SINGAPORE may consider allowing businesses to pay upcoming domestic and multinational top-up taxes in interest-free installments, to better help multinationals navigate the minimum tax framework under the Global Anti-Erosion Model rules of the tax base.

This was one of the proposals put forward by professional services firm Deloitte in its Budget 2025 wish list published on Thursday (December 26), along with suggestions to improve the Repayable Investment Credit Incentive Scheme (RIC).

From 2025, eligible multinational enterprises (MNEs) operating in Singapore will have to pay a minimum effective tax rate of 15 per cent on their group profits, in line with the second pillar of the base erosion framework. and Benefit Transfer (BEPS) 2.0.

This will apply to multinational companies with consolidated annual revenues of at least €750 million (S$1.1 billion) in two of the previous four financial years.

Singapore will achieve this through a Multinational Enterprise Complementary Tax (MTT) and a Domestic Complementary Tax (DTT), which will close the gaps when a multinational enterprise’s effective tax rate falls below 15 percent, whether at the international or national level.

The DTT will ensure that Singapore-based entities comply with the global minimum effective tax rate of 15 percent, while the MTT will apply to Singapore-based companies that hold interests in entities located in low-tax jurisdictions. ‘taxation.

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Providing multinationals with the option to make installment payments would help them manage their cash flow during the transition, said Liew Li Mei, head of international tax at Deloitte Singapore.

Strengthen incentives

Singapore introduced the RIC during Budget 2024 to encourage businesses to make significant investments that bring substantial economic activities to the Republic.

The RIC is a tax credit with a cash refundable function. To strengthen its impact, Deloitte recommends that it be expanded to include offshore and regional decarbonization projects initiated from Singapore.

The government may also consider expanding eligible cost categories to include cost-sharing arrangements, intangible assets and depreciation of existing assets. This would provide companies with greater flexibility to expand their high-impact projects, said Yvaine Gan, global head of investment and innovation incentives at Deloitte Singapore.

The company also proposed increasing the support rate up to 70 percent and allowing the RIC to be offset against other taxes payable in addition to the corporate income tax, such as property taxes. and carbon.

The RIC could also be modified to have a volume-based component, where credits are linked to production volumes. This would ensure its adaptability to various business models, Gan added.

Other proposals

Separately, Deloitte also made recommendations to streamline other tax policies of Singapore companies.

For example, he proposes easing restrictions on the sale of shares in real estate companies to give companies greater flexibility to restructure their assets.

“Current rules, such as the requirement to prove that there is no real estate development for an extended period, could slow down strategic decisions and limit the ability of companies to quickly adapt to market conditions,” he declared.

“Simplifying these requirements can allow businesses to streamline their operations, redeploy capital more efficiently, and effectively manage their resources during times of economic uncertainty.”

To support Singapore’s sustainability ambitions, Deloitte recommended expanding the Energy Efficient Grant – which co-finances investments in energy-efficient equipment – ​​to include a wider range of equipment and services.

It also recommended extending the Sustainability Reporting Grant – which helps large companies and small and medium-sized businesses prepare their first climate reports – beyond the initial reporting year, as well as to expand eligibility.

To better attract top talent, Deloitte has proposed that employment eligibility for Dependant’s Pass holders be expanded beyond just the spouses of Overseas Networks and Expertise Pass holders.

Current eligibility restrictions limit the options available to many qualified professionals, Deloitte said. Expanding eligibility criteria would allow spouses of employment pass holders to work without a separate work permit, boosting Singapore’s attractiveness to foreign professionals.