SINGAPORE (CNA) – Singapore will explore a “top-up” tax as it adjusts its corporate tax system in response to a global deal that will ensure big companies pay a minimum tax rate of 15 per cent.
Called the Minimum Effective Tax Rate (METR), the new tax being studied will “top up” a multinational enterprise (MNE) group’s effective tax rate in Singapore to 15 per cent, said Singaporean Finance Minister Lawrence Wong in his Budget speech yesterday.
In his speech, Wong had outlined a range of near-term aid and long-term measures for the Singapore economy and society. To bring these various initiatives into fruition, he said Singapore needs more revenue and he is therefore making “major enhancements to strengthen the tax structure”.
Discussions to revise international tax rules and increase the taxes paid by large businesses have been under way since 2013, but gathered momentum last year.
As of November 2021, more than 140 countries and jurisdictions, including Singapore, have endorsed an agreement brokered by the Organisation for Economic Co-operation and Development to overhaul global corporate tax rules and fight what is known as base erosion and profit shifting (BEPS) issues.