Sir, the proposed amendments in the Finance (Income Tax) Bill may be split into three sets of changes: those pertaining to the Income Tax Act (ITA) and also related to the Budget this year; ITA changes that are not directly related to the Budget; and refinements to the Multinational Enterprise (Minimum Tax) Act (MMTA) that aim to clarify definitions and rules related to the OECD’s Base Erosion and Profit Shifting (BEPS 2.0) project, and specifically Global Anti-Base Erosion (GloBE) rules in Pillar 2.

My colleagues, Louis Chua and Kenneth Tiong, have/will deal with the first and second elements of the Bill. I will confine my reactions to the MMTA and parts of the ITA related to Multinational Enterprises (MNEs). In addition to a few specific concerns about the legislative elements, I also will also speak more broadly about what it means to stick to BEPS 2.0, in a Trump 2.0 world.

Ensure securities entities are subject to GloBE reporting requirements, and that RICs conform with OECD transfer pricing guidelines

Parts G and H of Clause 56 of the Bill inserts subsections that define “securitization entities” and “securitization arrangements” established by multinationals to help investors manage insolvency risk.[1] On its face, this is unobjectionable. Securitized entities and arrangements are ubiquitous in modern enterprise design and operation, and I understand that these may have been introduced as a result of public feedback requesting greater clarity on their treatment, when it comes to domestic top-up tax (DTT) calculations.[2]

My concern has to do with the role that securitized entities have historically played in modern finance, and especially how securitization enabled financial institutions to carry far riskier portfolios than otherwise possible,[3] which contributed to the 2007/08 global financial crisis. This is because securitized products—such as the infamous collateralized debt obligations (CDOs), CDO-squared, and other forms of asset-backed securities—increased the informational distance between regulators and banks, which then elevated the fragility in the system and set the stage for a full-blown crisis.[4]

While there is little reason to presently believe that similar securitization arrangements are inducing the sort of undesirable risk-taking in the context of MNEs’ approach to BEPS, it is nevertheless useful to keep in mind the key lesson from that earlier episode: that corporations can (and so) employ securitization to skirt rules and regulations. Hence, it is important that our authorities be alert to the possibility that MNEs may choose to park otherwise taxable assets into such arrangements and special purpose vehicles, which the legislation explicitly accommodates. Will the Ministry confirm that it will impose GloBE reporting obligations for such associated entities, which are often off-balance sheet, as well?

Clause 45 of the Bill deals with Refundable Investment Credits (RICs). I had, in the debate on last year’s budget statement, raised my concern that RICs could potentially be used as a strategic loophole by MNEs to shield themselves from their tax liabilities,[5] specifically through recording all innovation activities in a subsidiary located in a jurisdiction with generous R&D credits.[6] In his response, PM Wong assured the House that “the RIC is compliant with BEPS.”[7]

Singapore’s approach to transfer pricing currently takes strong reference from the OECD’s own guidelines.[8] In practice, this requires that intellectual property (IP) to be valued at arms-length, open-market prices. Presumably, then, this implies that RICs must likewise conform with transfer pricing of intangible IP, including hard-to-value intangibles.

In scrutinizing Clause 45 of the Bill, however, I did not find any such restrictions written into the language of the proposed legislation. The requirement for arms’ length conditions do, however, appear in the original Income Tax Act.[9] May I confirm, then, that this selfsame stipulation on pricing applies with equal force to RICs, via reference to ITA Section 34D.

Sticking to a rules-based system in the new Machiavellian global order

All in this House are undoubtedly aware that we appear to be transitioning from what had hitherto been a robust, United States-led, rules-based international economic order, toward one that is much more transactional, where might makes right, and the U.S.—rather than being a global caretaker—comes across instead as a bully. Small countries, such as Singapore, are unavoidably at a disadvantage in such a Machiavellian system. This applies to an international project such as BEPS, which is heavily reliant on the buy-in of nations to sustain it.

Does the exit of the United States from the system[10] irreparably undermine BEPS, and the multinational minimum tax? This is, of course, the fear that many have. In my view, however, the future of international tax rules is likely to unfold in much the same way that the global trading system has been evolving: steadily grinding forward, even in the absence of the United States.[11] To date, more than 50 countries already have Pillar 2 rules in force, and the passage of this Bill will further consolidate our nation’s position within this group of like-minded economies.

After all, the ability of countries to proceed with top-up taxes—even without the acquiescence or compliance of other countries—is largely built into the design of GloBE rules. Admittedly, unilateral action performed without the cover of a treaty may invite retaliatory responses. But given how the U.S. has already chosen to proactively wield the tariff stick under the Trump administration, the threat of such a tit-for-tar response becomes much less credible.

That said, I note that we have yet to impose certain elements of Pillar 2, such as the Under-Taxed Payments Rule (UTPR),[12] have yet to be implemented by Singapore.[13] This is somewhat fortuitous, since this has been a sticking point for the Trump administration.[14]

There may yet be room for reconciliation of the disparate positions between the United States and the rest of the signatories of BEPS. One possibility is a side-by-side regime, where American-owned groups receive some form of exceptional treatment vis-à-vis the rest of the world.

This could entail, for instance, the recognition of idiosyncratic MNE minimum taxes, such as the Global Intangible Low Tax Income (GILTI) for controlled foreign corporations, as equivalent to those prescribed by GloBE rules.[15] Another might grant U.S. entities permanent safe harbor, instead of just a temporary one.[16]

There is some text in the Bill, notably on Clause 59, that speaks to safe harbors, but only to the extent that it aligns the timing of elections of GloBE safe harbors, with no mention of their permanence. Similarly, there is no mention of how GILTI will be addressed in the present legislation.

These considerations have yet to be weaved into the MMTA, which is appropriate. I believe it would be premature to do so, given the volatile nature of the Trump administration’s policymaking process. Still, that does not preclude us from planning ahead.

To that end, I hope that the Ministry will share whether, in its view, there is a more plausible scenario among the various possibilities for how the global minimum corporate tax regime will play out, and if it has sketched out a tentative plan for how we might revise legislation, as these different potential outcomes unfold.

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[1] Finance (Income Taxes) Bill (2025).

[2] MOF (2025), Summary of Responses to Public Consultation on the Proposed Finance (Income Taxes) Bill 2025, Singapore: Ministry of Finance.

[3] Acharya, V.V., P. Schnabl & G. Suarez (2013), “Securitization Without Risk Transfer,” Journal of Financial Economics 107(3): 515–36.

[4] Lim, J.J. & T. Tan (2016), “Endogenous Transactions Costs and Institutions in the 2007/08 Financial Crisis,” Journal of Regulatory Economics 49: 56–85.

[5] Hansard (2024) 95(125): Feb 27.

[6] Djankov, S. (2021), “How Do Companies Avoid Paying International Taxes?”, PIIE Educational Resources, Washington, DC: Peterson Institute for International Economics.

[7] Hansard (2024) 95(126): Feb 28.

[8] OECD (2025), Singapore: Transfer Pricing Country Profile, Paris: Organisation for Economic Co-operation and Development.

[9] Income Tax Act (1947), Sec. 34D.

[10] On the first day of his second term, U.S. president Donald Trump issued an executive order that declared that BEPS 2.0 had no force or effect in the United States. See Trump, D.J. (2025), “The Organization for Economic Co-operation and Development (OECD) Global Tax Deal (Global Tax Deal),” Presidential Executive Order, Washington, DC: The White House.

[11] This is consistent with the way that the former Trans-Pacific Partnership (TPP) eventually morphed into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), following the exit of the United States from the original 12-member negotiating body. The final text was similar to the original TPP, with some provisions advanced by the United States dropped.

[12] The UTPR is a backstop to the Income Inclusion Rule, which permits jurisdictions where the constituent entities are located to apply a top-up tax. See OECDPillars (2025), The Under-Taxed Payments Rule, Torrance, CA: OECDPillars.

[13] McHoney, D., J. Howe, A. Sciarra, W. Morris & G. Jacobi (2025), “Pillar Two Country Tracker,” New York, NY: PwC.

[14] The two areas that are specifically targeted appear to be the UTPR and digital services taxes.

[15] ThomsonReuters  (2025), “Is Pillar Two Thriving or at Risk: What President Trump’s U.S. Exit from Global Tax Deal Means for Multinationals,” Business Insight, Mar 7, Toronto: ThomsonReuters.

[16] Barenfeld, M. & H. Ydén (2025), “BEPS 2.0: What Will Happen to Pillar 2?”, Insights, Oct 21, Stockholm: KPMHG Sweden.

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