Singapore Budget 2025: Announcements for businesses

What is happening

• All eligible companies will enjoy a cash grant of SGD 2,000.
• In addition, all taxpaying companies will get a rebate of 50% of their tax payable.
• The 50% rebate is capped at SGD 40,000, or SGD 38,000 if the corporate taxpayer received (or is eligible to receive) the grant.
• To be eligible for the grant of SGD 2,000, the companies must be active and have employed at least one local employee in calendar year 2024.

Keep in mind

• To help businesses deal with cost pressure, the rebate and grant that were granted in YA 2024 have been extended to YA 2025.
• A new condition, i.e., “the company must be active” has been introduced for eligibility for the rebate.
• The SGD 2,000 will be processed automatically from Q2 of calendar year 2025.
• The local employee condition is met if the company has made CPF contributions for at least one local employee.
• There is imparity between taxable companies and loss makers, who may be most in need.

What is happening

With effect from 1 January 2026:

• The years of uncertainty have finally come to an end.
• The “exemption” has been extended to a disposal of preference shares accounted for as equity under applicable accounting principles.
• The minimum shareholding requirement can now be looked at on a group basis (i.e., related companies’ shareholdings may be taken into account to ascertain if the minimum shareholding requirements have been met).

Keep in mind

• It should not be forgotten that preference shares may be treated as debt and not equity for accounting purposes. The extension in the scope is intended to apply to equity and not debt. Hence, the vendor will need to pay attention to this in the event that a sale of the “debt” gives rise to a profit.
• Further, companies should note that Section 10L may still subject the gains to tax if the vendor is a Singapore company that does not satisfy certain economic substance conditions.

What is happening

At last, with effect from YA 2026, a company can claim a tax deduction for payments to their holding company or an SPV for newly issued shares of its holding company based on the lower of:

• the amount paid by the company; or
• the fair market value (or net asset value) of the shares at the time of grant,

less any amount payable by employees for the share.

Keep in mind

• This is a welcome further alignment of the symmetry between the corporate and personal tax treatment of share awards and options. However, it does not go far enough.
• A holding company or SPV has to be set up before a tax deduction can be claimed, as a payment to another entity has to be made before a deduction can be admissible.
• Companies will need to take note of the difference in the tax deduction rules between treasury shares and newly issued shares that are granted to employees under an EEBR scheme.

What is happening

• The sunset clause will be removed for tax transparency for distributions from S-REITs in the hands of the trustees of S-REIT ETFs.
• The concessionary WHT rate of 10% for S-REIT ETF distributions received by qualifying non-tax resident non-individual investors will continue until 31 December 2030. 

Keep in mind

• The extension of the existing tax concession and sunset clause will support the continued growth of the S-REIT and maintain its attractiveness and Singapore’s standing as a Real Estate Investment Trust (REIT) hub in Asia.
• MAS will provide further details by Q2 of 2025.

What is happening

• At least 80% of the gross floor area of a qualifying building must be used by the approved recipient or its related users.
• To be considered related, the users must have more than 50% of their shareholdings held in common, whether directly or indirectly.
• Previously, to be considered related, the users needed to have at least 75% of their shareholdings held in common (or have entitlement to at least 75% of the income in the case of a partnership) whether directly or indirectly.

Keep in mind

• The lower shareholding requirement may make it easier for businesses to qualify for the LIA incentive.
• The Building Control Authority (BCA) and EDB will be providing further details by Q3 of 2025.
• It is not clear if the lower shareholding requirement will apply to the share of income of a partnership, but equity suggests it should.

What is happening

• Existing project bond investors can continue to enjoy the tax exemption under QPDS for the remaining life of the securities.  Investors can rely on the Qualifying Debt Securities scheme for new issues after 31 December 2025.
• Tax incentives for approved listed entities to invest in and finance overseas infrastructure projects will be extended to 31 December 2030. 

Keep in mind

The rationalisation streamlines the tax incentives available to general investors, while maintaining an attractive environment for Singapore-based infrastructure project sponsors to use Singapore’s financial system to invest in overseas infrastructure projects. 

What is happening

• Extension of IBD scheme which was due to lapse after 31 December 2025.
• An additional CTR tier of 15% will be introduced with immediate effect from 19 February 2025 for the IBD, IBD-Captive Insurance and IBD-Insurance Broking Business schemes.
• Monetary Authority of Singapore (MAS) will be providing further details by Q2 of 2025.

Keep in mind

• This reflects a strategic move by the government to bolster Singapore’s value proposition as an Asian insurance and reinsurance centre and enhance its competitiveness and relevance.
• This higher rate tier will presumably mean lower economic commitments than for the other tiers.​
• Existing incentive recipients that miss their initial economic commitments may potentially “downgrade” to a higher CTR.​
• Given the small difference between the basic corporate tax rate (17%) and the additional tier of 15%, the incentives may not be that attractive, in view of the onerous monitoring and reporting requirements.​
• We await more details to be released by the MAS on what the qualifying conditions for the additional CTR tier might be.

What is happening

• Approved incentive recipients under the Financial Sector Incentive (FSI) scheme are now eligible for a tax rate of 10%, 13.5% or the new 15% on qualifying income under the FSI-Standard Tier, FSI-Trustee Company and FSI Headquarter Services Scheme.
• MAS will provide further details by Q2 of 2025.

Keep in mind

• The FSI scheme was introduced to encourage high growth and high value-added financial activities in Singapore and continues to be refined to ensure that the tax incentive remains relevant and competitive in the financial sector.
• It is not expected that a tax rate so close to the basic CIT rate of 17% will influence behaviour noticeably.

What is happening

• Subject to qualifying conditions, companies and registered business trusts may apply for an annual corporate tax rebate over 5 years after listing in Singapore. The rebate is capped at either SGD 6 million a year where the market capitalisation is above SGD 1 billion and SGD 3 million a year in other cases.
• Subject to qualifying conditions, the Financial Sector Incentive – Fund Management (FSI-FM) has been enhanced as follows:
  • A fund manager may apply for a 5% concessionary tax rate on qualifying income if it (or its holding company) gets listed in Singapore.
  • Tax exemption for fund managers’ qualifying income arising from funds investing substantially in Singapore-listed equities.

Keep in mind

• The aim of the tax incentives is to encourage companies, to list on and invest in companies listed on the Singapore Stock Exchange (SGX).
• The general incentive will only be useful if the listed company is an active operating company with significant Singapore-sourced income unless the corporate tax rebate can be “transferred” to operating subsidiaries.
• Fund managers that are considering the new tax incentive will likely face similar or increased qualifying conditions as are currently imposed under the existing FSI-FM incentives.
• The investment conditions for the tax exemption may be a bit of a disincentive for fund managers to pursue the incentive.

What is happening

• This will be introduced for electric HGVs and buses registered from 1 January 2026.
• AFC is waived until 1 January 2029 for electric HGVs and buses registered on or before 31 December 2025.

Keep in mind

Companies wanting to shift to electric HGVs can benefit by registering their electric HGVs and buses by 1 January 2026 to enjoy the AFC waiver until 1 January 2029.