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

1. Mr Speaker, Sir, on behalf of the Second Minister for Finance, I move, ‘That the Bill be now read a second time’.

Introduction

2. Sir, we are operating in a much more challenging global economic landscape.

   1. Geopolitical rivalries have intensified.

   2. Economic competition has sharpened.

   3. Many countries are home-shoring key industries and companies.

   4. The competition for investment is fiercer than ever before.

   5. At the same time, global tax and tariff rules continue to evolve, creating uncertainty, and complicating companies’ decisions on when and where to invest.

3. For Singapore to continue to be a choice location for businesses to expand and invest, we must keep our tax system up-to-date, responsive to industry needs, and aligned with global tax developments.

4. The Bill today serves two purposes:

   1. First, the amendments to the Multinational Enterprise (Minimum Tax) Act incorporate updates to the Pillar Two rules under the international Base Erosion and Profit Shifting (or BEPS) 2.0 initiative.

   2. Second, the Bill also brings into legal effect several tax measures already announced in this year’s Budget Statement, as well as other changes to our tax system, following close consultations with the industry.

Amendments to the Multinational Enterprise (Minimum Tax) Act

5. I will now briefly outline the amendments to the Multinational Enterprise (Minimum Tax) Act.

   1. Last year, Parliament approved the enactment of the Act 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.

   2. Our 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.

   3. Both top-up taxes apply to businesses’ financial years commencing on or after 1 January 2025.

6. Since the enactment of the Act, the OECD Inclusive Framework has published new technical clarifications on the Pillar Two rules.

   1. Clauses 56 to 70 of the Bill will incorporate these and other technical clarifications into our legislation, so that our regime remains up-to-date and consistent and is recognised by other jurisdictions.

   2. This will provide certainty to businesses, ease their compliance burdens and most importantly, relieve them from having to pay Pillar Two taxes elsewhere in respect of their Singapore operations.

7. Meanwhile, we are closely monitoring international developments.

   1. Negotiations on the parameters of Pillar Two have re-opened following the June 2025 G7 statement on the development of a “side-by-side” system that will exempt US-parented multinational enterprises from specific Pillar Two rules.

   2. At this point, discussions at the OECD Inclusive Framework are ongoing. It is unclear what the final outcome will be, and how other jurisdictions and affected businesses will respond.

   3. For the moment, our considerations for the implementation of the Domestic Top-up Tax and the Multinational Enterprise Top-up Tax remain valid. We are therefore proceeding with the implementation of Pillar Two taxes, so that we do not cede tax revenue to other Pillar Two-implementing jurisdictions, and at the same time, we provide tax certainty for multinational enterprises to plan their investments.

   4. We will continue to monitor global developments, and if necessary, review this approach.

Amendments to the Income Tax Act

8. Sir, I will now highlight key amendments to the Income Tax Act, which cover changes to our corporate income tax and personal income tax regimes. 

9. The corporate income tax amendments ensure that our tax system remains responsive to business needs and practices.

10. Clause 19 provides for 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. Currently, such tax deductions are only available when certificates or credits are surrendered or retired to meet statutory requirements. But with this amendment, tax deductions will now also apply if these certificates or credits are used to meet sustainability commitments.

11. Clauses 27, 34 and 42 introduce tax incentives recommended by the Equities Market Review Group, set out at Budget this year.

    1. These incentives aim to encourage new listings in Singapore’s equities market, and increase investment demand for Singapore-listed equities.

    2. First, companies that complete a primary or secondary listing with shares offered in conjunction with the listing will enjoy a 20% or 10% Listing Corporate Income Tax Rebate respectively, subject to caps.

    3. Second, we will also introduce a 5% concessionary tax rate on qualifying income for new fund manager listings in Singapore.

    4. Third, we will introduce a tax exemption on fund managers’ qualifying income from funds with at least 30% allocation to Singapore-listed equities.

12. Moving on to personal income tax, the amendments relate mainly to changes that provide stronger support to our workers.

13. Clause 55 provides for all tax-resident individuals to receive a Personal Income Tax Rebate of 60% for the Year of Assessment 2025, capped at $200 per taxpayer. This was announced in Budget 2025 as part of the SG60 package, and is granted automatically to eligible taxpayers.

Conclusion

14. Let me conclude.

15. Mr Speaker, the provisions in the Bill will update our tax regime to strengthen our economic competitiveness, provide more clarity to businesses, and give more support to companies and individuals amidst a challenging global economic landscape.

16. Sir, I seek to move.