The 2025 Singapore Budget Speech with the theme of onward together for a better tomorrow was delivered by the Prime Minister and Minister of Finance, Mr Lawrence Wong on 18 Feb 2025.
This year marks Singapore’s 60th year of independence and challenges in the form of economic and trade barriers loom. Amidst these challenges and the constraints on infrastructure and resources, the 2025 Budget sets out measures to address cost pressures, advance growth, equip workers through lifelong learning and build a sustainable city.
The tax-related key changes are set out below.
Key Changes for Businesses
General
Corporate Income Tax (CIT) Rebate and Cash Grant for YA 2025
To support companies’ cash flow needs, a CIT rebate of 50% of tax payable after deducting any applicable CIT rebate cash grant, will be granted in YA 2025.
Active companies which have employed / made CPF contributions to at least one local (i.e. Singapore Citizen or Permanent Resident) employee in calendar year 2024 will receive a minimum S$2,000 CIT rebate cash grant. Shareholders who are also directors of the company are excluded from the definition of “local employees”.
The total maximum benefits from the CIT rebate and the CIT rebate grant that a company can receive is capped at S$40,000. These measures were also granted for YA 2024.
Enhance upfront certainty of non-taxation of companies’ disposal gains (Section 13W of ITA)
Broadly, apart from other conditions, Section 13W of the ITA provides that gains derived by companies from the disposal of ordinary shares will not be taxed if:
- A minimum 20% level of shareholding is maintained in the investee company for a continuous period of at least 24 months before the disposal of any shares in the investee company;
- Shares are disposed during the period from 1 Jun 2012 to 31 Dec 2027.
To provide greater certainty to companies, the above sunset clause will be removed, and the following enhancements will be made:
- Expand the scope to include gains from the disposal of preference shares that are accounted for as equity by the investee company under applicable accounting principles; and
- Allow the assessment of the shareholding condition to be done on a group basis.
These enhancements take effect for disposal gains derived on or after 1 Jan 2026.
Further details will be provided by 3Q 2025 (IRAS).
Land Intensification Allowance (LIA) scheme
The LIA scheme grants an approved recipient:
- An initial allowance of 25% of the qualifying capital expenditure incurred on the qualifying building; and
- An annual allowance of 5% of the qualifying capital expenditure incurred over 15 years, upon issuance of the temporary occupation permit for the completed building, subject to conditions.
At least 80% of the gross floor area of the qualifying building must be used by the approved recipient or its related users. To be considered related, the users must have at least (≥) 75% of their shareholdings held in common (or have entitlement to ≥ 75% of the income in the case of a partnership), whether directly or indirectly.
The LIA scheme which is scheduled to lapse after 31 Dec 2025, will be extended till 31 Dec 2030.
The above shareholding requirement will be lowered from “≥75%” to “> 50%” for LIA applications made from 1 Jan 2026.
Further details will be provided by 3Q 2025 (BCA and EDB).
Insurance Business Development (IBD) Scheme
Approved insurers and insurance brokers are granted a CTR of 10% on the relevant qualifying income under the IBD, IBD-Captive Insurance (IBD-CI) and IBD-Insurance Broking Business (IBD-IBB) schemes.
The IBD and IBD-CI schemes which are scheduled to lapse after 31 Dec 2025, will be extended till 31 Dec 2030.
An additional CTR tier of 15% will be introduced with effect from 19 Feb 2025 for the IBD, IBD-CI and IBD-IBB schemes.
Further details will be provided by 2Q 2025 (MAS).
Currently, companies are allowed tax deduction for treasury shares or previously issued shares of the company or the holding company that are transferred to employees under Employee equity-based remuneration (EEBR) schemes.
No tax deductions are allowed where new shares are issued to employees under EEBR schemes.
Enhancements will be made such that companies will be allowed to claim a tax deduction on payments to the holding company or a Special Purpose Vehicle (SPV) for the issuance of new shares of the holding company under EEBR schemes.
Deduction will be the lower of:
- The amount paid by the company; and
- The fair market value (FMV), or net asset value of the shares (if the FMV is not readily available), at the time the shares are applied for the benefit of the employee
Less any amount payable by employees for the shares.
These changes take effect from YA 2026.
Further details will be provided by 3Q 2025 (IRAS).
Introduction of tax incentives recommended by Equities Market Review Group
The following tax incentives will be introduced to encourage new listings in Singapore and increase investment demand for Singapore listed equities. Applications to the relevant statutory boards are required and are subject to conditions:
a. New corporate listings in Singapore (EDB or ESG)
Companies and registered business trusts (qualifying entities) that are tax residents in Singapore may apply for a 10% or 20% Listing CIT Rebate. Rebate caps apply:
- S$6mil per YA for qualifying entities with market capitalization of ≥ S$1bn; or
- S$3mil per YA for qualifying entities with market capitalization of < S$1bn
Open for award until 31 Dec 2027.
b. New fund manager listings in Singapore (MAS)
Singapore fund managers may apply for the Enhanced Concessionary Tax Rate (CTR) of 5% on qualifying income introduced under the FSI-FM scheme for newly listed fund managers.
Open for award until 31 Dec 2028.
c. Fund managers’ qualifying income (MAS)
Singapore fund managers may apply for tax exemption on qualifying income arising from funds investing substantially in Singapore-listed equities
Open for award until 31 Dec 2028.
Introduction of an additional CTR tier of 15% for the Financial Sector Incentive (FSI) Scheme
Approved incentive recipients are eligible for a CTR of 10% or 13.5% on qualifying income (where applicable) under the FSI scheme.
An additional CTR tier of 15% will be introduced with effect from 19 Feb 2025 for the FSI-Standard Tier, FSI-Trustee Company and FSI-Headquarter Services schemes.
Further details will be provided by 2Q 2025 (MAS).
Extensions of certain tax incentives and concessions
a. Double Tax Deduction for Internationalisation (DTDi) scheme
Under the DTDi scheme, businesses are allowed a tax deduction of 200% on qualifying market expansion and investment development expenses.
Extended till 31 Dec 2030. Further details will be provided by 2Q 2025 (ESG).
b. Mergers and Acquisitions (M&A) scheme
Subject to conditions, the M&A scheme allows a Singapore company that makes a qualifying acquisition of the ordinary shares of another company to claim the following tax benefits:
- An M&A allowance (to be written down over five years) that is based on 25% of up to S$40 mil of the value of all qualifying acquisitions per YA (i.e., S$10 million); and
- 200% tax deduction on transaction costs (capped at S$100,000 per YA) incurred on qualifying acquisitions.
Extended till 31 Dec 2030.
Lapse of certain tax incentives and concessions
a. WHT concession for non-tax-resident arbitrators and mediators
The concessions will lapse after 31 Dec 2027.
b. Venture Capital Fund Incentive (VCFI) and Venture Capital Fund Management Incentive (FMI)
The concessions will lapse after 31 Dec 2025.
Maritime and Shipping
Maritime Sector Incentive (MSI)
Ship operators, maritime lessors and providers of certain shipping-related support services can enjoy various tax concessions by way of exemption, CTR or the alternative net tonnage basis of taxation, subject to conditions, under the following MSI sub-schemes:
a. MSI-Shipping Enterprise (Singapore Registry of Ships) (MSI-SRS);
b. MSI-Approved International Shipping Enterprise (MSI-AIS) Award
c. MSI-Maritime Leasing (Ship) (MSI-ML (Ship)) Award;
d. MSI-ML (Container) Award; and
e. MSI-Shipping-related Support Services (MSI-SSS) Award.
In addition, withholding tax (WHT) exemption is granted on qualifying payments made by qualifying MSI entities to non-tax-residents (excluding a permanent establishment in Singapore) in respect of qualifying financing arrangements entered into on or before 31 Dec 2026 to finance the construction or purchase of qualifying assets (e.g., ships, containers), subject to conditions.
The MSI-AIS for qualifying entry players, MSI-ML (Ship), MSI-ML (Container) and MSI-SSS schemes are scheduled to lapse after 31 Dec 2026.
The MSI will be extended till 31 Dec 2031. The WHT exemption will also be extended for qualifying payments made on qualifying financing arrangements entered into on or before 31 Dec 2031.
The following enhancements will be made with effect from 19 Feb 2025:
a. Expand the scope of prescribed ship management services under the MSI-SRS, MSI-AIS and MSI-SSS to include emission management services;
b. Expand the scope of offshore renewable energy activities under the MSI-SRS and MSI-AIS to cover the subsea distribution of renewable energy generated onshore;
c. Expand the scope of ships used for offshore renewable energy activities under the MSI-ML (Ship) to include ships that support subsea distribution of renewable energy generated onshore;
d. Allow assets leased-in from third parties under finance lease (FL) treated as sale agreements to be recognised as qualifying assets under the MSI-ML (Ship) and MSI-ML (Container) awards; and
e. Expand the scope of shipping-related support services under the MSI-SSS to include maritime technology services.
Further details will be provided by 2Q 2025 (MPA).
Introduction of an Approved Shipping Financing Arrangement (ASFA) Award
To support the ownership and management of ships and sea-containers from Singapore, the ASFA Award will be introduced.
The ASFA Award provides WHT exemption on interest and related payments made by approved entities to non-tax-resident lenders for qualifying arrangements entered into on or before 31 Dec 2031, to finance the purchase or construction of ships and containers.
Ship and container lease payments made to non-tax-resident lessors* under FL agreements for ASFA Award recipients will also be exempted from WHT.
* Excluding payments derived from any operation carried on by the non-tax-resident through its permanent establishment in Singapore.
The ASFA Award will be administered by MPA and be introduced with effect from 19 Feb 2025.
Further details will be provided by 2Q 2025 (MPA).
Extensions of certain tax incentives and concessions
a. WHT exemption for container lease payments made to non-tax-resident lessors
Container lease payments made to non-tax-resident lessors* under Operating Lease (OL) agreements for the use of qualifying containers for the carriage of goods by sea are exempted from WHT.
* Excluding payments derived from any operation carried on by the non-tax-resident through its permanent establishment in Singapore.
This exemption which is scheduled to lapse after 31 Dec 2027, will be extended.
WHT exemption for container lease payments made to non-tax-resident lessors under OL agreements will be extended to agreements entered into on or before 31 Dec 2031.
b. WHT exemption for ship and container lease payments made to non-tax-resident lessors
Ship and container lease payments made to non-tax-resident lessors under FL agreements for specified MSI recipients are exempted from WHT.
* Excluding payments derived from any operation carried on by the non-tax-resident through its permanent establishment in Singapore
This exemption which is scheduled to lapse after 31 Dec 2028, will be extended.
WHT exemption for ship and container lease payments made by specified MSI recipients to non-tax-resident lessors under FL agreements will be extended to agreements entered into on or before 31 Dec 2031.
Real Estate
Real Estate Investment Trusts listed on the Singapore Exchange (S-REITs)
The following income tax concessions are granted to S-REITs and their investors:
a. Tax transparency on specified income in the hands of the trustee of the S-REIT if the trustee distributes at least 90% of its specified income to unitholders in the same year that the income is derived by the trustee;
b. Tax exemption on qualifying foreign-sourced income received by S-REITs, S-REITs’ wholly-owned Singapore sub-trusts, and S-REITs’ directly or indirectly held wholly-owned companies incorporated and tax resident in Singapore (FSIE-REIT), subject to conditions;
c. Tax exemption on S-REITs distributions received by individuals, excluding those who derive the distributions through a partnership in Singapore or from the carrying on of a trade, business or profession; and
d. Final withholding tax (WHT) rate of 10% for S-REITs distributions received by qualifying non-tax-resident non-individuals and qualifying non-tax-resident funds.
Tax concessions at b) and d) which are scheduled to lapse after 31 Dec 2025, will be extended till 31 Dec 2030. The following enhancements will be made:
a. Expanded scope of specified income for the tax transparency treatment, to include all co-location and co-working income derived from 1 Jul 2025;
b. For FSIE-REIT the following refinements will be introduced from 19 Feb 2025:
- Qualifying foreign-sourced income will include rental and ancillary income received in Singapore from 19 Feb 2025, subject to conditions;
- The requirement for wholly-owned companies of S-REITs to be incorporated in Singapore will be removed. The wholly-owned companies must still be Singapore tax residents to qualify for the concession;
- Repayment of shareholder loans and return of capital will now be recognised as qualifying modes of remittance for wholly-owned Singapore sub-trusts and wholly-owned Singapore tax resident companies to pass remitted income through to S-REITs; and
- Singapore sub-trusts will be allowed to deduct other operational expenses against their income before passing the remaining amount to S-REITs.
Further details will be provided by 2Q 2025 (IRAS)
Extensions of certain tax incentives and concessions
a. Real Estate Investment Trust Exchange-Traded Funds listed on the Singapore Exchange
The following income tax concessions are granted to S-REIT ETFs and their investors:
- Tax transparency in the hands of the trustee of S-REIT ETFs on distributions received by S-REIT ETFs from S-REITs, which are paid out of the latter’s specified income;
- Tax exemption on such S-REIT ETFs distributions received by individuals, excluding those who derive S-REIT ETFs distributions through a partnership in Singapore or from the carrying on of a trade, business or profession; and
- Final WHT rate of 10% for S-REIT ETFs distributions received by qualifying non-tax-resident non-individuals and qualifying non-tax-resident funds.
Tax concessions at i. and iii. are scheduled to lapse after 31 Dec 2025. The sunset date for concession at i. will removed. The tax concession at iii. will be extended till 31 Dec 2030.
Further details will be provided by 2Q 2025 (MAS)
b. GST remission for S-REITS and Singapore-listed Registered Business Trusts (RBTs)
GST remission is granted to S-REITs and RBTs in the infrastructure business, ship leasing and aircraft leasing sectors, to allow them to claim input GST on the following, subject to conditions:
- Their business expenses, regardless of whether they hold underlying assets directly or indirectly through multi-tiered structures such as SPVs or sub-trusts;
- Their business expenses incurred to set up SPVs that are used solely to raise funds for the S-REITs or RBTs, and that do not hold qualifying assets of the S-REITs or RBTs, directly or indirectly; and
- Business expenses of financing SPVs mentioned in ii.
The GST remission which is scheduled to lapse after 31 Dec 2025, will be extended till 31 Dec 2030.
Key Changes for Individuals
Personal Income Tax (PIT) Rebate for YA 2025
A PIT Rebate of 60% of tax payable will be provided to all tax resident individuals for YA 2025. The rebate will be capped at S$200 per taxpayer.
Removal of certain CPF Cash Top-Up Relief
The Government will introduce a five-year Matched MediSave Scheme (MMSS) from Jan 2026, to boost MediSave adequacy for seniors with lower balances. Eligibility is subject to conditions.
Under the MMSS, the Government will match every dollar of voluntary cash top-ups to the MediSave Account of eligible CPF members, up to an annual cap of S$1,000.
Tax resident CPF members may, subject to conditions, enjoy CPF Cash Top-Up Relief for cash top-ups made to the following accounts which are their own or their eligible loved ones’:
a. Retirement Account (RA) and / or Special Account (SA) (excluding any amount of cash top-ups that attract a matching grant under the Matched Retirement Savings Scheme (MRSS)); and
b. MediSave Account (MA).
However, cash top-ups made from 1 Jan 2026 to the MA of a MMSS-eligible CPF member that attract the MMSS matching grant will not entitle the giver to the CPF Cash Top-Up Relief.
A giver may continue to enjoy tax relief of up to S$16,000 per year for eligible CPF cash top-ups that do not attract the MMSS or MRSS matching grant. The maximum amount of CPF Cash Top-Up Relief is S$8,000 per year for cash top-ups to the giver’s own SA, RA or MA, and another S$8,000 per year for cash top-ups to such accounts of the giver’s loved ones.
