Fiscal Prudence of Offsetting Grants for Enterprises and Impact of G7 Proposal to Exempt US-parented Groups from Global Minimum Tax Rules

Parliamentary Question by Mr Kenneth Tiong Boon Kiat:

To ask the Prime Minister and Minister for Finance (a) whether the Ministry has assessed the fiscal prudence of offsetting grants such as Refundable Investment Credit as recipient multinational enterprises may subsequently relocate jobs citing high costs; and (b) if not, whether the Government will repeal or suspend BEPS 2.0 Pillar Two if major jurisdictions like US and China abstain from joining the framework, to avoid competitiveness and tax-base erosion.

Parliamentary Question by Mr Shawn Loh:

To ask the Prime Minister and Minister for Finance (a) whether statements made by the G7 in June 2025 to propose a "side-by-side" solution to exempt US-parented groups from global minimum tax rules are likely to have implications on Singapore's future budgets; and (b) if so, what are these implications.

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Parliamentary Reply by Senior Minister of State for Finance, Mr Jeffrey Siow:

On Mr Kenneth Tiong‘s question on grants, all incentives offered by our economic agencies, including the Refundable Investment Credit, are subject to terms and conditions. Companies that receive Government support must make significant investments in Singapore and meet key outcomes, such as job creation and local employment, business spending, or fixed asset investment. The level of support and conditions vary depending on the nature of the project and incentive. Should a company fail to meet the imposed conditions, the Government has mechanisms to terminate the incentive and claw back the grants provided.

Our competitive strengths go beyond the financial incentives we provide. Singapore has built up a strong reputation as a global business hub, underpinned by our stable political environment, strong rule of law, deep pool of talent, excellent infrastructure, and connectivity with the world. These attributes also enable us to compete on the basis of value and not simply on cost.

On BEPS 2.0 Pillar Two, Singapore implemented the Domestic Top-up Tax and the Multinational Enterprise Top-up Tax from 1 January 2025. This was to avoid ceding revenues to other jurisdictions under the Pillar Two rules.

In June 2025, the G7 released a statement on how the Pillar Two rules may co-exist “side-by-side” with the US tax system. Discussions on the details of such a framework are ongoing. It is still unclear at the moment what the eventual outcome will be, and how other jurisdictions and multinational enterprises will respond. Hence, the impact on our fiscal outlook is uncertain. We are monitoring the issue closely and will review our approach once there is greater clarity.