Pillar Two Legislation: Multinational Enterprise (Minimum Tax) Act And Its Accounting Implications
As announced in Singapore Budget 2024, the Multinational Enterprise (Minimum Tax) Act and its subsidiary legislation, Multinational Enterprise (Minimum Tax) Regulations 2024 (“Pillar Two legislation”), are effective for financial years starting on or after 1 January 2025. Both tax legislations are applicable to constituent entities that are members of a Multinational Enterprise (“MNE”) Group that has annual revenue of EUR750 million or more in the consolidated financial statements of the ultimate parent entity in at least two of the last four years.
As Singapore had enacted Pillar Two legislation before 31 December 2024, impacted MNE entities are required to comply with the applicable requirements in SFRS(I) 1-12 and FRS 12 for financial reporting periods ended 31 December 2024.
In addition, impacted MNE entities would need to assess the impact on reporting systems and processes as well as the availability of data for the computation of Pillar Two income taxes. This could pose challenges given the complexity involved in the computation and collection of data across various jurisdictions.
ISCA is working on the issuance of a technical guidance on the accounting implications arising from Pillar Two legislation. Keep a look out for more information on this.
The ED aims to reduce diversity in practice by answering application questions about the equity method of accounting and to improve the understandability of IAS 28. The proposed amendments are intended to clarify and amend the requirements of IAS 28, with new disclosure requirements to enhance the information companies provide about equity accounted investments. In addition, a reordering of the requirements is being proposed to improve the understandability of IAS 28.
We are supportive of the approach taken by IASB to address specific application questions which would provide solutions to long-standing application difficulties, reduce diversity in practice and lead to more comparable and understandable information for users. However, we note that further clarifications and guidance might be required to ensure consistent application of the proposed amendments. For example, the proposed definition of the cost of associate or joint venture is silent on the accounting of expenses directly attributable to the acquisition of the investment. Hence, we recommend IASB to provide clarity on whether such expenses should be included in the cost of associate or joint venture.
ASC Issues Amendments To SFRS(I) 9 And SFRS(I) 7, And Amendments To FRS 109 And FRS 107
The Accounting Standards Committee (ASC) has issued Amendments to SFRS(I) 9 and SFRS(I) 7: Contracts Referencing Nature-dependent Electricity and Amendments to FRS 109 and FRS 107: Contracts Referencing Nature-dependent Electricity, effective for annual reporting periods beginning on or after 1 January 2026.
IASB Completes Technical Work On Management Commentary
IASB has completed its technical decision-making on the revised IFRS Practice Statement 1 Management Commentary. IASB will now move into the drafting phase, with the updated Practice Statement expected to be published in the first half of 2025.
The updated document aims to provide a comprehensive resource for regulators and companies to support improvement and greater global alignment in management commentary and similar reports.
First Two Webcast Series On Connectivity Between Financial Statements And Sustainability-Related Financial Disclosures
IASB and the International Sustainability Standards Board (ISSB) recognise the importance of connectivity between their respective requirements in enabling the provision of high-quality financial information to capital markets.
In this webcast series, IASB and ISSB technical staff discuss how IFRS Accounting Standards and IFRS Sustainability Disclosure Standards complement each other. Through practical examples, they illustrate how applying the Standards together results in complementary and connected reported information.
The first two episodes of this series are now available:
December 2024 IASB Update And Podcast Available
In December 2024’s IASB Update and Podcast, the topics discussed include updates on IASB’s projects: Management Commentary, and Business Combinations – Disclosures, Goodwill and Impairment; and highlights of year 2024, and what stakeholders can expect in year 2025.
Q4 2024 IFRS Interpretations Committee Podcast Available
In this podcast, IFRS Interpretations Committee Chair Bruce Mackenzie shared on IFRIC’s decisions made at its November 2024 meeting, focusing on the application of IAS 29 to identify when an economy becomes hyperinflationary and whether a company’s expenditures for carbon credits and its research and development activities meet the requirements in IAS 38, to be recognised as intangible assets.
December 2024 Emerging Economies Group (EEG) Agenda And Meeting Papers Available
At the EEG meeting held on 17 and 18 December 2024, the topics discussed include Intangible Assets, Post-implementation Review of IFRS 16, updating IFRS 19, and allocation of monetary gains or losses on the Statement of Profit or Loss.
December 2024 ISSB Update And Podcast Available
In December’s ISSB Update and Podcast, ISSB Chair Emmanuel Faber and ISSB Vice-Chair Sue Lloyd shared on topics discussed at the ISSB meeting in December 2024, including the agenda on the December ISSB Investor Advisory Group meeting and key takeaways from the ISSB meeting in Frankfurt.