Singapore's Enhanced Financial Sector Incentive Schemes: Tax Reforms for 2025

Singapore's Monetary Authority (MAS) has announced broad reforms to its Financial Sector Incentive (FSI) scheme, implementing specific programs that align with the recommendations of the Equities Market Review Group and international regulatory changes, such as the BEPS Pillar 2.

These targeted improvements are designed to strengthen Singapore's position as a leading fund management and capital markets centre and to draw new listings to its local exchanges.

Executive Summary

The updated FSI framework introduces three pivotal changes:

5% tax rate for listed fund managers through the new FSI-FM Listing scheme.

Full tax exemption (0%) for managers focused on Singapore equities via the FSI-FM SG Equities scheme.

BEPS Pillar 2-compliant Basic Tier schemes offering 15% rates to ensure global competitiveness

These reforms enable Singapore to secure a larger share of Asia's growing fund management market while ensuring adherence to international regulatory standards.

Key Scheme Enhancements

FSI-Fund Management Listing (FSI-FM Listing)

This flagship scheme offers a 5% concessionary tax rate—halving the current 10% standard rate—for qualifying fund managers who commit to listing on the Singapore Exchange.

Qualifying Criteria:

Primary listing on Singapore exchange (5-year commitment).

Minimum S$800 million Assets Under Management threshold.

Professional headcount requirements.

Regular dividend distributions are mandatory.

FSI-Fund Management Singapore Equities (FSI-FM SG Equities)

This scheme provides complete tax exemption for fund managers who demonstrate a substantial commitment to Singapore-listed equities.

Eligibility Framework:

New funds: Minimum 30% AUM allocation to Singapore-listed equities.

Existing funds: 30% Singapore equity allocation plus 5% minimum annual net inflows.

Standard AUM and professional headcount thresholds apply.

This zero-tax incentive directly addresses Singapore's need for deeper local equity market liquidity and is expected to drive meaningful capital allocation toward SGX-listed companies.

Basic Tier (BT) Schemes: Future-proofing Against Global Tax Changes

The new 15% Basic Tier rate across FSI-BT, FSI-TC-BT, and FSI-HQ-BT schemes ensures Singapore remains competitive under the global minimum tax framework.

Key Features:

Application window: 19 February 2025 to 31 December 2028.

Transition pathway: Existing award holders can migrate to Basic Tier schemes.

Enhanced benefits: FSI-HQ-BT includes withholding tax exemption on qualifying interest payments.

Market Context and Competitive Positioning

Singapore's reforms are happening in the context of increasing regional competition for fund management. The 5% tax rate for listed managers is among the most attractive worldwide, and the zero-tax scheme for Singapore equities aims to target local market growth.

The timing coincides with the growth of assets in Asia-Pacific fund management, offering Singapore distinct value propositions. This comes as global financial institutions reevaluate their regional strategies in response to the implementation of BEPS Pillar 2.

Conclusion

Singapore's improved FSI framework features a complex, layered strategy to maintain its competitive edge in global fund management. The programs strike a balance between strong tax incentives and genuine efforts toward local market growth, while also adhering to regulations.

The effectiveness of these schemes will mainly rely on how well regulators and market participants implement them. Nonetheless, the framework provides Singapore with strong tools to increase its share in Asia's evolving fund management industry.