Jurisdictions are encouraged to implement a coordinated global minimum tax. The United States has chosen to operate under a separate, pre‑existing global tax system. To accommodate this, the OECD introduced the Side‑by‑Side package, which

• Allows US MNEs to continue operating under the US global tax system, which already imposes a minimum level of tax on their worldwide income; and
• Recognises that the US system achieves broadly similar policy outcomes to Pillar Two, permitting it to operate in parallel with the Pillar Two rules.

However - and this is the key issue for US‑headed groups operating in Singapore-the Side‑by‑Side package does not replace or override Singapore’s QDMTT obligations.

Because the US regime is not treated as a Pillar Two–qualified rule:

• US MNEs cannot rely on the US tax system to satisfy the 15% minimum tax for their Singapore operations, and
• Singapore will apply QDMTT to bring the effective tax rate of in‑scope groups up to 15%, ensuring that top‑up taxes relating to Singapore income are collected in Singapore.

This remains the case even if the US parent entity is already subject to a minimum level of tax under its home country rules.

US‑parented MNEs meeting the consolidated revenue threshold (EUR 750 million) must assess their Singapore effective tax rate under the Pillar Two model and prepare for QDMTT filings from FY 2025.

Because Pillar Two uses financial accounting profit to determine GloBE income, transfer pricing outcomes have a significant impact on ETR calculations. Groups may need to reassess:

• Operating margins for Singapore entities
• Intercompany service and licensing arrangements
• Benchmarking positions
• Supply chain structures with limited‑risk entities

QDMTT introduces calculations that extend beyond standard Singapore tax filings. US‑headed groups may need enhanced:

• Data governance
• Intercompany reporting processes
• Coordination between US headquarters and Singapore finance teams

With different countries adopting Pillar Two at different times, and the US applying its own system under the Side‑by‑Side approach, US MNEs must prepare for: 

• Increased complexity across jurisdictions
• Transitional rules for incentive regimes
• Potential year‑on‑year fluctuations in effective tax rates

Evaluating how existing transfer pricing positions influence GloBE income and Singapore’s QDMTT outcome.

Identifying data, system, and process gaps to support accurate reporting.

Assessing whether business structures or intercompany arrangements require adjustment under the Pillar Two framework.

Ensuring that transfer pricing documentation remains robust and aligned with Singapore’s evolving minimum tax landscape.