What happened?

IRAS’s Pillar Two page, last updated 13 October 2026, explains Singapore’s implementation of the substance-based tax incentive safe harbour. This article explains that guidance; the webpage date does not establish when each individual provision was first published or enacted.

Key details

The safe harbour permits qualified tax incentives to increase adjusted covered taxes for the jurisdictional effective-tax-rate calculation. Income-based incentives are excluded. Generally available expenditure-based or tangible-production-volume incentives can qualify subject to the detailed conditions.

Who is affected?

Singapore’s IIR and domestic top-up tax apply from financial years starting 1 January 2025 to groups meeting the €750 million revenue threshold in at least two of the preceding four financial years. GCC groups assessing Singapore operations should check scope before assessing incentive treatment.

Effective date / timing

IRAS states that the incentive safe harbour applies for financial years starting on or after 1 January 2026. The ordinary substance cap is 5.5% of the greater of eligible payroll or eligible tangible-asset depreciation. An alternative 1% carrying-value cap requires an election for at least five consecutive financial years.

Why it matters

IRAS also publishes a list identifying qualifying components of specific incentives. Its distinction between base and enhanced deductions matters: the list is not a statement that every component of a named scheme qualifies. The linked list was retrieved and checked for this article.