Singapore to Implement OECD’s BEPS 2.0 Initiative

Singapore is set to adopt the income inclusion rule and a domestic top-up tax under Pillar Two of the OECD’s BEPS 2.0 Initiative, imposing a minimum effective tax rate of 15% on qualifying enterprises’ profits from financial years starting on or after Jan. 1, 2025.

However, this move limits Singapore’s ability to offer traditional tax incentives, such as tax holidays or concessionary tax rates, to attract new investments. Concerns arise that multinational enterprises (MNEs) may consider relocating their operations away from Singapore due to increased tax exposure.

To address this challenge and maintain competitiveness, Singapore announced the Refundable Investment Credit (RIC) in its Budget 2024. The RIC serves as a strategic measure to attract and retain international investment by providing a stable business environment and clear supportive framework. This initiative aims to reassure MNEs of Singapore’s commitment to fostering competitiveness and innovation in a rapidly evolving global market.