Impact of US-based MNCs' Exemption from 15% Global Corporate Tax on Singapore's Tax Revenues and Medium-term Fiscal Risks

Mr Saktiandi Supaat asked the Prime Minister and Minister for Finance whether the Ministry has assessed (i) the potential impact of the Organisation for Economic Co-operation and Development's (OECD) decision to exempt US-based multinational corporations from the 15% global corporate tax will have on Singapore’s corporate tax revenues and (ii) whether this poses any medium-term fiscal risks to Singapore.

The Side-by-Side package under Pillar Two of the OECD's Base Erosion and Profit Shifting initiative (BEPS) essentially allows US multinational enterprises (MNEs) to continue operating under the US global tax system, which already imposes a minimum level of tax on their worldwide income. This arrangement is deemed to achieve similar policy outcomes as Pillar Two and hence, it is allowed to operate "side by side" with the Pillar Two rules.

This new development does not impact other jurisdictions' implementation of Domestic Minimum Top-up Taxes. Singapore will therefore proceed with our Domestic Top-up Tax, and all large MNEs, including US MNEs, operating in Singapore will still have to pay the minimum effective tax rate of 15% on profits earned in Singapore.

Notwithstanding the progress made with BEPS, global competition for key investments is continuing to intensify in other forms, and through other fiscal tools and incentives. We will therefore have to continue making the necessary investments to stay competitive and create good jobs and opportunities for Singaporeans.