Essential Corporate Tax Updates from Singapore Budget 2025: What Businesses Need to Know

1.

Corporate Income Tax Rebate and Cash Grant: To alleviate cost pressures on businesses, a 50% corporate income tax rebate and a cash grant of S$2,000, would be available for the Year of Assessment 2025, with total benefits capped at S$40,000. 

2.

Support for Innovation Activities: A 100% tax deduction is available for payments made by companies under approved Cost Sharing Agreements (CSAs) for innovation activities. This aims to encourage collaborative research and development efforts among businesses. 

3.

Employee Equity-Based Remuneration (EEBR) Schemes: Companies can now claim tax deductions for payments made to a holding company or special purpose vehicle for the issuance of new shares under EEBR schemes. This change provides greater flexibility in structuring employee remuneration packages. 

4.

Enhancements to Section 13W of the Singapore Income Tax Act: To strengthen Singapore’s appeal as an investment holding location and provide greater certainty regarding the non-taxation of disposal gains, Section 13W will be enhanced as follows: 
(a)    The scope of eligible gains will include gains from the disposal of preference shares that are accounted for as equity by the investee             company under the applicable accounting standards; and
(b)    The shareholding threshold condition will be assessed on a group basis.

The changes above will take effect for disposal gains derived on or after 1 January 2026.

5.

Financial Sector Incentives: Effective from 19 February 2025, an additional concessionary tax rate of 15% has been introduced for various Financial Sector Incentive schemes, including the Standard Tier and Trustee Company schemes. It is anticipated that this will also come with reduced economic commitments, with the Monetary Authority of Singapore (MAS) set to provide further details by the second quarter of 2025. This initiative is designed to reinforce Singapore's attractiveness as a financial hub.

Equities Market Development: To encourage new listings in Singapore and drive investment demand for Singapore-listed equities, the following tax incentives will be introduced: 
(a)    Listing corporate income tax rebate of 10% or 20% for new corporate listings in
        Singapore for qualifying entities, subject to the rebate cap of: 
        −    S$6 million per Year of Assessment (“YA”) for qualifying entities with market capitalisation of at least S$1 billion; or
         −    S$3 million per YA for qualifying entities with market capitalisation of less than S$1 billion;

(b)    Enhanced corporate tax rate of 5% for new fund manager listings in Singapore under the Financial Sector Incentive-Fund     
         Management (FSI-FM) scheme, subject to meeting specific conditions; and 

(c)    Tax exemption on fund managers’ qualifying income arising from funds  investing substantially in Singapore-listed equities under the     
        FSI-FM scheme, subject to meeting certain conditions.