Singapore: Parliament reviews Finance (Income Tax) Bill 2025, includes new corporate tax relief measures

This legislation proposes numerous amendments to the Income Tax Act (ITA) and the Multinational Enterprise (Minimum Tax) Act (MMTA). 

Singapore’s Parliament is reviewing the Finance (Income Taxes) Bill 2025, which had its first reading on 14 October 2025.

The bill aims to implement the Budget 2025 measures. This legislation proposes numerous amendments to the Income Tax Act (ITA) and the Multinational Enterprise (Minimum Tax) Act (MMTA).

Key changes to the ITA include expanding tax exemptions for shipping and related activities, particularly those involving renewable energy and maritime technology services, and introducing a tax rebate incentive for companies that list shares on a Singapore stock exchange between early 2025 and late 2027.

The changes to the MMTA focus on aligning Singapore’s regulations with the GloBE rules by refining definitions related to multinational groups, flow-through entities, and tax calculations, including provisions for handling the refundable investment credits (RICs).

Furthermore, the amendments detail new tax deduction provisions for payments under innovation cost-sharing agreements and revise rules concerning bad debts and expected credit losses for financial institutions.

Multinational Enterprise (Minimum Tax) Act (MMTA) amendments

The 2025 Finance Bill amends the MMTA to ensure alignment with the GloBE Model Rules and the June 2024 Administrative Guidance (AG) from the OECD.

• Refined definitions: The definition of “excluded equity gain or loss” now includes losses stemming from the impairment of direct ownership interest in an entity. New terms are defined, such as “reference entity,” used to determine if a flow-through entity is a “reverse hybrid entity,” and “securitisation entity”.
• Securitisation entities: Securitisation entities are generally exempt from specific MMTA compliance obligations. They are barred from being designated as local GIR filing entities or local DTT filing entities, and they are excluded from joint and several liability for unpaid DTT, unless the securitisation entity is the only constituent entity of the MNE group located in Singapore.
• Administrative powers: Regulations may now specify the effective start and end dates for a foreign tax to be considered a “qualified domestic minimum top-up tax,” “qualified IIR,” or “qualified UTPR,” often referencing webpages accessible from the OECD’s prescribed website. Furthermore, regulations can modify the revenue threshold for the MMTA’s application in cases where the MNE group results from a demerger.
• Tax expense allocation: Guidance regarding the allocation of qualifying current tax expense and qualifying deferred tax expense of one constituent entity to another via a flow-through entity is incorporated into the First Schedule.

Corporate tax relief, incentives, and listings

The Bill introduces immediate relief measures for companies, specifically for the Year of Assessment (YA) 2025. A corporate tax rebate is established, equal to the lower of 50% of the tax payable (excluding certain taxes) or SGD 40,000, offset by a potential cash grant of SGD 2,000. This non-taxable cash grant of SGD 2,000 is available to companies that satisfy the time requirement of making a Central Provident Fund (CPF) contribution for at least one local employee during the calendar year 2024, provided the company is actively carrying on a trade or business and is not in liquidation at the time of disbursement.

Other measures include:

To promote capital markets, a new incentive scheme, section 92K, offers a tax rebate for companies whose ordinary shares are first listed or re-listed on a Singapore stock exchange between 19 February 2025 and 31 December 2027.

The rebate applies for a 5-year incentive period, starting from the first day of the listing month, but no earlier than 1 February 2025. The rebate is calculated as a percentage of the tax payable (20% for a primary listing and 10% for a secondary listing).

The total rebate is capped per year of assessment at either SGD 6 million (if market capitalisation is SGD 1 billion or more on the listing date) or SGD 3 million (if market capitalization is less than SGD 1 billion).

Enhancements for green economy and key sectors

The legislation introduces new mechanisms to support environmentally focused activities and extends existing incentives for key economic sectors:

• Green certificates and credits: A new section 14ZJ allows a deduction for qualifying expenditure incurred by a person carrying on a trade or business for the acquisition and surrender (or retirement) of prescribed green certificates or green credits, applicable from YA 2026 onwards.
• Renewable energy activity: Effective 19 February 2025, tax exemptions related to shipping will be broadened from “offshore renewable energy activity” to encompass all “renewable energy activity. “
• Sector incentive extensions: The deadline for granting or extending approvals for several major tax incentive schemes has been extended, typically from 2026 to 31 December 2031. This includes incentives for international shipping enterprises, shipping investment enterprises, container investment enterprises, and shipping investment managers.
• Financial sector and insurance: Regulations may be introduced to impose a concessionary tax rate of 15% on specified income derived by financial sector incentive companies and approved insurers whose approval is granted on or after 19 February 2025, potentially taking effect retrospectively from 1 January 2025. New tax exemption provisions are also established for certain income derived by financial sector incentive companies on or after 19 February 2025.

Tax deductions for share disposals

The tax exemption for gains or profits derived by a company from the disposal of shares is expanded from ordinary shares to include preference shares (accounted for as equity). Furthermore, a new “group basis of assessment” is introduced for disposals made on or after 1 January 2026, where eligibility for the exemption can be based on the combined ownership of shares by the divesting company and other companies within the same group.