Singapore Budget 2025: summary of key tax changes and initiatives

Singapore Prime Minster and Finance Minister Lawrence Wong delivered the Budget Statement for 2025, which was focused on supporting businesses, promoting growth, and building a sustainable city. It also included a number of changes and new initiatives aimed at optimising Singapore’s competitive strengths.

To mitigate higher costs, businesses will receive a 50% corporate income tax rebate for Year of Assessment (YA) 2025. Any company that employs at least one local employee will further receive a minimum benefit of SGD2,000. The total benefits will be capped at SGD40,000.

To maintain Singapore’s competitive advantages into the future, a number of new initiatives were announced:

• Global Founder Programme: the Economic Development Board will launch a new programme in 2025 to encourage more global founders to anchor and grow new ventures in Singapore.
• National Productivity Fund (NPF) top up: Singapore will set aside an additional SGD3 billion to attract more multinational enterprises through the NPF, which supports productivity improvements and training.
• Investment in R&D infrastructure: the Singapore government will invest SGD1 billion in infrastructure including the public biosciences and medtech research sector and developing a new national semiconductor R&D fabrication facility.
• Enterprise Compute Initiative: the government has set aside SGD150 million to provide eligible enterprises with priority access to major cloud service providers to access artificial intelligence (AI) tools, computing power and expert consultancy services.
• Private Credit Growth Fund: the Minister for Trade and Industry will announce that more financing options for high-growth local enterprises will be provided by introducing a new SGD1 billion Private Credit Growth Fund.

Initiatives for Business Growth

Budget 2025 also saw funds set aside for grants and schemes to encourage the growth of Singaporean SMEs locally and overseas. Among these include:

• Double Tax Deduction for Internationalisation (DTDi) scheme: the DTDi scheme, which allows businesses to claim a tax deduction of 200% on qualified market expansion and investment development expenses, is extended from 31 December 2025 to 31 December 2030.
• Market Readiness Assistance (MRA) grant: the MRA assists Singapore businesses to expand into new markets by defraying costs of overseas set-up, marketing and business development. The grant cap has been extended SGD100,000 per new market, and the scheme will be from 31 March 2025 to 31 March 2026.
• Mergers and Acquisition (M&A) scheme: the M&A scheme will be extended from 1 April 2025 to 31 December 2030. It allows eligible businesses to claim an M&A allowance based on 25% of up to SGD40 million of the value of all qualifying acquisitions in each assessment year (YA), and a 200% tax deduction on costs incurred, with an expenditure cap of SGD100,000, per assessment year.
• Enterprise Financing Scheme (EFS) scheme: the EFS, which gives Singapore enterprises improved access to financing across all stages of growth, will be enhanced by increasing the maximum loan quantum under for EFS – Trade Loan from SGD5 million to SGD10 million and extending the scope of the EFS – Mergers and Acquisitions Loan scope from equity acquisitions to support targeted asset acquisitions from 1 April 2025 to 31 March 2030.

Incentives for the Equities

Following the recommendations of the Equities Market Review Group, Singapore will introduce three new tax incentives to encourage new listings and strengthen the development of its equities market, as follows:

• Listing Corporate Income Tax (CIT) Rebate: new corporate listings in Singapore could qualify for a 10% or 20% CIT rebate, with a cap of either SGD3 million per YA for qualifying entities with market capitalisation of less than SGD1 billion to SGD6 million per YA for qualifying entities with market capitalisation of at least SGD1 billion. The award will be open until 31 December 2027 and will stand for five years per qualifying entity, non-renewable.
• Enhanced Concessionary Tax Rate (CTR): new fund manager listings in Singapore could qualify for a CTR of 5% under the Financial Sector Incentive-Fund Managers (FSI-FM) scheme. The award will be open until 31 December 2028 and will stand for five years per fund manager, non-renewable.
• Tax exemption for fund managers: qualifying incomes of fund managers from funds investing in Singapore-listed equities could qualify for corporate tax exemption under the FSI-FM. The award will be open until 31 December 2028 and will stand for five years per fund manager, non-renewable.

Further measures were announced to deepen trading liquidity and strengthen capabilities in the local fund management and equity research ecosystem:

• The Monetary Authority of Singapore (MAS) and the Financial Sector Development Fund (FSDF) to launch a SGD5 billion Equity Market Development Programme (EQDP) to invest with selected fund managers with capabilities to implement investment mandates with a strong focus on Singapore stocks. MAS will start the process of evaluating eligible fund managers and strategies over the next few months.
• An adjustment to the Global Investor Programme (GIP) to support more capital inflows into Singapore-listed equities. Currently, GIP applicants investing under the Family Office option are required to establish a Single Family Office (SFO) with assets under management of at least SGD200 million, of which at least SGD50 million must be deployed into qualifying investment categories consisting of listed equities/REITS/business trusts, qualifying debt securities, Singapore-distributed funds and non-listed Singapore-based operating companies. Going forward, for new GIP Family Office applicants, the qualifying investment categories will be narrowed to equities listed on approved Singapore exchanges.
• Expansion of the Research Development Grant Scheme under the MAS Grant for Equity Market Singapore (GEMS) to build a ready investor base, sharpen focus on mid- and small-cap enterprises, and broaden research dissemination including via new media channels. MAS and the Singapore Exchange (SGX) will release further details around mid-2025.

Other Tax Incentives

• Enhancement and extension to Section 13W of the Income Tax: to improve the tax treatment of investments, the following changes will apply to disposal gains derived on or after 1 January 2026:
  • Removal of the sunset clause, making the scheme permanent.
  • Expansion of qualifying gains to include gains from the disposal of preference shares accounted for as equity.
  • Group-based assessment of shareholding threshold conditions.
• Enhancement and extension to Employee Equity-Based Remuneration (EEBR) schemes: currently, companies are only allowed deductions for treasury shares or previously issued shares of the company or the holding company that are transferred to employees under EEBR schemes. From Year of Assessment 2026, a new tax deduction will be introduced for payments made to a holding company or special purpose vehicle (SPV) for the issuance of new shares under EEBR schemes, further aligning Singapore’s tax policies with global best practices. The deduction will be the lower of the amount paid by the company and the fair market value, or net asset value of the shares (if the fair market value is not readily available), at the time the shares are applied for the benefit of the employee, less any amount payable by the employees for the shares.
• Enhancement to Cost Sharing Arrangement (CSA) for innovation activities: Currently, payments made under a CSA are not tax deductible under Section 2 if they do not meet the definition of ‘research and development’ expenditure under Section 14C ITA. From 19 February 2025 payments made by companies under an approved CSA for innovation activities will be allowed a 100% tax deduction. The Economic Development Board (EDB) will provide further details in the second quarter of 2025.
• Enhancement and extension for Singapore REITS (S-REITS) and REIT ETFs: to further promote the listing of S-REITs and maintain Singapore’s status as a global REIT hub, the income tax concession for S-REITs and REIT ETFs will be extended until 31 December 2030 and enhanced, providing long-term certainty for investors. Additionally, the GST remission for S-REITs has been extended for the same period to continue supporting the sector’s growth.
• Enhancement and extension to the Land Intensification Allowance (LIA) scheme: the LIA scheme, which allows qualifying companies to claim for qualifying capital expenditure incurred on the construction of a qualifying building or structure, is to be extended from 31 December 2025 to 31 December 2030. To enhance the scheme, the shareholding requirement for building users to be considered related is also to be lowered from 75% to more than 50% for applications made from 1 January 2026.
• Introduction of additional CTR tier of 15% for schemes: Budget 2025 saw the introduction of an additional CTR tier of 15% for the Financial Sector Incentive (FSI), Insurance Business Development (IBD), IBD-Captive Insurance (IBD-CI) and IBD-Insurance Broking Business (IBD-IBB) schemes. This will align with the minimum tax rate under Pillar Two. Further details will be provided by the Monetary Authority of Singapore (MAS) by the second quarter of 2025.

“This was a highly encouraging Budget for Singapore business. The new Global Founder Programme, in particular, promises to be transformative in encouraging global founders to base and grow new ventures in Singapore,” said Andrew Galway, Managing Director of Sovereign Management Services in Singapore.

“This initiative aligns with Singapore’s strategic focus on enhancing its position as a global business hub, attracting talent, investments and innovation. These developments underscore Singapore’s commitment to fostering a dynamic and competitive marketplace, reinforcing its status as a leading financial hub in Asia.”

For any further information or to discuss any aspect of doing business in Singapore, please contact Sovereign by telephone on +65 6222 3209 or by email below.