A general presentation of the two-pillar system
The 43-slide IRAS presentation explains BEPS background, GloBE adoption and scope, IIR/UTPR/DTT mechanics, exclusions and four safe-harbour types. It traces the 2013 fifteen-action plan, 2015 reports, 2016 Inclusive Framework and October 2021 two-pillar agreement. Pillar One reallocates residual-profit taxing rights to markets; Pillar Two seeks a minimum tax in each jurisdiction. The slides expressly give a general understanding rather than every possible tax issue. In particular, their transitional safe-harbour dates are the dates shown at presentation, not a substitute for later 2026 packages or detailed Singapore legislation.
Revenue scope is tested on prior years
GloBE applies where UPE consolidated annual revenue is at least EUR750 million in at least two of the four immediately preceding fiscal years, excluding the tested current year. Eliminate intragroup transactions but include revenue attributable to minority interests and excluded entities. A new group meeting the threshold in its first two years can enter in year three without waiting for four full years. For a short fiscal period, proportionately adjust the threshold or annualise revenue. A group includes consolidated entities and those excluded only for size, materiality or held-for-sale status; it can also be a single entity with a foreign PE. An MNE has an entity or PE outside the UPE jurisdiction. Constituent entities include partnerships/trust arrangements, and a PE is a separate constituent entity; excluded entities themselves are outside CE scope.
The five steps and rule order
Identify the group, constituent entities and locations; determine GloBE income; attribute covered taxes; compute jurisdictional ETR and top-up; then allocate under IIR/UTPR. Excess profit is net GloBE income less substance-based exclusion, not all gross revenue. STTR is a treaty-source rule at 9% on specified gross intragroup payments; IIR charges a parent its share of low-tax foreign income at a 15% minimum, and UTPR backstops tax not collected under IIR. GloBE is a common approach: jurisdictions need not adopt, but should accept consistent rules applied by other members, including ordering and safe harbours. This explains why foreign taxation can matter even before Singapore adopts its own rule.
IIR, UTPR and DTT numerical illustrations
With 1,000 low-tax profit, zero substance exclusion and 5% ETR, the gap to 15% is 100. A 100%-owning parent pays 100 under IIR and a 90%-owning parent pays 90 in the simplified illustration. If no parent collects IIR and only subsidiary jurisdiction B adopts UTPR, the 100 is allocated there rather than to the non-adopting parent, A or C jurisdictions. The UTPR key uses employees and tangible-asset net book value. A qualified domestic top-up tax is deducted against GloBE top-up. The Singapore example with DTT of 100 leaves IIR or UTPR of zero on the same 1,000/5% income, avoiding duplicate collection. The diagrams assume the stated ownership and zero SBIE; they are not universal results for every structure.
Three Singapore implementation examples
The slides introduce Singapore IIR and DTT for financial years beginning from 1 January 2025. In a Singapore-UPE group holding low-tax foreign entities directly, the presentation compares no Singapore IIR/DTT in FY2024 with domestic DTT and parent IIR in FY2025. With an intermediate parent in C applying IIR from FY2024, C collects first in 2024; from 2025 the Singapore UPE’s top-down IIR switches C’s collection off while Singapore DTT addresses local entities. For a foreign-headquartered group, the foreign UPE collects on low-tax Singapore income in 2024; in 2025 Singapore DTT takes precedence and reduces foreign IIR. Actual tax requires the ownership and jurisdiction rules, not only the year label.
Entity exclusions differ from income and de minimis exclusions
Excluded entities are governmental entities, international organisations, non-profits, pension funds, investment-fund UPEs and real-estate-investment-vehicle UPEs. Certain controlled entities can qualify where at least 95% of value is owned by excluded entities and activities almost exclusively hold/invest assets for them or are ancillary, or at least 85% is owned and substantially all income is excluded dividends or equity gains/losses. Their profits, taxes, assets and payroll are excluded from GloBE/DTT computation, though revenue remains relevant to group scope. This differs from reducing the taxable profit through income exclusions or deeming a jurisdiction’s top-up zero by de minimis election.
Substance and international shipping exclusions
The eventual substance carve-out is 5% of eligible payroll and tangible-asset carrying value. The slides’ FY2024 transitional figures are 9.8% payroll and 7.8% assets, reducing toward 5% in 2033. International shipping and qualifying ancillary shipping income/loss require strategic or commercial ship management effectively in the entity’s jurisdiction, with related direct/allocated indirect costs. Shipping includes international passenger/cargo, slot charters, fully equipped crewed leasing, bareboat leasing to another CE, pools and ships sold after at least one year of use. Domestic inland-waterway traffic is excluded from this concession. Ancillary categories include ≤3-year bareboat leases to non-CE shipping enterprises, domestic-leg tickets on international voyages, container leasing/storage/detention, specified services to shippers and integral investment income; aggregate qualifying ancillary income cannot exceed 50% of the local CEs’ shipping income.
The ordinary de minimis election
A jurisdiction’s top-up is deemed zero where the current and previous two years’ average GloBE revenue is below EUR10 million and average income is below EUR1 million or is a loss. Elect annually. Stateless and investment entities are not eligible and their amounts are excluded from this calculation. This ordinary three-year-average GloBE test is distinct from the transitional CbCR current-year qualified-report test with similar headline thresholds. Passing an exclusion does not mean the entire group is outside the original EUR750 million scope.
Transitional CbCR: the three tests and historical window
The presentation’s window is years beginning by 31 December 2026 and not ending after 30 June 2028, subject to once-out-always-out. Later packages must be checked before applying that original window. Use a qualified CbC report from qualified statements: consolidation accounts, acceptable/authorised separate accounts or qualifying non-material entities’ CbCR accounts. Pass any one test: revenue below EUR10 million and pre-tax profit below EUR1 million; simplified ETR at least 15%/16%/17% for years beginning in 2024/2025/2026 respectively; or pre-tax profit no greater than GloBE SBIE. The routine-profit comparison includes equality. The report and accounting quality are conditions, not optional merely because a tax rate appears high.
Permanent, QDMTT and UTPR safe harbours
The permanent simplified-calculations framework reduces computations for ETR, routine-profit and de minimis tests; the slides refer to December 2023 NMCE guidance rather than claiming all permanent rules were final. A QDMTT must first qualify, then meet accounting, consistency and administration standards for its safe harbour: equivalent GloBE accounting or the specified local-account standard, matching calculations except authorised variations and ongoing monitoring. Relief deems other GloBE top-up zero subject to Article 8.2.2; it is different from merely crediting a domestic tax. The original transitional UTPR slide covers a UPE jurisdiction with at least 20% corporate income tax, years no longer than twelve months starting by 31 December 2025 and ending before 31 December 2026. The later May 2026 52–53-week amendment and 2026 Side-by-Side package must be read separately.
Official source
This article independently explains the substantive contents of the official PDF, including the relevant conditions, procedures and annexes. The linked document remains the authoritative source for its original wording, and later changes should be checked separately.
Read the official PDF ↗