On June 16, 2016, the Singapore Ministry of Finance issued a press release saying that Singapore will join the “inclusive framework” for the global implementation of the BEPS project. 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 the BEPS project. 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. The inclusive framework was proposed by the OECD and endorsed by G20 in February 2016.
Singapore supports the key principle underlying the BEPS Project, namely that profits should be taxed where economic activities generating the profits are performed and where value is created. Singapore is committed to implementing the four minimum standards under the BEPS project, namely the standards on countering harmful tax practices, preventing treaty abuse, country-by-country reporting (CbCR), and enhancing dispute resolution. 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.”
Singapore’s position on the four minimum standards is detailed below:
Countering harmful tax practices (Action 5 recommendations)
Singapore uses tax incentives to promote investment in certain areas of the economy. Incentive recipients must have substantive operations in Singapore and contribute meaningfully to the growth of the overall economy. The tax incentives are granted for defined periods of time on qualifying activities.
Preventing treaty abuse (Action 6 recommendations)
A number of Singapore’s bilateral tax treaties contain anti-treaty shopping provisions to prevent abuse. Singapore is currently part of a group of jurisdictions that is developing a multilateral instrument to incorporate BEPS measures into existing bilateral treaties to counter treaty abuse.
CbCR (Action 13 recommendations)
Singapore is committed to implementing CbCR for financial years beginning on or after January 1, 2017 for multinational enterprises whose ultimate parent entities are in Singapore and whose group turnover exceed S$1,125 million. These companies are required to file the 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, once the following conditions have been established:
- These jurisdictions have a strong rule of law and can ensure the confidentiality of the information exchanged.
- There must be reciprocity in terms of the information exchanged.
IRAS will consult with Singapore-headquartered multinational enterprises on the implementation details of CbCR, and release these details by September 2016.
Enhancing dispute resolution (Action 14 recommendations)
IRAS has been engaging with foreign tax authorities to resolve cross-border tax disputes via the mutual agreement procedure provided in Singapore’s bilateral tax treaties.
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