Finance (Income Taxes) Bill passed in Parliament (2026)

28 October 2026

On 6 October 2026, the Finance (Income Taxes) Bill (“Bill”) was passed in Parliament. As outlined in the speech by Second Minister of State for Finance Jeffrey Siow delivered at the second reading of the Bill, the Bill seeks to:

  • bring into legal effect tax measures that were announced in the 2026 Budget Statement to help businesses cope with cost pressures and invest in AI;
  • introduce amendments to comply with the latest Pillar Two global minimum tax rules, which will provide greater certainty to multinational enterprises; and
  • introduce changes to simplify tax filing for taxpayers.

Ease cost pressure and support AI adoption

The Bill seeks to amend the Income Tax Act 1947 to introduce the Corporate Income Tax Rebate (“CIT Rebate”) and CIT Rebate Cash Grant for the year of assessment (“YA”) 2026. In the 2026 Budget Statement, the Government announced a CIT Rebate of 40% of tax payable, with a S$1,500 Cash Grant for active companies that employed at least one local employee in 2025. The total benefit of the CIT Rebate and Cash Grant was capped at S$30,000. To provide further support for companies to manage their cashflow needs as they navigated the impact of the Middle East situation, the Government announced in April 2026 that the CIT Rebate would be raised to 50% of tax payable, and the Cash Grant raised to S$2,000. The total benefits of the enhanced CIT Rebate and Cash Grant for YA 2026 is now capped at S$40,000.

The Bill also introduces amendments to the Enterprise Innovation Scheme, as announced in the 2026 Budget Statement, to support businesses in AI adoption by expanding the scheme to include AI expenditure. Businesses will be able to claim an enhanced tax deduction of 400% on up to S$50,000 of qualifying AI expenditure for YA 2027 and YA 2028.

Provide tax certainty amid changing global tax rules

The Bill seeks to amend the Multinational Enterprise (Minimum Tax) Act 2024 (“MMTA”) in relation to Singapore’s Pillar Two taxes, namely the Multinational Enterprise Top-up Tax and Domestic Top-up Tax.

In January 2026, all 147 jurisdictions of the Organisation for Economic Co-operation and Development (OECD) Inclusive Framework agreed to the Side-by-Side package, which exempts US multinational enterprises from certain Pillar Two rules. The Bill gives effect to this agreement in Singapore. US multinational enterprises will be exempted from the Multinational Enterprise Top-up Tax. The Domestic Top-up Tax will continue to apply to all multinational enterprises in Singapore, including those from the US.

The Bill also seeks to align Singapore’s laws with other updates to international rules. For example, Singapore will allow the exchange of Global Anti-Base Erosion (GloBE) information returns with other jurisdictions under Pillar Two, so that multinational enterprises only need to file these returns in one jurisdiction.

Make tax administration simpler for taxpayers

The Bill will require all companies to use the Inland Revenue Authority of Singapore’s (“IRAS”) e-service for filing of objections or revisions from 1 July 2027. This will allow for faster resolution of tax matters. Presently, all companies are already filing tax returns using IRAS’ e-service, and nearly 80% do this for objections and revisions to tax filings.

Reference materials

The following materials are available on Singapore Statutes Online sso.agc.gov.sg and the MOF website www.mof.gov.sg: