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Ministry of Finance (MOF)
Speeches

Second Reading Opening Speech on the Finance (Income Taxes) Bill – 2M Jeffrey Siow

6 October 2026

Topics

Tax-Related (Income Tax)

Thumbnail for Second Reading Opening Speech on the Finance (Income Taxes) Bill – 2M Jeffrey Siow

  1. Mr Speaker, I move, ‘That the Bill be now read a second time’.

INTRODUCTION

  1. This past year has been challenging for many businesses.

    1. The conflict in the Strait of Hormuz has disrupted supply chains and pushed up energy costs.

    2. At the same time, Artificial Intelligence is transforming industries, and companies must adapt quickly to stay competitive.

  2. This Bill does three things.

    1. First, it brings into legal effect tax measures that were announced in this year’s Budget and during the April Parliament sitting, to help businesses cope with these cost pressures and invest in AI.

    2. Second, it introduces amendments to comply with the latest Pillar Two global minimum tax rules, which will provide greater certainty to multinational enterprises.

    3. Third, it introduces changes to simplify tax filing for taxpayers.

EASE COST PRESSURE AND SUPPORT AI ADOPTION

  1. Let me start with the first set of amendments on business support.

  2. Clause 31 introduces the Corporate Income Tax Rebate and Cash Grant for the year of assessment 2026.

    1. At this year’s Budget, the Government had announced a 40% tax rebate, with a $1,500 cash grant for active companies that employed at least one local employee in 2025. The total benefit was capped at $30,000.

    2. When the conflict in the Strait of Hormuz broke out, I shared in Parliament in April that we would raise the tax rebate to 50%, and the cash grant to $2,000, to help small and medium enterprises cope with cost pressures. The benefit cap was also raised to $40,000. Today’s amendment brings this into legal effect.

  3. Clause 13(1) enhances the Enterprise Innovation Scheme, to support businesses in AI adoption.

    1. At Budget this year, we announced an expansion of the Scheme to include AI expenditure. Businesses will be able to claim an enhanced tax deduction of 400% on up to $50,000 of qualifying AI expenditure, for the 2027 and 2028 years of assessment.

PROVIDE TAX CERTAINTY AMIDST CHANGING GLOBAL TAX RULES

  1. The second set of amendments concerns our Pillar Two taxes, namely the Multinational Enterprise Top-up Tax and Domestic Top-up Tax.

  2. In January this year, all 147 jurisdictions of the OECD Inclusive Framework agreed to the Side-by-Side package, which exempts US multinational enterprises from certain Pillar Two rules.

  3. Clauses 38 and 49(b) give effect to this agreement in Singapore. US multinational enterprises will be exempted from our 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.

  4. Clauses 36, 37, and 39 to 50 align our laws with other updates to international rules.

    1. For example, we will allow the exchange of 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

  1. The third set of amendments makes tax filing simpler for taxpayers, especially the self-employed.

  2. Today, self-employed persons have to compile and calculate their actual business expenses when filing tax returns. For some, this can be onerous.

    1. IRAS has simplified the process by allowing some groups of self-employed taxpayers like real estate agents, insurance brokers, or financial advisors, to deduct a fixed percentage of their gross commission revenue as expenses if they wish to.

    2. This simplified tax filing process has been popular.

    3. Clause 13(2) extends this option to all self-employed persons and individual sole proprietorships with annual revenue of up to $50,000, allowing them to claim a Fixed Expense Deduction Ratio of 20%. This is an option and is not compulsory. Those who still prefer to claim their actual expenses may continue to do so.

  3. We will also require all companies to use IRAS’s e-service for specific tax filing matters.

    1. Today, all companies already file tax returns using IRAS’ e-service, and nearly 80% do this for objections and revisions to tax filings.

    2. Clauses 27, 28, 32 and 34 require all companies to use IRAS’s e-service for filing of objections or revisions from 1 July 2027. This will allow for faster resolution of tax matters.

    3. IRAS will work closely with business associations and taxpayers to support those who need help to use the system.

CONCLUSION

  1. Mr Speaker, in summary, this Bill builds on the strong foundation of our tax system, to:

    1. Support businesses through a difficult year and help them invest for the next;

    2. Keep our tax system in step with international tax developments, and provide certainty to multinational enterprises;

    3. And lastly, simplify tax filing for businesses and self-employed persons.

  2. Sir, I seek to move.