Singapore's Ministry of Finance Proposes Major Tax Reforms

Singapore's Ministry of Finance (MOF) is conducting a public consultation on major updates to the nation's tax laws through the proposed Finance (Income Taxes) Bill. Taking place from 18 June to 11 July 2025, the consultation highlights two main areas: implementing international tax measures and introducing budget-related incentives that aim to reshape Singapore's tax landscape.

Corporate and Personal Tax Relief Measures

The proposed amendments offer significant tax relief for both businesses and individuals. Companies will benefit from a 50% Corporate Income Tax (CIT) rebate for the 2025 assessment year, with active companies employing at least one local worker guaranteed a minimum of S$2,000, capped at S$40,000. Individual taxpayers will receive a 60% Personal Income Tax rebate as part of the SG60 package, with benefits capped at S$200 per taxpayer.

Boosting Singapore's Financial Markets

To strengthen Singapore's position as a financial hub, the government is implementing targeted incentives to encourage the growth of the equity market. These include listing CIT rebates for new corporate listings, a more generous 5% concessionary tax rate for new fund manager listings, and tax exemptions for fund managers investing heavily in Singapore-listed equities. The measures, effective from 19 February 2025, aim to attract more listings and increase investment demand for Singapore-listed securities.

International Tax Compliance: GloBE Rules Implementation

The amendments demonstrate Singapore's commitment to international tax standards by adopting the Global Anti-Base Erosion (GloBE) rules under the OECD's Pillar Two framework. These rules ensure that large multinational enterprises pay a minimum effective tax rate of at least 15% globally, addressing concerns about profit shifting to low-tax jurisdictions. The proposed changes to the Multinational Enterprise (Minimum Tax) Act 2024 include clarifications on flow-through entities, securitisation arrangements, and various technical definitions to align with international standards.

Enhanced Business Incentives and Extensions

Several existing tax schemes, including the Double Tax Deduction for Internationalisation and the Land Intensification Allowance, will be extended until 31 December 2030. The government is also expanding Section 13W of the Income Tax Act to improve clarity for disposal gains by removing sunset clauses and broadening the scope of eligible gains. Additionally, new deductions will allow companies to claim expenses related to employee equity-based remuneration plans and innovation cost-sharing agreements.

Administrative Improvements and Clarifications

The reforms include practical improvements to tax administration, such as expanding the Enterprise Innovation Scheme Cash Payouts and clarifying transfer pricing rules for trusts and partnerships. Key social policy updates involve extending spouse and life insurance relief provisions to promote gender equality and exempting several government support payments from income tax, such as SkillsFuture and the Majulah Package benefits.

Looking Ahead

These extensive reforms show Singapore's dedication to creating a competitive tax climate while aligning with global standards. The MOF intends to publish a summary of consultation feedback and responses by Q4 2025, with many measures coming into effect from the 2025 assessment year. These updates seek to attract international companies and foster responsible engagement in global tax initiatives, balancing competitiveness with cooperation to combat tax avoidance.