MOF Conducts Consultation on Amendments to Tax Legislation to Implement GloBE Rules, 2025 Budget Statement

Introduction

The Ministry of Finance (“MOF“) is conducting a public consultation on the proposed Finance (Income Taxes) Bill (“Bill“). The Bill seeks to make legislative amendments to the Income Tax Act 1947 (“ITA“) and the Multinational Enterprise (Minimum Tax) Act 2024 (“MMTA“).

The Bill sets out a series of proposed amendments including:

• Amendments to the ITA: These comprise tax measures announced in the 2025 Budget Statement and changes arising from MOF’s periodic review of the income tax system; and`
• Amendments to the MMTA: These comprise, among others, clarifications that are in accordance with the Pillar Two Global Anti-Base Erosion Model Rules, commentary and administrative guidance (“GloBE rules“), and expansion of regulatory-making powers necessary to operate GloBE rules.

The public consultation will be conducted from 18 June to 11 July 2025. MOF will publish a summary of the main comments received on the MOF website, together with its responses, by Q4 2025. 

This Update provides a summary of the key amendments sought to be introduced pursuant to the Bill.

Amendments to the ITA

The Bill proposes a number of amendments to effect measures announced in the 2025 Budget Statement. Key amendments in this area include the following:

• Corporate Income Tax (“CIT”) Rebate: A 50% CIT Rebate will be granted in Year of Assessment (“YA“) 2025. Companies that are active and have employed at least one local employee in Calendar Year 2024 will receive a minimum benefit of S$2,000 in the form of a CIT Rebate Cash Grant. The total maximum benefit that a company may receive is S$40,000.
• Personal Income Tax (“PIT”) Rebate:As part of the SG60 package, a PIT Rebate of 60% of tax payable will be provided to all tax resident individuals for YA 2025, at a cap of S$200 per taxpayer.
• Tax incentives recommended by the Equities Market Review Group:To encourage new listings in Singapore and increase investment demand for Singapore-listed equities, the following tax incentives will be introduced with effect from 19 February 2025:

1. 1. Listing CIT Rebate for new corporate listings in Singapore;
   2. Enhanced concessionary tax rate of 5% for new fund manager listings in Singapore; and
   3. Tax exemption on fund managers’ qualifying income arising from funds investing substantially in Singapore-listed equities.

• Extension of schemes: The Double Tax Deduction for Internationalisation scheme, the Mergers and Acquisitions scheme, and the Land Intensification Allowance scheme will be extended till 31 December 2030. The shareholding requirement for qualification under the Land Intensification Allowance scheme will also be lowered.
• Enhancing section 13W of the ITA: Section 13W of the ITA provides upfront certainty of non-taxation of companies’ disposal gains. The sunset date will be removed and enhancements will be made to expand the scope of eligible gains and allow the assessment of the shareholding threshold condition to be done on a group basis.
• Tax deductions: Companies will be allowed to claim a tax deduction on payments to the holding company or a special purpose vehicle for the issuance of new shares of the holding company under employee equity-based remuneration (“EEBR“) schemes, with effect from YA 2026. A 100% tax deduction for payments made by companies under an approved cost-sharing agreement for innovation activities will be introduced with effect from 19 February 2025.
• Concessionary tax rate (“CTR”) amendments: An additional CTR tier of 15% will be introduced with effect from 19 February 2025 for the Insurance Business Development scheme and the Financial Sector Incentive scheme.
• Extension of concessions for Real Estate Investment Trusts listed on the Singapore Exchange (“S-REITs”): The existing tax concessions for S-REITs will be extended till 31 December 2030, and the scope of specified income for the tax transparency treatment will be expanded. Further, the sunset date for the tax transparency concession will be removed and the final withholding tax of 10% for S-REIT Exchange-Traded Funds distributions received by qualifying non-tax-resident non-individuals and qualifying non-tax-resident funds will be extended till 31 December 2030.
• Maritime sector incentives: An Approved Shipping Financing Arrangement will be introduced to provide withholding tax exemption relating to the purchase or construction of ships and containers. The Maritime Sector Incentive will be extended till 31 December 2031, and its qualifying scope will be updated.

The Bill also proposes amendments arising from MOF’s periodic review of Singapore’s income tax system to better reflect policy objectives and to improve tax administration. These include the following:

• Enterprise Innovation Scheme Cash Payout (“EIS CP”): The Bill expands the scope of items that EIS CP could be used to offset to include recovery of past EIS CP.
• Transfer pricing: The amendments clarify how to identify the related parties of trusts and partnerships for transfer pricing purposes, and that transfer pricing requirements will not apply to non-commercial private trusts.
• Income tax relief: The scope of the Spouse Relief, Spouse Relief (Disability) and Life Insurance Relief will be expanded to account for gender equality with effect from YA 2026.
• Bribes: The amendments explicitly disallow tax deductions on bribes and other expenses incurred in the furtherance of bribery.
• EEBR schemes: The tax deduction rules for the transfer of treasury shares of the company or the holding company to employees under EEBR schemes will be simplified with effect from YA 2026.
• Crypto-Asset Reporting Framework (“CARF”): This enables the implementation of the CARF, which is an internationally agreed standard for the automatic exchange of information on crypto-assets between partner jurisdictions for tax purposes.
• Exemption from income tax: The payouts from the SkillsFuture Jobseeker Support Scheme and the Majulah Package Earn and Save Bonus will be exempted from income tax. Exemption will also be granted for training allowance provided under the SkillsFuture Level-Up Programme, Workfare Skills Support (Level-Up), and Workfare Skills Support (Basic) Tier. This takes effect from YA 2026.
• Central Provident Fund (“CPF”): The CPF tax relief will be amended to allow the relief on the full amount of compulsory MediSave contributions made by self-employed persons in the year preceding a YA, with effect from YA 2026. Employers will also be allowed to claim tax deduction for CPF cash top-ups made on or after 1 January 2026 on their employees’ behalf to the employees’ MediSave Account under the Voluntary Contribution to MediSave Account scheme, with effect from YA 2027.
• Refund of excess tax: The Inland Revenue Authority of Singapore (IRAS) will be empowered to refund any excess taxes paid by foreign employees based on deemed gains on employee stock options or share awards when they cease employment in Singapore, if they subsequently realise a lower amount of gains than what they were subject to tax on.
• Transfer of business by insurers: The Minister or the Comptroller will be empowered to extend certain deadlines relating to the tax framework for transfer of business by insurers.
• Clarifications: The amendments provide clarifications on the recovery mechanism for the Corporate Income Tax Rebate Cash Grant and the treatment for tax-exempt losses under the Maritime Sector Incentive.

Amendments to the MMTA

Background to GloBE rules

The GloBE rules originate from concerns over base erosion and profit shifting (“BEPS“), which refers to tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift profits to locations with no/low tax rates and no/little economic activity. The Organisation for Economic Co-operation and Development (“OECD“) sought to address the issue of tax avoidance through BEPS strategies, establishing the Inclusive Framework (“IF“) as a platform for its BEPS discussions.

The IF adopted a Two-Pillar solution to address the tax challenges arising from the digital economy, known as BEPS 2.0. The GloBE rules are part of Pillar Two of BEPS 2.0, which aims to ensure that large multinational enterprise (“MNE“) groups operating in more than one jurisdiction pay a minimum effective tax rate (“ETR“) of 15%.

The GloBE rules comprise of:

• the Income Inclusion Rule (“IIR“), under which a top-up tax is imposed on a relevant parent entity of an MNE group in proportion to its ownership interests in a low-taxed constituent entity that has an ETR below 15%; and
• the Undertaxed Profits Rules (“UTPR“), under which a top-up tax will be collected in jurisdictions in which the MNE group operates if its parent entity has not been subjected to the IIR in its jurisdiction.

The OECD has provided clarification and guidance on the GloBE rules via the issuance of Administrative Guidance. In June 2024, the OECD released the fourth set of Administrative Guidance on the GloBE rules, which aims to clarify the application of the GloBE rules, particularly concerning deferred tax liability recapture, cross-border tax allocation, flow-through entities, and securitisation vehicles.

Proposed amendments to the MMTA

The Bill proposes amendments to clarify the definitions and rules in the MMTA and provide regulation-making powers required to operate the GloBE rules. The amendments seek to keep Singapore’s MNE tax regime in accordance with the GloBE rules, taking into account the recent Administrative Guidance.

The proposed amendments to the MMTA include the following key clarifications:

• Allocation of profits and taxes in group structures with flow-through entities: This will be amended to be in accordance with the recent clarifications in the Administrative Guidance on the GloBE rules.
• Securitisation entity: The amendment will define a “securitisation entity” (“SE“) and “securitisation arrangement” to provide that an SE will not be jointly and severally liable for unpaid domestic top-up tax (“DTT“) and interest of the MNE group. Further, a SE will not be appointed as the designated local DTT filing entity unless it is the only constituent entity located in Singapore.
• Deduction of DTT: DTT imposed in respect of a stateless entity formed in Singapore will be allowed to be deducted for the purpose of determining the jurisdictional top-up amount under Multinational Enterprise Top-up Tax.
• Clarification of definitions: The definitions of the terms “excluded equity gain or loss”, “excluded entity”, “multi-parent group” and “portfolio shareholding” will be clarified in accordance with the GloBE rules.
• Modifications to GloBE calculations for joint ventures (“JVs”): The amendments will remove the currently legislated need to replace the term “flow-through entity” with “standalone JV or entity of a JV group” in GloBE calculations when applied to a JV and JV subsidiaries.
• Adjusted covered taxes: The adjusted covered taxes of a main entity will exclude the qualifying current tax expense and qualifying deferred tax expense in respect of its permanent establishment (“PE“), whether those expenses are reflected in the PE’s financial accounting net income or loss (“FANIL“) or elsewhere.
• FANIL of PE: The amendments clarify that the FANIL of a PE must be based on its profits as reflected in separate financial accounts.
• Real estate investment vehicle: The definition of “real estate investment vehicle” includes the condition of “subject to taxation as the income of the holder”. The amendments clarify that this will be met if the entity’s income is subject to tax at its indirect holder’s level.
• Flowthrough entity: Certain entities will be considered a “flow-through entity” in accordance with the GloBE rules. They will be treated as the ultimate parent entity of an MNE group in cases where it would have met the definition of an “ultimate parent entity” in certain circumstances.

The proposed amendments to the MMTA also provide for the power to make regulations required to operate the GloBE rules, including the following:

• Regulations to prescribe the start and end dates for a foreign tax to be treated as a qualified domestic minimum top-up tax, qualified IIR or qualified UTPR, by referencing the effective dates stated in the central record approved by the IF on BEPS;
• Regulations to modify the consolidated group revenue threshold test for an MNE group that is newly created from a demerger; and
• Regulations to prescribe how the DTT and other administrative provisions apply to a multi-parented group.

Concluding Words

For more information, please see the following:

• Press release titled “Public Consultation on Proposed Finance (Income Taxes) Bill 2025”
• Public Consultation on Proposed Finance (Income Taxes) Bill 2025

Please feel free to contact our team for further queries, or if you wish to consult on providing feedback in response to the public consultation on the proposed Bill.