Finance (Income Taxes) Act 2025 amends Multinational Enterprise (Minimum Tax) Act 2024 to incorporate updates to Pillar Two rules and bring into effect tax measures announced in 2025 Budget Statement
28 January 2026
On 8 December 2025, the Finance (Income Taxes) Act 2025 (“Act”) was gazetted with its provisions largely in force and from various dates.
The Bill will (i) amend the Multinational Enterprise (Minimum Tax) Act 2024 to incorporate updates to the Pillar Two rules under the international Base Erosion and Profit Shifting (BEPS) 2.0 initiative; and (ii) bring into legal effect several tax measures announced in the 2025 Budget Statement, as well as other changes to the tax system.
Amendments to Multinational Enterprise (Minimum Tax) Act 2024
The Multinational Enterprise (Minimum Tax) Act 2024 was enacted to implement the Domestic Top-up Tax and the Multinational Enterprise Top-up Tax under the Pillar Two rules. The rules require large multinational enterprises to pay a minimum effective tax rate of 15% wherever they operate. Both top-up taxes apply to businesses’ financial years commencing on or after 1 January 2025.
Singapore’s implementation of the Pillar Two rules is aligned with the global implementation of these rules. Major economies such as the EU, the UK, and Japan have already implemented them.
Since the enactment of the Multinational Enterprise (Minimum Tax) Act 2024, the Organisation for Economic Co-operation and Development (OECD) Inclusive Framework has published new technical clarifications on the Pillar Two rules. These and other technical clarifications have been incorporated into the Multinational Enterprise (Minimum Tax) Act 2024 so that Singapore’s regime remains up-to-date and consistent and is recognised by other jurisdictions. This will provide tax certainty for multinational enterprises to plan their investments and, at the same time, ensure that Singapore does not cede tax revenue to other Pillar Two-implementing jurisdictions.
Amendments to Income Tax Act 1947
Key amendments to the Income Tax Act 1947 include a 100% tax deduction for expenses incurred by businesses on green certificates or credits. This is in response to feedback from businesses for more support in their sustainability journeys. Previously, such tax deductions were only available when certificates or credits are surrendered or retired to meet statutory requirements. With this amendment, tax deductions will now also apply if these certificates or credits are used to meet sustainability commitments.
The Income Tax Act 1947 is also amended to introduce tax incentives recommended by the Equities Market Review Group to encourage new listings in Singapore’s equities market and increase investment demand for Singapore-listed equities:
- A 20% or 10% Listing Corporate Income Tax Rebate for companies that complete a primary or secondary listing respectively, with shares offered in conjunction with the listing, subject to caps.
- A 5% concessionary tax rate on qualifying income for new fund manager listings in Singapore.
- A tax exemption on fund managers’ qualifying income from funds with at least 30% allocation to Singapore-listed equities.
Reference materials
The Finance (Income Taxes) Act 2025 is available on the Government Gazette website www.egazette.gov.sg.