Recent and upcoming tax changes affecting companies and individuals in Singapore, covering GST rate increases, corporate tax rebates, the Variable Capital Company framework, foreign income rules, and OECD Pillar Two top-up taxes.
In force1 January 2024
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GST rate increased to 9%
Singapore's Goods and Services Tax rate increased from 8% to 9% on 1 January 2024, completing the two-stage increase announced in Budget 2022. All GST-registered businesses must charge, collect, and remit GST at 9% on taxable supplies.
What changed and what to do
What changed
The second planned GST increase took effect on 1 January 2024, following the first step from 7% to 8% on 1 January 2023. IRAS issued transitional rules for contracts and invoices that straddled the changeover date, including an anti-profiteering framework. Businesses needed to update their accounting systems, invoicing templates, point-of-sale systems, and contracts to reflect the new rate. The Assurance Package (cash payouts and GST vouchers) continued to offset the impact on lower-income households.
Who it affects
All GST-registered businesses in Singapore
Businesses with taxable turnover above S$1 million considering voluntary registration
Businesses with contracts straddling 1 January 2024 requiring rate transitional treatment
Importers of goods and services subject to reverse charge
What to do
Confirm all invoicing, accounting software, and payment systems are updated to apply the 9% rate. Review any multi-year contracts entered before 2024 to ensure the correct GST rate is being applied and that transitional billing rules were followed for the changeover period. Check that your GST F5/F8 return reflects the 9% rate for supplies made on or after 1 January 2024.
A 50% Corporate Income Tax (CIT) rebate capped at S$40,000 applies for Year of Assessment 2025. Companies with at least one local employee in 2024 receive a minimum cash grant of S$2,000 even if they have no CIT payable.
What changed and what to do
What changed
Singapore Budget 2025 introduced a one-year CIT rebate of 50% of tax payable, capped at S$40,000, for all companies for YA2025 (income year 2024). A CIT Rebate Cash Grant of S$2,000 was added for companies that employed at least one local employee (Singapore Citizen or PR) in 2024, ensuring even loss-making or newly incorporated companies with staff receive a benefit. The cash grant is paid out directly and does not reduce CIT payable.
Who it affects
All Singapore-incorporated companies filing YA2025 returns
Companies with assessable income generating CIT payable
Companies with at least one local Singapore Citizen or PR employee in 2024 (for the cash grant)
Newly incorporated companies in their first year of trading
What to do
Ensure your YA2025 corporate tax return is filed accurately to claim the rebate automatically — IRAS applies it to the tax assessed. If your company had at least one local employee in 2024, confirm that payroll records and CPF contributions are up to date so you are eligible for the cash grant. Check IRAS MyTax Portal for the disbursement of the cash grant if applicable.
The Variable Capital Company Act introduced a new corporate structure for investment funds with flexible share capital, allowing open-ended funds to be domiciled in Singapore. Qualifying VCCs benefit from tax transparency treatment and enhanced confidentiality for sub-fund registers.
What changed and what to do
What changed
The VCC framework launched in January 2020, enabling investment funds to incorporate or re-domicile in Singapore under a structure that allows capital to fluctuate freely without shareholder approval — unlike a standard company. VCCs can be structured as umbrella funds with multiple sub-funds, each with segregated assets and liabilities. For tax purposes, qualifying VCCs are treated as transparent or as single taxable entities depending on their structure. Uptake accelerated significantly in 2023 and 2024, with over 1,000 VCCs registered with ACRA. The MAS-IRAS VCC Grant Scheme provides co-funding for setup and ongoing operating costs.
Who it affects
Fund managers seeking a Singapore-domiciled fund structure
Private equity and venture capital funds considering re-domiciling
Family offices exploring Singapore fund structures
Asset managers looking to launch Singapore retail or institutional funds
What to do
Fund managers evaluating a Singapore fund structure should assess whether the VCC offers advantages over a limited partnership or unit trust for their investor base and asset class. Review the tax transparency conditions with your tax adviser and check eligibility for the VCC Grant Scheme, which can offset a portion of setup and operational costs. ACRA provides a streamlined incorporation process specifically for VCCs.
Tightened economic substance requirements for foreign-sourced income
Following BEPS 2.0 and the OECD/G20 Inclusive Framework, IRAS has issued guidance tightening economic substance requirements for companies claiming exemptions on foreign-sourced dividends, branch profits, and service income under Section 10(25).
What changed and what to do
What changed
Singapore's tax treaties and domestic law have long provided exemptions for certain categories of foreign-sourced income when remitted to Singapore, subject to conditions including the income having been subject to tax in the source country. In response to BEPS 2.0 and EU concerns about substance, IRAS and MAS conducted consultations in 2023 and issued updated guidance requiring companies to demonstrate genuine economic activity in Singapore when relying on Section 10(25) exemptions. Groups relying heavily on Singapore as a holding or treasury hub with minimal local substance are at increased risk of challenge.
Companies with regional treasury centres in Singapore
Businesses earning foreign branch profits remitted to Singapore
MNE groups using Singapore service hubs claiming foreign service income exemptions
What to do
Review the economic substance of any Singapore entities that rely on Section 10(25) exemptions for foreign-sourced income. Document the substance factors — number of employees, key decision-making in Singapore, physical premises, and management and control. Groups with thin substance in Singapore should consider whether restructuring or adding genuine substance is warranted before the next IRAS audit cycle.
Singapore Budget 2025 confirmed the Minimum Top-up Tax (MTT) and Domestic Top-up Tax (DTT) for MNE groups with €750 million or more in global revenues, effective from Year of Assessment 2025. In-scope groups may face a top-up if their effective tax rate in Singapore falls below 15%.
What changed and what to do
What changed
Singapore legislated the GloBE (Global Anti-Base Erosion) rules as the Minimum Top-up Tax and Domestic Top-up Tax, applying from YA2025 to MNE groups meeting the €750 million revenue threshold. Singapore's headline corporate income tax rate is 17%, but after start-up exemptions, the partial tax exemption scheme, and investment incentives, many companies' effective rates can fall below 15%. Where the ETR on Singapore profits is below 15%, the DTT ensures Singapore collects the top-up domestically rather than ceding it to another jurisdiction under the Income Inclusion Rule.
Who it affects
MNE groups with consolidated global revenues of €750 million or more
Singapore subsidiaries of large MNE groups benefiting from tax incentives or exemptions
Companies in the Pioneer or Development and Expansion Incentive schemes
Financial services groups with significant Singapore operations
What to do
In-scope MNE groups should model their GloBE effective tax rate for Singapore operations. Assess whether Pioneer status, development incentives, or partial exemptions reduce your ETR below 15% and quantify the resulting MTT or DTT exposure. Engage your tax adviser to consider transitional safe harbour elections (such as the Transitional CbCR Safe Harbour) that may reduce compliance burden in early years, and review incentive arrangements to determine whether their value persists post-Pillar Two.