty abuse, transfer pricing documentation, and enhancing dispute resolution. In keeping with this commitment and after consulting Singapore-headquartered multinational enterprises, Singapore intends to implement Country-by-Country Reporting (“CbCR”) for these enterprises for financial years beginning on or after 1 Jan 2017. Please refer to Annex A for more details on Singapore’s position on the four BEPS minimum standards.
Commenting on Singapore’s implementation of the BEPS measures, Deputy Prime Minister, Coordinating Minister for Economic and Social Policies & Minister for Finance Mr Tharman Shanmugaratnam said, “Singapore is committed to working with the international community to counter artificial shifting of profits, and continues to welcome substantive economic activities. We will be actively involved with the OECD and G20 in ensuring the consistent implementation of the BEPS standards across all jurisdictions, so as to ensure a level playing field.”
- Countering harmful tax practices. As with many other jurisdictions, Singapore uses tax incentives to promote investment in certain areas of the economy. Incentive recipients would have to anchor substantive operations in Singapore and contribute meaningfully to the growth of the overall economy. Our tax incentives are legislated and granted for defined periods of time on qualifying activities. Non-qualifying activities of incentivised companies are taxed at the prevailing corporate tax rate. We regularly review our tax incentives to ensure that they remain relevant and competitive. As an outcome of these reviews, we have allowed some tax incentives to lapse and refined several others over the years.
- Preventing treaty abuse. Singapore does not condone treaty shopping. A number of our bilateral tax treaties contain anti-treaty shopping provisions to prevent abuse. Singapore is currently part of a group of jurisdictions working together under the aegis of the OECD and G20 to develop a multilateral instrument for incorporating BEPS measures into existing bilateral treaties to counter treaty abuse. Singapore will consider whether to join the instrument after it is finalised and ready for jurisdictions to sign.
- Transfer pricing documentation. Singapore adheres to the internationally agreed arm’s length principle. We will commit to implement CbCR for financial years beginning on or after 1 Jan 2017 for multinational enterprises whose ultimate parent entities are in Singapore and whose group turnover exceed S$1,125 million. These enterprises are required to file the Country-by-Country (CbC) reports with the Inland Revenue Authority of Singapore (IRAS) within 12 months from the last day of their financial year. IRAS will exchange CbC reports with jurisdictions that Singapore has entered into bilateral agreements with for automatic exchange of CbCR information, having established that they meet the following conditions:
- First, these jurisdictions have a strong rule of law and can ensure the confidentiality of the information exchanged and prevent its unauthorised use.
- Second, there must be reciprocity in terms of the information exchanged.
IRAS will consult Singapore-headquartered multinational enterprises further on the implementation details of CbCR, and release these details by September 2016.
- Enhancing dispute resolution. IRAS has been active in engaging foreign tax authorities to resolve cross-border tax disputes via the mutual agreement procedure provided in our bilateral tax treaties. As a BEPS Associate, Singapore will work closely with other jurisdictions to monitor the implementation of minimum standards on dispute resolution developed under the BEPS Project. This will complement the other BEPS minimum standards and ensure that taxpayers have access to effective and expedient dispute resolution mechanisms under bilateral tax treaties.
For more details of the inclusive framework, please refer to OECD’s website.
For more details of the BEPS Project, please see: http://www.oecd.org/ctp/beps.htm
For more details of the multilateral instrument, please see: https://www.oecd.org/tax/treaties/multilateral-convention-to-implement-tax-treaty-related-measures-to-prevent-beps.htm
For more details on country by country reporting, please see: https://www.oecd.org/ctp/transfer-pricing-documentation-and-country-by-country-reporting-action-13-2015-final-report-9789264241480-en.htm
Ministry of Finance
 Under this framework, all state- and non-state jurisdictions that commit to the BEPS Project will participate as BEPS Associates of the OECD’s Committee on Fiscal Affairs (CFA). BEPS Associates have the same rights and obligations as OECD and G20 countries involved in BEPS work. Every jurisdiction that participates in the framework as a BEPS Associate will have an equal voice in reviewing and monitoring the implementation of the BEPS measures.
 See “Singapore Welcomes the OECD’s Recommendations to Counter Base Erosion and Profit Shifting, 6 October 2015”
 This refers to multinational enterprises whose ultimate parent entities are in Singapore. Please see Annex A for details.
 CbCR is a minimum standard under the BEPS Action Plan, and is intended to be used for assessing high-level transfer pricing risk. Many jurisdictions, such as US, UK, Switzerland, Australia and China, have announced that they will implement CbCR.
 The arm’s length principle requires the transaction with a related party to be made under comparable conditions and circumstances as a transaction with an independent party.
 This is equivalent to €750 million, the reporting threshold under the CbCR guidelines for the BEPS Project.
 To illustrate, if the financial year end of a relevant entity is 31 December, the first reporting to IRAS will be within twelve months from 31 December 2017.
 The mutual agreement procedure provision in a
bilateral treaty provides a mechanism for competent authorities of both
contracting jurisdictions to resolve differences or difficulties regarding the
interpretation or application of the bilateral treaty on a mutually-agreed