The following 2 pillars discuss the potential situations that MNCs in Singapore could face:
Pillar one: Given Singapore’s small market size and consumer base, this could potentially mean that the revenue base could shrink as the new rules seek to link the taxing rights to the customer and user markets. However, depending on the final details, and how Singapore reacts and changes its tax policies to align with the new international tax rules, multinational companies who wish to establish a presence in Singapore will inevitably consider how these developments impact them before making their decision.
Pillar two: This is expected to have more significant implications for Singapore considering how the country has granted tax incentives to attract investments by multinational corporations. Multinational companies enjoying tax incentives may review their position and in the longer term, Singapore’s position as a regional hub for multinational groups will have to depend on non-tax factors.