Singapore’s 50% tax rebate aims to drive productivity, global growth

This broad-based support allows SMEs and companies not making a profit to benefit.

The 50% Corporate Income Tax (CIT) rebate for the Year of Assessment (YA) 2025 demonstrates the government’s responsiveness to current economic challenges, Alvarez & Marsal (A&M) Tax said.

This broad-based support allows SMEs and companies not making a profit to benefit, enabling them to focus on productivity improvements and explore new opportunities. The rebate applies to Singapore tax liability, capped at S$40,000 per company.

On the topic of international expansion, A&M said the extension of the Merger and Acquisitions (M&A) scheme and the Double Tax Deduction for Internationalisation (DTDi) scheme provides long-term certainty for businesses seeking global growth.

However, they cautioned that businesses should consider commercial factors such as strategic fit, synergies, and market access before pursuing these opportunities.

Regarding investor confidence, A&M highlighted that enhancements to Section 13W of the Singapore Income Tax Act will strengthen Singapore’s position as a stable investment hub by providing clarity and certainty on the tax treatment of disposal gains.

Focusing on the financial sector, A&M stated that new tax incentives for asset and wealth management are designed to solidify Singapore’s status as a global financial hub. However, they cautioned that liquidity challenges within the Singapore Stock Exchange (SGX) could affect the effectiveness of these incentives.

In terms of alternative financing, A&M emphasized the significance of the S$1 billion Private Credit Growth Fund, which aims to provide alternative financing options for high-growth local enterprises.

Although implementation details remain pending, A&M expects this fund to bolster Singapore’s asset management ecosystem, especially if third-party fund managers are appointed to oversee it.

Finally, A&M pointed out the lapse of the Venture Capital Fund Incentive (VCFI) and the Venture Capital Fund Management Incentive (FMI) after 31 December 2025.

They believe the limited take-up of these schemes influenced this decision but suggested that businesses could still leverage the Section 13D/O/U Tax Incentive Schemes, which provide a broader scope for qualifying investments.