Legal Updates for June 2024 MOF Launches Two Consultations on Implementation of BEPS 2.0 Pillar Two, Amendments to Income Tax Act
In February 2024, a suite of tax measures was announced in Singapore's Budget 2024, including the upcoming implementation of Pillar Two of the Base Erosion and Profit Shifting 2.0 ("BEPS 2.0") on 1 January 2025.
On 10 June 2024, the Ministry of Finance ("MOF") launched two public consultations on two Bills to implement the tax measures from Budget 2024:
- Consultation on the Multinational Enterprise (Minimum Tax) Bill ("MNE Bill") and the Multinational Enterprise (Minimum Tax) Regulations 2025, regarding the implementation of BEPS 2.0 Pillar Two; and
- Consultation on the Income Tax (Amendment) Bill 2024 ("ITA Bill"), which proposes 15 amendments to the Income Tax Act 1947 ("ITA") to effect measures announced in Budget 2024 and seven amendments arising from MOF's periodic review of Singapore’s income tax regime.
The MNE Bill, in particular, signals a major change to Singapore's tax regime by introducing a minimum effective tax rate of 15% for large multinational entity (MNE) groups pursuant to the Global Anti-Base Erosion Model Rules (GloBE Rules).
The consultations will run from 10 June 2024 to 5 July 2024, with MOF to provide a summary of responses in September 2024.
In this Update, we provide an overview of the two Bills.
The Significant Investments Review Act – Balancing National Security and Investment Opportunities
The Significant Investments Review Act 2024 ("Act"), which came into force on 28 March 2024, sets out a new investment management regime that applies to both local and foreign investors for entities that are critical to Singapore's national security interests. The Act reflects Singapore's proactive and adaptive approach to economic and security challenges, positioning the nation as a global leader in responsible and secure investment practices. It also follows the growing trend worldwide for governments to carefully screen foreign investments in sensitive sectors.
On 31 May 2024, the list of the first entities to be designated under the Act was published in the Government Gazette and on the Office of Significant Investments Review website. The nine entities are ST Logistics Pte. Ltd, Sembcorp Specialised Construction Pte. Ltd. ST Engineering Marine Ltd, ST Engineering Land Systems Ltd, ST Engineering Defence Aviation Services Pte. Ltd, ST Engineering Digital Systems Pte. Ltd., ExxonMobil Asia Pacific Pte. Ltd, Shell Singapore Pte, Ltd and Singapore Refining Company Private Limited.
In this Update, we first consider key requirements of the Act and then consider the current list of entities designated under the Act.
On the Cutting Edge of AI Governance - Singapore Launches Model AI Governance Framework for Generative AI, Develops Digital Forum of Small States AI Governance Playbook
As a regional leader in the field of artificial intelligence ("AI"), Singapore has played an active role in setting the course for the development and deployment of AI systems while managing its associated risks. In line with this, Singapore has launched the Model AI Governance Framework for Generative AI ("MGF-Gen AI"), which aims to establish a systematic and balanced approach to address generative AI risks while continuing to facilitate innovation.
Singapore will also be working with Rwanda to lead the development of a Digital Forum of Small States AI Governance Playbook ("Digital FOSS Playbook"), which seeks to enable small states to harness AI positively. The playbook is expected to be available at the end of 2024.
This Update highlights the key features of the MGF-Gen AI and what parties looking to develop or deploy generative AI solutions should be aware of, as well as the anticipated features of the Digital FOSS Playbook.
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