BDO Corporate Tax News

Several tax changes announced as part of Singapore’s budget 2025 are designed to enhance the nation's economic competitiveness, support businesses and innovation, and invigorate the equity market. The budget measures presented by the Prime Minister on 18 February 2025 aim to provide targeted support for enterprises, drive investment and business growth, and bolster Singapore’s position as a resilient and dynamic global business hub (for a detailed analysis of the measures in the budget, see the alert published by BDO in Singapore).

Relevant proposals include the following:

• Corporate income tax rebate and cash grant: To alleviate cost pressures on businesses, a 50% corporate income tax rebate and a cash grant of SGD 2,000 will be available for the Year of Assessment (YA) 2025, with total benefits capped at SGD 40,000.
• Support for innovation activities: A 100% tax deduction will be available for payments made by companies under approved cost sharing agreements for innovation activities to encourage collaborative R&D efforts among businesses.
• Employee equity-based remuneration (EEBR) schemes: Companies will be able to 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 will offer greater flexibility in structuring employee remuneration packages.
• Enhancements to Section 13W of the Income Tax Act: To strengthen Singapore’s appeal as an investment holding location and provide greater certainty regarding the nontaxation of disposal gains, Section 13W will be enhanced as follows for gains derived on or after 1 January 2026:
  • 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
  • The shareholding threshold condition will be assessed on a group basis.
• Financial sector incentives: To reinforce Singapore’s attractiveness as a financial hub, effective 19 February 2025, an additional concessionary tax rate of 15% is introduced for various financial sector incentive schemes, including the standard tier and trustee company schemes. It is anticipated that this reduced rate will be accompanied by reduced economic commitments, with the Monetary Authority of Singapore to provide further details by the second quarter of 2025.
• 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 corporate income tax rebate of 10% or 20% for new corporate listings in Singapore for qualifying entities, subject to the rebate cap of:
    • SGD 6 million per YA for qualifying entities with a market capitalisation of at least SGD 1 billion; or
    • SGD 3 million per YA for qualifying entities with a market capitalisation of less than SGD 1 billion.
  • An enhanced corporate tax rate of 5% for new fund manager listings in Singapore under the Financial Sector Incentive-Fund Management (FSI-FM) scheme will be available, subject to fulfilling conditions.
  • A tax exemption will be granted on fund managers’ qualifying income arising from funds investing substantially in Singapore-listed equities under the FSI-FM scheme, subject to fulfilling conditions.

BDO Insight

With the plethora of tax measures announced in Budget 2025, businesses can strategically align their operations with the tax changes to maximise benefits. By leveraging corporate tax rebates, financial sector incentives and support for innovation, companies can enhance profitability and drive sustainable long-term growth. The budget measures provide businesses with greater financial flexibility to invest in talent development, technology adoption and market expansion. In an increasingly competitive and rapidly evolving economic landscape, adapting to these policy shifts will be crucial in building a resilient, future-ready business that thrives in Singapore’s dynamic business environment.

Wong Sook Ling
BDO in Singapore