Singapore to roll out more stringent tax reporting rule
Singapore will implement a new reporting rule for multinationals whose parent entities are based here, as part of its commitment to deepen its involvement in the international campaign against corporate tax avoidance.
The Ministry of Finance said yesterday that Country-by-Country Reporting (CbCR) will apply to Singapore-based multinationals whose group turnover exceed $1.125 billion.
The rule will take effect for the financial year beginning on or after Jan 1 next year. Companies will have to file the report by filling out a template developed by the Organisation for Economic Cooperation and Development (OECD) with the Inland Revenue Authority of Singapore within 12 months from the last day of their financial year.
The template will require the company to disclose data such as its profits, revenues and taxes paid in each country it has operations in.
Ernst & Young Solutions partner Henry Syrett said companies that meet the threshold should start thinking about how to fulfil this rule.
"We've had dry runs with some companies and our takeaway is that companies should not underestimate how hard it can be to put all this information together. And once they compile the information they should look out for data that might be seen as controversial to other tax authorities, and be prepared to explain their numbers."
The implementation of CbCR here comes as Singapore joins the inclusive framework for the global implementation of the Base Erosion and Profit Shifting (BEPS) Project spearheaded by the OECD and Group of 20 economies (G-20).
Base erosion and profit shifting refer to the practice of companies channelling their profits into a jurisdiction where they have little economic activity in order to benefit from that location's tax rates, which may be lower than the rates levied in the places where their operations actually take place.
Last year, the OECD set out a blueprint known as the BEPS Project to clamp down on the practice, and Singapore expressed its agreement with the plan.
By joining the inclusive framework, Singapore will become a "BEPS Associate", and will work with other participating jurisdictions to develop the implementation and monitoring phase of the BEPS Project
Deputy Prime Minister Tharman Shanmugaratnam said in a statement yesterday: "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 G-20 in ensuring the consistent implementation of the BEPS standards across all jurisdictions, so as to ensure a level playing field."
This article was first published on Jun 17, 2016.
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