Illustrative Annual Report 2023

Sustainability Report

Sustainability reporting is an ever developing area, and has increasingly become an important information source about companies’ long-term value creation opportunities and their wider impact on the society and the environment. In June 2023, the International Sustainability Standards Board (ISSB) released its two sustainability disclosure standards IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures for annual reporting periods beginning on or after 1 January 2024.

In Singapore, the Sustainability Reporting Advisory Committee (SRAC) proposed mandatory reporting of climate-related disclosures by listed and large non-listed companies. The proposal includes recommendations for in-scope companies to report on ISSB-aligned climate-related disclosures with listed issuers reporting from 2025 and large non-listed companies from 2027.

Even though these new guidelines are not enacted in Singapore, it is important for companies to consider the new guidelines for sustainability reporting. This publication highlights these considerations in the Sustainability Report section.

Insurance

SFRS(I) 17 Insurance Contracts is mandatory for annual reporting periods beginning on or after 1 January 2023. The standard applies to insurance contracts regardless of the entity that issues them. Therefore the new standard impacts more than just traditional insurance entities, and non-insurers will have to assess if contracts entered into meet the definition of insurance contracts and within the scope of this new standard. Where this is the case, additional disclosures required under this new standard will apply, to allow financial statement users to better understand the impact of this transition.

This publication recommends disclosures that would be required upon adoption of the standard in Appendix 3: Impact of insurance contracts on the non-insurer.

Base erosion and profit sharing

In December 2021, the Organisation for Economic Co-operation and Development (OECD) published Global Anti-Base Erosion Model Rules (Pillar Two): Inclusive Framework on BEPS. The rules are designed to ensure that large multinational enterprises (MNEs) within the scope of the rules pay a minimum level of tax on the income arising in a specific period in each jurisdiction where they operate. In general, the rules apply a system of top-up taxes that brings the total amount of taxes paid on an entity's excess profit in a jurisdiction up to the minimum rate of 15%.

The Singapore government has announced that the country would implement the rules including a domestic top-up tax (DTT) for in-scope MNEs from the financial year beginning on or after 1 January 2025.

Amendments have been made in SFRS(I) 1-12 Income Taxes to include exception in the requirements where an entity shall neither recognise nor disclose information about deferred tax assets and liabilities related to Pillar Two income taxes. Amendments have also include additional disclosures on BEPS, and these disclosures are required to be made under the standards for the financial year beginning on or after 1 January 2023.This publication highlights these considerations and related disclosure in the Income Taxes' note.