Understanding Base Erosion and Profit Shifting - a two-pillar solution

Actionable insights for your tax transformation

Under the OECD Inclusive Framework, 140 countries agreed to enact a two-pillar solution to address the challenges arising from the digitalisation of the economy.

Pillar Two would ensure that large multinational enterprises (MNEs) - those with consolidated annual revenues of EUR 750 million or more - pay tax at an effective rate of at least 15% on profits earned in countries in which they operate. This will be primarily administered through a top-up tax regime.

The Singapore government has announced that the country would implement the Global Anti-Base Erosion (GloBE) rules including a domestic top-up tax (DTT) for in-scope MNEs from the financial year beginning on or after 1 January 2025. However, the legislation was not included in the draft Income Tax (Amendment) Bill 2023 published for public consultation on 6 June 2023.

It is time for MNEs to start preparing for the new regime. Taking into consideration the complexities involved, from data gathering to impact forecasting and more, this undertaking will require significant time and resource investment. To accelerate your transformation, here are key building blocks that are foundational to building up your Pillar Two readiness by 2025.

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Tap on the Refundable Investment Credit

Singapore's newly announced Refundable Investment Credit (RIC) scheme is designed to attract and incentivise multinational enterprises (MNEs) to invest in high-value and sustainable activities in Singapore.

Lennon Lee, our Financial Services Tax Leader, breaks down the newly announced RIC scheme, and how MNEs can leverage it to get a leg up.

Global minimum tax - what’s beyond the horizon?

The dawn of global minimum tax (also known as Pillar Two top-up tax) in 2024 may mean placing a floor on tax competition, but it does not change the fact that competition for foreign direct investments (FDIs) remains as intense as ever.

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Temporary exception from deferred tax accounting for GloBE

Amendments to IAS 12 provide a temporary exception from the requirement to recognise and disclose deferred taxes arising from the GloBE rules. Find out how and when this will affect your deferred tax reporting obligations.

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OECD’s Outcome Statement on the two-pillar solution

The OECD published an Outcome Statement and provides an update on the status and timeline for implementing Amount A and B of Pillar One and the Pillar Two Subject-to-Tax Rule (STTR).

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Data capture and reporting

MNEs are at varying stages of preparedness for Pillar Two. Find out the common roadblocks businesses are facing and some strategies to move forward.

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DTT and what it means for you

Pillar Two implementation will be a challenge for in-scope MNEs. Business leaders need to make their voices heard to help the government understand the impact of DTT on their businesses.

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Looking beyond tax incentives

The introduction of Pillar Two will impact Singapore’s tax incentive regime. With the GloBE rules coming into effect, is Singapore still an attractive investment location?

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Global Anti-Base Erosion (GloBE) Rules

Singapore will be implementing the GloBE rules including the DTT from 2025. Find out what businesses should do to prepare for this.

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A cautionary tale of global minimum tax

Unprecedented change in the global tax system is on the horizon. How will Pillar Two impact businesses in the Asia Pacific?

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Here’s how we can help with your transformation

  • Understand and interpret the concepts, rules and regulations relevant to Pillar Two
  • Determine how to access the financial data needed to comply
  • Identify gaps in your data needed for reporting
  • Develop a data strategy supported by the right systems and processes that can sustain reporting and compliance requirement
  • Reevaluate and streamline your business operations given the anticipated law changes.

Understand Pillar Two developments around the world

The OECD has recommended that the Pillar Two rules become effective in 2024, with the exception of the Undertaxed Profits Rule (UTPR) which is recommended to become effective in 2025. The EU Member States formally adopted the Minimum Tax Directive on December 15, 2022 and Member States shall transpose the Directive into their domestic law by December 31, 2023. Many other countries are working on their domestic rules to implement Pillar Two. Nevertheless, many multinationals already are subject to Pillar Two since the transition rules capture certain transactions occurring on or after November 30, 2021.

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Contact us

Chris Woo

Tax Leader, PwC Singapore

+65 9118 0811


Allison Cheung

Asia Pacific Tax Reporting and Strategy Leader, PwC Singapore

+65 8218 8350


Tan Ching Ne

Partner and Corporate Tax Leader, PwC Singapore

+65 9622 9826


Irene Tai

Partner, Corporate Tax, PwC Singapore

+65 9756 8439


Paul Lau

Partner, Financial Services Tax, PwC Singapore

+65 8869 8718


Rose Sim

Tax Reporting and Strategy Leader, PwC Singapore

+65 9623 9817


Tan Tay Lek

Partner, Corporate Tax, PwC Singapore

+65 9179 2725


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