TRW & Co · Tax and structuring
Pillar Two in Singapore: the Domestic Top-up Tax, the Income Inclusion Rule and the 2027 Filing Calendar
Pillar Two in Singapore applies to multinational groups with consolidated revenue of at least EUR 750 million. From financial years starting on or after 1 January 2025, the Domestic Top-up Tax tops up low-taxed Singapore profits to 15%, and the Income Inclusion Rule taxes Singapore parents on low-taxed foreign profits. Registration is under way and first returns are due in 2027.
Key pointThe January 2026 Side-by-Side package can relieve US-headquartered groups from the Income Inclusion Rule, but IRAS has confirmed it does not affect Singapore's Domestic Top-up Tax, so those groups still register and may still pay DTT.
At a glance
EUR 750m revenue test
Groups with consolidated revenue of at least EUR 750 million in two of the four preceding years, and a Singapore entity, must register under the MMT Act.
Two taxes from 2025
The Domestic Top-up Tax and the MNE Top-up Tax apply to financial years beginning on or after 1 January 2025; the UTPR is not yet implemented.
Register within six months
Registration is due six months after the first in-scope year end, so 30 June 2026 for a group with a 31 December 2025 year end.
Returns 15 or 18 months
GloBE, DTT and MTT returns are due 15 months after year end, or 18 months in a transition year, with payment one month later.
New safe harbours adopted
Singapore adopts the Substance-based Tax Incentive and Side-by-Side safe harbours from FY 2026 and the Simplified ETR Safe Harbour from FYs starting on or after 31 December 2026.
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The short answer: what Pillar Two in Singapore requires now
Pillar Two in Singapore is implemented through the Multinational Enterprise (Minimum Tax) Act 2024 (the MMT Act). From financial years beginning on or after 1 January 2025, it imposes two taxes on multinational groups with consolidated revenue of at least EUR 750 million: a Domestic Top-up Tax (DTT) on low-taxed profits of group entities in Singapore, and a Multinational Enterprise Top-up Tax (MTT), Singapore's version of the Income Inclusion Rule (IIR), on low-taxed profits of group entities abroad. Both aim at a 15% minimum effective tax rate in each jurisdiction.
As of October 2026, the compliance cycle is live. Registration for groups with a 31 December 2025 year end was due by 30 June 2026. The first GloBE Information Returns, DTT returns and MTT returns follow in 2027. In January 2026 the OECD/G20 Inclusive Framework also agreed a "Side-by-Side" package of safe harbours, which Singapore is adopting in stages from 2026.
This article explains who is in scope, how the DTT and the IIR interact, what the safe harbours change and what the filing calendar looks like. For our wider advisory page, see global minimum tax in Singapore.
The legal framework: GloBE rules, the MMT Act and IRAS
Pillar Two comes from the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting. Singapore joined the October 2021 consensus on a two-pillar solution. The GloBE Model Rules, released in December 2021, use two interlocking charging rules: the IIR, which taxes a parent entity on the low-taxed income of its subsidiaries, and the Undertaxed Profits Rule (UTPR), a backstop collected by denying deductions elsewhere in the group.
Singapore announced in Budget 2024 that it would implement the IIR and a domestic top-up tax from 2025, and that the UTPR would be considered later. The MMT Act gives effect to both taxes, and IRAS administers them. Its GloBE and DTT guidance page is the best single official summary and lists the OECD administrative guidance Singapore follows.
The DTT is designed to operate as a qualified domestic minimum top-up tax. That matters because, where a jurisdiction's own top-up tax is qualified, it reduces any top-up tax another country could otherwise collect on the same profits under its IIR or UTPR. In plain terms, the DTT keeps the top-up tax on Singapore profits in Singapore, which is the central design choice behind Pillar Two in Singapore.
Who is in scope of Pillar Two in Singapore
According to IRAS registration guidance, a group must register under the MMT Act if two conditions are met. First, its annual revenue in the consolidated financial statements of the ultimate parent entity (UPE) was EUR 750 million or more in at least two of the four financial years immediately before the tested year. Second, it has at least one constituent entity or joint venture located in Singapore, or a reverse hybrid entity incorporated or registered in Singapore.
Pillar Two in Singapore can catch both foreign-headquartered and Singapore-headquartered groups. A foreign group with a single Singapore subsidiary is in scope for the DTT. A Singapore-headquartered group, or a group with a Singapore intermediate holding company, may also be a responsible member for the MTT.
Excluded entities, such as certain government entities, pension funds and investment funds that are ultimate parents, are not subject to the DTT or MTT. IRAS has confirmed that if all of a group's Singapore entities are excluded entities, the group need not register, unless it elects not to treat them as excluded.
| Feature | Domestic Top-up Tax (DTT) | MNE Top-up Tax (MTT / IIR) |
|---|---|---|
| What it taxes | Low-taxed profits of group entities located in Singapore | Low-taxed profits of group entities located outside Singapore |
| Who is liable | Singapore constituent entities, with a designated local DTT filing entity paying | Singapore parent entities that are responsible members, such as the UPE or an intermediate parent |
| Typical trigger | Singapore incentives or reliefs push the jurisdictional effective tax rate below 15% | A foreign subsidiary's jurisdiction taxes below 15% and has no qualified domestic top-up tax |
| Start date | Financial years beginning on or after 1 January 2025 | Financial years beginning on or after 1 January 2025 |
| Effect of Side-by-Side Safe Harbour | Not affected; the DTT still applies | Groups headquartered in a qualifying jurisdiction are relieved from FY 2026 |
DTT and IIR mechanics in practice
Under Pillar Two in Singapore, both taxes start from the same GloBE computation. The group calculates GloBE income and adjusted covered taxes for every jurisdiction where it operates, works out the jurisdictional effective tax rate, and compares it with 15%. Where the rate is lower, top-up tax is due on the excess profit, after a substance-based income exclusion linked to payroll and tangible assets.
If the low-taxed jurisdiction is Singapore, the DTT collects the top-up tax locally. If the low-taxed jurisdiction is overseas and that country has no qualified domestic top-up tax, a Singapore parent may owe MTT on its share. If the overseas jurisdiction does have a qualified domestic top-up tax, that tax normally comes first and reduces the MTT.
For DTT purposes, IRAS says groups may elect to use either Singapore's local accounting standards or an acceptable financial accounting standard used in the consolidated financial statements, subject to the Simplified ETR Safe Harbour conditions. That choice affects data collection, so make it early. Our article on tax incentive strategy covers how concessionary rates interact with the 15% floor.
The Side-by-Side package and the safe harbours
On 5 January 2026, the Inclusive Framework agreed a Side-by-Side package. It has four parts: a Simplified ETR Safe Harbour; an extension of the Transitional Country-by-Country Reporting Safe Harbour to financial years beginning on or before 31 December 2027, but not a year ending after 30 June 2029; a Substance-based Tax Incentive Safe Harbour; and a Side-by-Side system made up of a Side-by-Side Safe Harbour and a UPE Safe Harbour.
IRAS has said Singapore will adopt the Substance-based Tax Incentive Safe Harbour and the Side-by-Side Safe Harbour for financial years beginning on or after 1 January 2026. It will extend the transitional CbCR safe harbour as agreed, and apply the Simplified ETR Safe Harbour from financial years beginning on or after 31 December 2026. It does not need the UPE Safe Harbour because it has not implemented the UTPR.
Substance-based Tax Incentive Safe Harbour
This safe harbour lets a group treat qualified tax incentives as an addition to covered taxes, up to a substance cap of 5.5% of the greater of eligible payroll costs or depreciation of eligible tangible assets in the jurisdiction. An alternative cap of 1% of the carrying value of eligible tangible assets is available on an election for at least five consecutive years. Only expenditure-based or production-based incentives qualify; income-based incentives such as concessionary rates do not. IRAS has published a list of Singapore qualified tax incentives.
Side-by-Side Safe Harbour
The Side-by-Side Safe Harbour relieves groups headquartered in a jurisdiction with a qualified side-by-side regime from the IIR and UTPR in other jurisdictions. IRAS has confirmed that the United States has qualified status, that the relief applies from FY 2026, and that it does not affect the DTT. A US-headquartered group with Singapore entities therefore still registers and still faces the DTT on low-taxed Singapore profits.
The Side-by-Side package changes who pays the IIR, not whether Singapore collects the DTT. Groups that expected the US arrangement to take their Singapore operations out of Pillar Two should revisit that assumption before the first DTT return.
Registration, filing and payment deadlines
For Pillar Two in Singapore, the MMT Act sets a one-time registration and then an annual filing cycle. IRAS's compliance obligations module sets out the timeline. A "transition year" is the first year in which the group comes within any jurisdiction's qualified IIR or UTPR, or becomes liable to register in Singapore, whichever is earlier, and it carries a longer filing period.
- Register within six months of the first year end. The UPE, or an authorised representative, registers the group online and designates a local GloBE Information Return filing entity and a local DTT filing entity. For a 31 December 2025 year end, the deadline was 30 June 2026.
- Set up Corppass access. The group receives a Group ID. IRAS says the DTT and GloBE Information Return will be handled in myTax Portal from January 2027, with the filing entity's Corppass administrator as the default administrator.
- File the GloBE Information Return or a notification. File within 15 months of year end, or 18 months for a transition year. Where the return is filed in another jurisdiction that exchanges it with Singapore, a notification is filed instead.
- File the DTT and MTT returns. These follow the same 15-month or 18-month deadlines. For a 31 December 2025 year end, that means 31 March 2027, or 30 June 2027 for a transition year.
- Pay within one month of the filing deadline. DTT and MTT are payable in Singapore dollars, in full, within one month after the filing due date unless IRAS allows more time.
- Keep records for the required period. IRAS describes a general five-year record-keeping period and an extended ten-year period for records that support look-back calculations.
A group that fails to notify IRAS of its registration liability may face a surcharge of 10% of the DTT and MTT. Groups that missed the registration window should speak to IRAS promptly rather than wait for the first return.
What changed in 2026 and what is still moving
In June 2026, MOF consulted on a draft Finance (Income Taxes) Bill 2026, and Parliament passed the Bill in October 2026. Alongside Budget 2026 measures, it amends the MMT Act to legislate the Side-by-Side Safe Harbour for financial years beginning on or after 1 January 2026, and creates a framework for exchanging GloBE Information Returns with other tax administrations. Where IRAS does not receive a group's return through exchange by the deadline, the group must file it directly.
As of October 2026, groups should check the commencement provisions and IRAS's updated guidance for the final operational detail. Budget 2026 itself did not change the scope or rate of the DTT or the MTT. We cover the Budget's company measures separately in our tax structuring practice.
Illustrative scenario: a regional group headquartered in Singapore
This scenario is illustrative only and uses generic parties.
A consumer products group has its ultimate parent in Singapore and consolidated revenue above EUR 750 million in each of the last four years. Its Singapore trading company enjoys a concessionary tax rate under an incentive. It also has a regional distribution subsidiary in a jurisdiction that taxes it at a low rate and has no domestic top-up tax. Its financial year ends on 31 December, and FY 2025 is its first year in scope anywhere.
FY 2025 is a transition year. The group should have registered by 30 June 2026. For Singapore, the concessionary rate may pull the jurisdictional effective tax rate below 15%, creating DTT. The Substance-based Tax Incentive Safe Harbour will not help with the concessionary rate, because it is income-based, but it may help with enhanced deductions from FY 2026. For the overseas subsidiary, the Singapore parent may owe MTT. The first GloBE Information Return, DTT return and MTT return are due by 30 June 2027, with payment by 31 July 2027.
For this group, the legal workstreams under Pillar Two in Singapore are as important as the calculations: confirming which entities are constituent or excluded entities, documenting the authority for the registering representative, and reviewing intra-group agreements so that top-up tax costs land in the right entity.
Risks and common mistakes
Treating the EUR 750 million test as a single-year test
The revenue threshold looks at at least two of the four financial years before the tested year, using the UPE's consolidated financial statements. A group that dipped below the threshold last year may still be in scope, and a group that has just crossed it may come into scope earlier than expected.
Map consolidated revenue for the relevant years and record the analysis. Acquisitions and disposals need particular care because they change the group perimeter.
Assuming incentives are protected
Many Singapore incentives reduce tax through concessionary rates, which can lower the effective tax rate below 15%. The new safe harbour only treats qualified, expenditure-based incentives as covered taxes, within a substance cap. Income-based incentives will usually produce DTT where the rate falls below 15%.
Model the effective tax rate before negotiating or renewing an incentive. Our page on transfer pricing coordination explains why profit allocation drives the result.
Leaving the representative's authority undocumented
Where an overseas UPE does not register itself, its representative must be an individual from a Singapore constituent entity or a local tax agent, and must submit a Letter of Authorisation on the UPE's letterhead. Gaps in that authority cause delays.
Board resolutions at the UPE and clear internal delegations help. They also avoid later disputes about who is responsible for errors in the return.
Ignoring Pillar Two in deals
Top-up tax liabilities can follow an entity that leaves a group, and IRAS's guidance contemplates assessments on the group for DTT attributable to a departing entity. Buyers and sellers of in-scope businesses need to allocate this risk.
Add Pillar Two to due diligence questionnaires, warranties and indemnities. Our article on M&A tax diligence sets out how to frame the questions.
What to do next, and how TRW & Co helps
Pillar Two in Singapore is mostly a data and calculation exercise, and that work sits with the group's tax function and its tax advisers. The legal work sits around it: confirming scope and entity classification, documenting authorisations, revising intra-group agreements, allocating top-up tax in transactions, and handling disputes with IRAS if positions are challenged.
TRW & Co provides that legal advice and coordinates with your tax advisers and auditors; we do not prepare or file GloBE returns. Our network across Bangladesh, the UK, the UAE and China helps groups align Singapore positions with parent and subsidiary jurisdictions.
- Confirm the revenue test for each year and record which year is your transition year.
- Check registration was made on time, or contact IRAS now if it was not.
- Choose the accounting standard for DTT and plan data collection.
- Review incentives against the Substance-based Tax Incentive Safe Harbour and IRAS's list of qualified tax incentives.
- Diarise filing and payment deadlines for 2027.
- Update intra-group agreements and deal documents to allocate top-up tax.
For governance around these steps, see our article on corporate tax governance. To discuss your group, contact our Singapore team.
Frequently asked questions
01When did Pillar Two start in Singapore?
Singapore's Domestic Top-up Tax and Multinational Enterprise Top-up Tax, which is its version of the Income Inclusion Rule, apply to financial years beginning on or after 1 January 2025. They are imposed under the Multinational Enterprise (Minimum Tax) Act 2024 and administered by IRAS. Singapore announced the measures in Budget 2024 and has said it will consider the Undertaxed Profits Rule at a later stage. For a calendar-year group, FY 2025 is therefore the first year in scope.
02Does Pillar Two apply to a foreign group with one Singapore subsidiary?
Yes, if the group meets the EUR 750 million revenue test. A single Singapore constituent entity or joint venture is enough to require registration under the MMT Act. The Singapore entity will be within the Domestic Top-up Tax, which applies if the group's Singapore effective tax rate falls below 15%. The foreign parent will not normally pay Singapore's MTT, which applies to Singapore parent entities, but the group must still designate local filing entities and meet Singapore deadlines.
03What is the deadline to register for DTT and MTT?
The ultimate parent entity, or an authorised representative, must register within six months after the end of the group's first financial year to which the MMT Act applies. For a group with a 31 December 2025 year end, that was 30 June 2026. IRAS opened the registration process in May 2026. A group that fails to notify IRAS of its registration liability can face a surcharge of 10% of the DTT and MTT, so late registrants should contact IRAS without delay.
04When are the first Pillar Two returns due in Singapore?
The GloBE Information Return or notification, the DTT return and the MTT return are due 15 months after the financial year end, or 18 months if the year is a transition year. For a 31 December 2025 year end, that is 31 March 2027, or 30 June 2027 for a transition year. Tax is payable within one month after the filing due date. IRAS says filing will be through myTax Portal using a Group ID from January 2027.
05Do Singapore tax incentives still work under Pillar Two?
They still reduce Singapore corporate income tax, but if they push the group's Singapore effective tax rate below 15% the Domestic Top-up Tax can claw back the benefit. From FY 2026, the Substance-based Tax Incentive Safe Harbour treats qualified, expenditure-based incentives as covered taxes within a substance cap, which helps. Income-based incentives, such as concessionary tax rates, do not qualify, so groups should model their effective tax rate before relying on them.
06Does TRW & Co prepare Pillar Two returns?
No. GloBE calculations and returns are prepared by the group's tax function and tax advisers. TRW & Co advises on the legal side: scope and entity classification, registration authority, intra-group agreements, transaction documents and any dispute with IRAS. We coordinate with your tax advisers and auditors so that the legal structure and the filings are consistent, and draw on our offices and network outside Singapore where parent jurisdictions are involved.
Sources and official materials
- IRAS: GloBE Rules and Domestic Top-up Tax — Scope, implementation dates and the Side-by-Side package in Singapore
- IRAS: Registration for MTT and DTT — Registration conditions, deadlines, representatives and surcharge
- IRAS: GloBE and DTT related compliance obligations (Module 9) — Filing, payment and record-keeping timelines
- IRAS: List of qualified tax incentives — Singapore incentives treated as QTIs for the safe harbour
- IRAS: Pillar 2 Top-up Taxes — Landing page for IRAS Pillar Two guidance and e-learning
General information only, current as at 20 October 2026. It is not legal advice and does not create a lawyer–client relationship. Singapore law and regulatory practice change; check current official sources and take advice on the facts of your matter.
