Finance (Income Taxes) Bill

Mr Speaker, Sir, I rise to speak in support of the Finance (Income Taxes) Bill 2025. While the Bill may appear technical, its implications are wide-ranging. It keeps Singapore's tax system fair, forward-looking and aligned with global developments and it affects the daily lives of our families, small businesses and workers.

This Bill delivers on the intent of Budget 2025: to strengthen fiscal sustainability while easing cost pressures on Singaporeans. It provides immediate relief through a 60%personal income tax rebate, capped at $200; and a 50% corporate tax rebate, capped at $40,000, to help both households and firms manage near-term costs.

For individuals, this rebate will especially benefit lower- and middle-income households. Mr Speaker, I have a few questions to ask.

First, may I ask how many Singaporeans are expected to face zero income tax liability this year, and how much less personal income tax revenue the Government expects to collect overall? In the longer term, could the Ministry study whether the lowest income tax brackets might also be reduced? We can make our system more progressive not only by raising rates at the top, but by easing them at the bottom if fiscal space permits.

Another welcome change is the tax exemption for allowances under the Workfare Training Support Scheme, the SkillsFuture Level-Up Programme and the Workfare Skills Support (Level-Up) Scheme. This rightly ensures that training and upskilling benefits are not taxed.

However, I note that individuals who previously paid tax on these payments must apply to the Inland Revenue Authority of Singapore (IRAS) for refunds before 31 December 2029. Would the Ministry consider an automatic refund instead, and share how many individuals and how much tax collected, since 2013, will be affected by this retrospective exemption?

Mr Speaker, in my conversations with residents and business owners, many appreciate these rebates but remain concerned about complexity. Small enterprises often lack dedicated accounting staff and self-employed workers. Our freelancers, drivers, tutors and hawkers manage their own filing. They can deduct legitimate business expenses. Yet, many remain unfamiliar with the process.

[Deputy Speaker (Mr Xie Yao Quan) in the Chair]

I urge Ministry of Finance (MOF) and IRAS to pair legislative reform with practical support: clearer guidance, simpler e-forms and accessible digital tools. Tax compliance should be simple, not stressful; and reliefs should be inclusive, not confined to those who can afford professional help.

For companies, I note that those not profitable will receive a $2,000 cash grant if they made Central Provident Fund (CPF) contributions for at least one local employee in 2024. May I confirm that this CPF contribution requirement applies only to the cash grant component, not a precondition to get the corporate income tax rebate? If so, what is the reason for this distinction? And what situations would the Comptroller regard as "just and equitable" to waive this condition under section 92L(5)?

Mr Deputy Speaker, my third point is on enhancing transparency and global alignment.

The Bill also amends the Goods and Services Tax (GST) Act to allow the Board of Review to publish case details with consent, a small but meaningful step that enhances transparency and consistency in tax administration.

More broadly, the Bill aligns Singapore with the OECD's BEPS 2.0 framework. Large multinational groups will now be subject to a global minimum effective tax rate of 15%. These changes ensure Singapore remains trusted, competitive and compliant as global rules evolve.

Given that the US has withdrawn from Pillar Two, does MOF foresee any adjustment to Singapore's implementation timeline or commitments under BEPS 2.0, and how will we maintain our competitiveness if other major jurisdictions slow or reverse their adoption? So, I encourage MOF to continue providing clear guidance and transition support to affected firms, ensuring that the implementation remains proportionate and predictable.

The Bill also refines our fund-management regime, reinforcing Singapore's position as a trusted global financial centre. It enhances the tax exemption scheme for fund managers that launch and manage funds investing substantially, at least 30%, in Singapore-listed equities. A 5% concessionary rate will apply for qualifying new fund manager listings, alongside a listing tax rebate to encourage more companies to list and grow here.

While deductions for listing expenses remain non-deductible as they are capital in nature, Singapore supports enterprises through non-tax measures, such as the GEMS Listing Grant Scheme, which co-funds up to 70% of eligible Singapore Exchange (SGX) Mainboard listing costs.

These measures reflect that Singapore's appeal rests not on low rates, but on stability, transparency and innovation in our ecosystem of global capital. They also strengthen emerging areas, such as sustainable finance and wealth management, which create skilled jobs and long-term opportunities for Singapore.

Assuming Singapore proceeds with Pillar Two, can the new Listing Corporate Income Tax Rebate under section 92K remain effective once the global minimum tax rules take full effect? How often will these incentives be reviewed for effectiveness?

I also note that the Monetary Authority of Singapore (MAS) and the Equity Market Review Group are exploring non-tax measures to boost market vibrancy. I look forward to further announcements on these initiatives and their timelines.

Mr Deputy Speaker, Sir, while I support the direction of the Bill, there are a few areas that could be refined for greater fairness and long-term effectiveness.

First, the new Listing Tax Rebate may not be easily accessible to smaller issuers. Its short eligibility window and administrative requirements could discourage participation, especially among emerging or innovative firms. A more flexible framework with consistent criteria would help broaden the base of Singapore-listed companies

Second, the growing number of overlapping incentive schemes adds compliance burden and complexity. Although our headline corporate tax rate remains 17%, multiple concessionary regimes co-exist under different rules and timelines.

In addition, the amendments to sections 105L and 105K of the Income Tax Act are in preparation for the implementation of the Crypto-Asset Reporting Framework (CARF), for the automatic exchange of information on crypto-assets for tax purposes. Is there a projected timeline for any update of reporting requirements that IRAS may be carrying out, and for the release of any guidance or training to ensure that affected entities will be in a position to comply with updated requirements? So, a more integrated and transparent structure would improve clarity and efficiency.

Third, while Ministerial discretion allows flexibility, it should be balanced by regular public reporting to ensure accountability and Parliamentary oversight.

And finally, as global tax norms evolve under the OECD's 15% minimum tax framework, we should move beyond rate-based incentives and prioritise productivity- and innovation-driven measures in research and development (R&D), workforce skills and digital capability. This will safeguard fiscal integrity and sustain Singapore's competitiveness.

Mr Deputy Speaker, some may ask what all this means for the average Singaporean.

When our businesses stay competitive, they invest and hire. When compliance is simple, small and medium enterprises (SMEs) can focus on growth instead of paperwork. When revenues are stable, Government can fund programmes that uplift Singaporeans – from Workfare and SkillsFuture to the Majulah Package's Earn and Save Bonus.

I note that this Bill also ensures these social payouts remain tax-exempt, providing direct help to lower-income workers and seniors. Looking ahead, we should continue simplifying compliance through digital tools, expanding tax education in partnership with trade associations and community groups and reviewing new rules annually to stay both competitive and far.

Mr Deputy Speaker, this Bill fortifies the architecture of Singapore's fiscal system – combining prudence, fairness and adaptability. Taxation is not only about numbers. It is about trust – trust that our regime is fair, that growth benefits all and that compliance is manageable for every taxpayer.

Sir, as we align with global standards, we must ensure no resident, freelancer or SME feels left behind. If we continue to pair global alignment with domestic inclusion, we will preserve Singapore's fiscal strength and social solidarity for businesses, families and future generations. Mr Deputy Speaker, I support the Bill.

Mr Deputy Speaker, the Finance (Income Tax) Bill before this House seeks to implement tax changes announced in Budget 2025 by amending the Income Tax Act and related legislation.

While this may appear to be a procedural exercise to give legal effect to the Budget measures, I see it also as an opportunity to do much more. It is an opportunity to refine our tax system so that it continues to work well for Singaporeans and to ensure that our broader national objectives are met, particularly given the critical redistributive role that taxes play in fiscal policy. It is also an opportunity to look ahead to make constructive suggestions for the upcoming Budget 2026.

As I have emphasised in my past Budget speeches, we must move beyond transitional cost of living measures and strengthen structural support through lasting tax changes that achieve greater redistributive efficiency.

As we look towards Budget 2026, how can our tax system best serve Singaporeans, especially at a time of persistent cost pressures and growing inequality? How can our fiscal architecture reinforce fairness, resilience and growth? Can our tax policies play a stronger role in redistribution, support for families and domestic capital formation?

I will focus my remarks on three themes.

First, the importance of putting in place structural changes rather than relying on recurring one-off measures. Second, the potential role of refundable tax credits in improving equity and efficiency. And third, how we can better align our tax system with our ambition to strengthen Singapore's equities market.

Mr Deputy Speaker, in both my Budget 2024 and Budget 2025 speeches, I emphasised the importance of structural rather than episodic fiscal measures. Let me reiterate that call once more today. Our tax system should automatically adjust to reflect the economic reality Singaporeans face rather than depending on annual ad hoc adjustments that create uncertainty and administrative complexity.

Under clause 55 of the Bill, a personal income tax rebate worth 60% of tax payable, capped at $200, will be granted for the Year of Assessment (YA) 2025. This is similar to the rebate in YA 2024, where it was 50% of tax payable, but capped at $200, and also to the one granted in YA 2019.

Should such rebates become a recurring feature of every budget, they would effectively raise the tax-free threshold for the current $20,000 of chargeable income. But the Government has framed this as part of the SG60 package, which would suggest that this is only temporary. Instead of offering periodic rebates, I believe we would be better off instituting a mechanism to regularly review both the personal income tax brackets and basic relief quota to avoid bracket creep, so that the system keeps pace with changes in wages and price over time. After all, the last time the personal income tax brackets were last updated was more than 24 years ago in 2001. This was a point I had raised in my Parliamentary Question in 2022 and again, in last year's Budget debate.

Based on my estimates, close to 80% of resident taxpayers will only receive the $200 cap, which means that the headline 60% rebate appears more generous than it really is. Another example is the earned income relief. For workers below 55 years of age, this relief has remained at $1,000 for as long as I can recall. For older workers aged 55 to 59, the relief stands at $6,000. And for those aged 60 and above, $8,000. These figures have not been revised since Budget 2012, more than a decade ago. For handicapped workers, the reliefs are also unchanged.

Given the rise in the cost of living, wages and labour participation since then, it is long overdue for a comprehensive update. In addition, I agree with the exemption from tax of a wide range of initiatives, such as Workfare Training Support Training Allowance, SkillsFuture Mid-Career Training Allowance and Workfare Skill Support.

Again, in the spirit of making scheme-specific changes each time, it would be better for us to introduce a broad-based skills investment relief allowing individuals to claim a capped deduction for out-of-pocket training expenses, and this would be an expansion of the existing course fees relief, which only provides relief for specific approved academic, professional or vocational qualification, or courses relevant to a person's current employment, trade, business, profession or vocation. But at the same time, it does not reward initiatives to better position oneself for an alternative career especially in the current era of rapid change and disruption, as it has no linkages to his or her current profession.

Turning to clause 43, which introduces a new section 92L, providing for a 50% corporate income tax rebate. This continues a familiar pattern of annual corporate rebates, varying from 20% to 50% over the last decade, with caps ranging from $10,000 to $40,000. While such rebates can provide short-term relief, they do not offer the long-term certainty and predictability that businesses, especially SMEs, do require.

As I argued in my speech on the Income Tax (Amendment) Bill in 2021, I suggested that we consider introducing more structural progressivity in our corporate income tax regime, particularly to better support local SMEs.

Even as other forms of enterprise support are strengthened, the Government could consider raising partial tax exemption limits or introducing two-tiered corporate profit tax system, similar to Hong Kong's model introduced in 2018. Such an approach could offer greater certainty than the current system of fluctuating rebates.

To illustrate, an SME earning $300,000 in chargeable income today pays around $34,000 in corporate income tax before rebates, an effective tax rate of roughly 11%, compared to about 8% before the exemption restrictions introduced in Budget 2018. Building these reforms directly into the tax regime, rather than relying on discretionary rebates would send a clearer signal of support to our local enterprise base.

Mr Deputy Speaker, I wish to next turn to a topic that deserves greater attention in Singapore, and that is of the refundable tax credits. These function as a form of negative income tax, providing benefits through the tax system, but paying out the difference in cash to those with insufficient tax liability to benefit otherwise. In doing so, they allow the Government to extend supports to lower and middle-income households more efficiently without distorting work incentives or relying on other specific schemes.

Refundable credits are widely used in advanced economies, such as the US' Earned Income Tax Credit and Canada's various Refundable Credit Systems, for example.

In Singapore, one promising area to consider refundable tax credits is in relation to child relief or the Working Mother's Child Relief (WMCR).

As I have shared previously, this relief was restructured for children born on or after January 2024 from a percentage-based formula to a fixed dollar amount of $8,000 for the first child, $10,000 for the second and $12,000 for the third and subsequent children.

While this change benefits some lower-income mothers marginally, my estimate suggests that roughly 80% of working mothers will either be unaffected or worse off with the formula change.

I have spoken previously about how Singapore's total fertility rate, which fell below 1.0 in 2023 and remained there in 2024, represents an existential challenge. President Thaman has pledged that this term of Government will do more to help parents better manage their work and family commitments and to foster a culture that celebrates families.

In that spirit, we should consider whether the revised WMCR structure truly achieves its intent of encouraging married women to stay in the workforce or whether it inadvertently discourages some from doing so.

I acknowledge that the Government has said that when the WMCR changes are considered alongside the one-off $2,000 increase in the Child Development Account First Step Grant, about 97% of mothers will be no worse off in the year of birth. But I would also ask what about the next 15 years of tax assessments? Perhaps a reversion of WMCR or its reform into a refundable tax credit could be explored as part of future Budget changes. After all, this concept is not new to Singapore, with the refundable investment credits already introduced.

Mr Deputy Speaker, I now turn to the final theme of my speech – aligning our tax regime more closely with the goal of strengthening Singapore's equities market.

My colleague and Member of Parliament for Aljunied group representation constituency (GRC), Mr Kenneth Tiong, will be elaborating further on this point.

Let me also declare that I am an equity analyst working in a financial institution here in Singapore.

Clause 54 operationalises the 13O and 13U Fund Tax Incentive schemes for family offices. The schemes aim to offer a conducive operating environment for Singapore-based fund managers and family offices.

In my earlier Parliamentary Question in 2022, I had asked about the number of family offices, their aggregate business spending, assets under management (AUM) and local investments. Back then, the Monetary Authority of Singapore (MAS) shared that it does not have estimates on aggregate business spending, aggregate AUM help and the amount invested locally by Singapore Family Offices (SFOs). Do we now have such data?

Otherwise, how do we assess the effectiveness of the capital deployment requirement rules?

Under current rules, family offices must invest the lower of 10% of AUM or $10 million in designated investments. However, the definition of invested-locally is broad. Even an investment into a global fund distributed by a financial institution with a Singapore presence can qualify. This means that the actual capital deployed into Singapore's productive economy may be far smaller than the headline numbers intended.

I would urge the Government to strengthen this capital deployment requirement, perhaps, by raising it to at least 15% to 20% of AUM and/or tightening the definition of eligible investments to require a minimum portion in Singapore listed equities, Real Estate Investment Trust (REITS) or funds with domestic exposure even as I note that there is a 1.5 to two times multiplier applied to certain investments. Greater transparency and periodic reporting of aggregate investment data will also help the public to assess whether these generous tax incentives are delivering tangible benefits to Singapore's economy.

Mr Deputy Speaker, as I conclude, allow me to recap the three themes I have raised.

First, we should move away from recurring one-off measures towards structural reforms, indexing tax brackets and reliefs to inflation, updating outdated reliefs, like the Earned Income Relief, and embedding greater progressivity into our corporate tax regime. Second, we should consider introducing refundable tax credits to make our fiscal system more equitable and efficient, particularly, in supporting working families and working mothers and lower-income Singaporeans. And third, we must align our tax incentives more strategically with our goal of strengthening Singapore's capital markets and ensuring that incentives like those for family offices deliver meaningful local benefits.

Ultimately, our tax system is more than a means of raising revenue. It reflects our values as a society – fairness, resilience and solidarity. As we look ahead to Budget 2026, I hope we can take this opportunity to refine our fiscal architecture to serve Singaporeans better, strengthen inclusivity and build an economy that works for all.

Mr Deputy Speaker, I will speak today on section 92K of the Finance (Income Taxes) Bill which is part of the Government's emerging strategy to improve the attractiveness of Singapore's equity market. It provides time-limited tax incentives for both primary and secondary listings.

Before I begin, let me preface by saying I will use the term SGX as shorthand for SGX's equities business. SGX, as a whole, is a multi-asset exchange that has great strengths in foreign exchange (FX), commodities and other derivatives. I think those parts of the business, including BidFX and Iron Ore, have been doing a good job.

On section 92K, my overall view is that these measures, a time-limited experiment in tax incentives, are in themselves unlikely to move the needle on improving the SGX's competitiveness, for good or bad. Although I have some general reservations about some of the Bill's principles, on balance, since it is tightly scoped by being both limited in time and capped in subsidy, I support the Bill to give this Government latitude to experiment.

Section 92K introduces a tax rebate to encourage companies to list their shares on SGX. Companies that list their ordinary shares on the SGX between 19 February 2025 and 31 December 2027, new listings or re-listings, both primary and secondary listings, will qualify. Shares must be offered to the public in conjunction with the listing.

The company receives a tax rebate for five years, 20% corporate tax for periods of a primary listing; and 10% for a secondary listing. These are capped at $6 million a year, if the market cap is at or above $1 billion on listing date; and $3 million a year if below that figure. The company must remain listed throughout the entire five-year period and must apply for approval by 31 December 2027.

The principles on 92K which I have reservations about are:

First, the extension of rebates toward secondary listings. From the company's perspective, academic research shows secondary listings work primarily when listing in the US, where companies gain from purported superior governance standards or valuation premiums. It is debatable if Singapore offers either advantage. The advantages are not of secondary listings in general but of the US in particular.

I can understand why SGX might want to encourage secondary listings. They are a prelude to secondary offerings. In Financial Year (FY) 2025, SGX had six new listings, raising $25.7 million. This was dwarfed by secondary offerings, which was a hundred times larger at $4.3 billion.

SGX's function as a capital raising venue for already listed companies is currently much more significant than its listings. SGX Chairman Koh Boon Hwee, has argued for the need to take calculated first-mover risks to build liquidity. Presumably anchoring more secondary listings is one of those first-mover risks.

But from Singapore's perspective, I do not see much benefit in giving incentives to attract secondary listings, especially combined with a disclosure-based regime, which may result in a bigger slate of lower quality companies. At the point of entry, many may just make the number of listings and market cap look better, while not creating broad local employment since their operations are overseas. Some may disagree on the basis that these secondary listings may improve liquidity and generate turnover. But how much of this is sticky, multi-year liquidity, and how much is transient event-driven volume?

I ask: what is the basis of the Government's belief that it will lead to high-quality liquidity? For me, the bigger philosophical questions from first principles – why would a company want to do a secondary listing in Singapore? Why would Singapore benefit overall from more secondary listings in a disclosure-based regime? – remain inadequately answered.

Overall, I would rather we focus on attracting quality primary listings over extending incentives to secondary listings. But since the trial is limited in time and scope, we will support the Bill scope in toto. We hope the results will be published and guide future market development.

The Bill addresses three key technical problems regarding secondary listings.

Many secondary listings come by introduction, meaning no new shares sold, which leaves little local free float and tends to depress local turnover. The Hong Kong Exchange (HKEX) warns that secondary listings can suffer from failure to develop or sustain an active trading market, which is why they flag such stocks prominently with an "S" marker.

SGX currently has 29 secondary listings. Multiple high-profile SGX secondary listings were by way of introductions, meaning no new shares. This includes a 2010 listing of Prudential and the 2022 SGX listing of electric vehicle company, Nio Inc, which GIC is now suing for securities fraud in the Southern District of New York. These secondaries have had thin local trading versus their primary venues, with exception of the Jardine Group. So far, secondary listings have been a mixed bag.

I will return to this point about poor quality listings later. But technically, 92K insists that shares must be offered to the public, ensuring some float, so listings by introduction are excluded from rebates. This is prudent.

And while this is not in the Bill, I note that MAS has the Grant for Equity Market Singapore (GEMS) Research Development Grant, which provides a top-up per research report, more if it covers pre-Initial Public Offering and newly-listed names. This will help strengthen the value proposition of a listing here in Singapore, even if we cannot offer much valuation premium.

The tax rebates are also tied to the profitability of the company. If the companies are loss-making, they will not qualify for the rebates. If it were not the case, we could be attracting rebate tourism from dubious companies.

Last, and most importantly, these measures are time-limited until the end of 2027.

The second principle I have reservations on is this whole idea of giving listing incentives at all. I could not find much evidence that having listing incentives will improve the quality of companies or long-term performance. In fact, the converse was more likely true. The Quebec Stock Savings Plan, which offered taxpayers generous tax write-offs for investment in new public stock issues of companies, drove a short-term surge in small company primary issues. But many issuers later disappeared or posted weaker earnings. The impact on capitalisation was short-lived and overall, stimulus effects were limited.

For listing incentives, from the company's perspective, it may be unsustainable once incentives end and these companies may fail or simply delist when that time comes. What we are likely to see is a short-term pop in the numbers, because without answers to permanent questions around liquidity disclosure, quality, investor depth and regulatory credibility, strong secular headwinds remain.

Some say it is a chicken-and-egg problem, building liquidity and investor depth. I understand this view, but I believe that raising the quality of listed companies is pre-conditional to building this two-sided market.

Other jurisdictions are not focusing on financial incentives. Hong Kong is focused on raising corporate governance standards, enforcement and improving processing efficiency, which is, in my view, a more correct approach. Hong Kong's listing rules have historically been stricter than SGX in areas such as independence of directors, remuneration disclosures and related party transactions, and their regulators have been much more aggressive in enforcement actions, including against directors.

Hong Kong recently introduced a new Corporate Governance Code with stricter requirements: limiting independent non-executive directors to six listed directorships, mandatory continuing professional training, broad skills matrices and performance reviews. They are raising standards without using financial incentives.

On 29 October, SGX RegCo announced it would remove the financial watchlist and introduce more flexible listing rules under a "disclosure-based approach." This is a bit paradoxical to me. The watchlist itself was disclosure. It flagged financially distressed companies to investors. Removing it does not increase disclosure; it removes a critical warning signal. What SGX calls a more "disclosure-based approach" can actually mean more disclosure for poor companies while keeping them listed and trading, but less actionable disclosure and actionable information for the market as a whole. I therefore disagree with the removal of the watchlist.

Industry players supporting its removal may of course benefit from more trading volume, even if low-quality. Their incentives may not align with retail investor protection. Taiwan's 54% retail participation versus our 21% shows what happens when retail investors have confidence – confidence built on quality signals like watchlists and Investor Protection Centres.

I will now move on to a few remarks on the principles that should underlie our stock market. At its core, a stock market strikes a "domestic bargain": savers get high-quality asset appreciation and local enterprises get capital and exit opportunities. All other functions, such as foreign capital allocating to Singapore, or overseas companies listing in Singapore, are extensions of this core.

Four structural realities constrain our equities market. First, the "ASEAN gateway" strategy is becoming obsolete. It may have worked for Singapore when other Southeast Asian countries did not have a strong local market, but today, Thailand and Vietnam have their own mature and highly liquid markets with domestic brand recognition. ASEAN companies no longer have as many compelling reasons to list on the SGX, vis-a-vis their home exchanges.

Second, our regulatory reach is limited over other foreign markets. This means for foreign companies, we are exposed to information asymmetry and governance risks we cannot adequately mitigate, such as, for the fraud-accused Nio.

Third, passive capital demands quality indexes. The tidal force of passive investment is a secular supertrend. Sovereign wealth funds like Norway's leading Government Pension Fund Global (GPFG) have demonstrated that low-cost passive investing outperforms the active management approach. I believe passive strategies will form the basis of significant portfolio allocations going forward. But passive investment requires something fundamental, high quality indexes or baskets worth buying. Investors must be able to trust that the baskets of stocks they are purchasing represent genuine value, not a random collection of mediocre companies.

By lowering listing standards and removing investor protections like the financial watch list, the risk is that the quality of the SGX and Straits Times Index (STI) is allowed to degrade precisely when global capital is demanding higher quality for passive allocation. Let us not forget that active management, to weed out mediocrity, is an expensive endeavour. You will pay an active manager above and beyond to do due diligence to separate weed from chaff, and these active management fees are a drag on any future returns. You cannot attract passive capital by diluting the quality of your index. Any slackening in market shaping and maintaining quality standards cuts directly against one of the most important structural trends in modern finance. I am bearish on any cutting of standards.

Fourth, passive capital also demands coherent indexes. Without quality and coherence, we cannot articulate what our market represents. Big allocators need clarity about what each allocation represents in their portfolio. But look at the STI: Financials – 54%, Real Estate Investment Trusts or REITS – 16.4%, Industrials – 9.8%, Telecom – 7.5%, Utilities – 4.9%. Almost entirely defensive.

There is also leakage. Secondary listings like Jardine Matheson and Hongkong Land, both managed from Hong Kong, comprise 5% of the Index, but represent neither Singapore operations nor "Singapore Inc's" core capital-formation interests. Defensiveness and leakages are headwinds in building a future coherent story to ultimately increase SGX's valuation premium.

What would a future coherent story look like? Not mimicking NASDAQ's high-beta growth, not remaining purely defensive, but rather a foundation of quality SMEs, profitable, well-run, the "domestic bargain" in action, complemented by selective growth engines from a robust R&D industrial policy.

The local stock market is currently dominated by Government-linked Companies (GLCs). However, Singapore has a long tail of well-run profitable SMEs, which do require growth capital. They are not super growth companies, but they deserve capital and can anchor our index. We need to meet our economy where it is. SGX should become an exchange that looks out for growing SMEs and cultivates a pipeline for listing.

This should include overhauling the sponsor-based Catalist board, to be replaced by a non-trading, capacity-building "incubation board" which graduates to OTC-style boards as a prelude to mainboard listing. SMEs are the companies that will benefit most from a supportive exchange ecosystem, including the long-tail of research needed to cover them.

The second layer will be selective growth from R&D. Commercial offshoots from our Research, Innovation and Enterprise (RIE) masterplans in Pharmaceuticals, Advanced Manufacturing and Deep Tech should be able to list an earlier stage, in order to access domestic capital.

The collapse of Tessa Therapeutics in 2023, despite raising over US$200 million, illustrates the brittleness of relying solely on late stage venture funding without domestic capital market support. Without opining on the commercial validity of that specific decision, I believe capital intensive R&D ventures could benefit from accessible public markets. Earlier stage listings would build local investor familiarity with science-based companies and allow incremental capital raising as milestones are met, and would perhaps have improved the odds for some of the first generation Biopolis companies which failed. That is why I support SGX RegCo's amending of admission requirements for life sciences companies.

With your indulgence, Sir, before I end, as this Bill touches on the stock market, I would like to correct some statements about the Workers' Party (WP) stock market proposals.

Minister Chee Hong Tat, at the DBS hosted a fireside chat on 22 October 2025, said, I quote, "Over the past year, we have worked closely with the industry to come up with proposals that could enhance the liquidity and competitiveness of Singapore's equities markets. We decided not to go for quick fixes, such as asking GIC or Temasek to pump-prime the market by mandating them to invest a certain amount in local equities. I explained in Parliament previously, in response to similar calls by the Workers' Party, that I do not believe such superficial measures will be effective and sustainable. This is what the Chinese call, "治标不治本", solutions that may sound good in theory but actually do not solve the underlying problems facing our equities markets."

I am not sure what calls the Minister was referring to. I have looked around and asked my colleagues, but have drawn a blank. My colleague Louis Chua did speak in this year's Committee of Supply about our stock market, but he suggested two things: letting more of Temasek's GLCs list on SGX; and strengthening corporate governance standards. He did not suggest what the Minister has called "pump-priming".

But I did manage to find this exchange while digging in the Hansard, a Parliamentary Question from 2 July 2024, "Asked the Prime Minister and Minister for Finance whether the Government will review its investment mandates with GIC to consider the suggestion from some industry players for GIC to allocate part of its investments to securities listed on the Singapore Exchange to revitalise our local stock exchange." The source of that "pump-priming" question was Member of Parliament Liang Eng Hwa, who is not a WP Member of Parliament.

So, respectfully, I would like to ask the Minister to please clarify and source his comments. Thank you, Mr Deputy Speaker. I support the Bill.

Mr Deputy Speaker, the proposed amendments to the Finance (Income Tax) Bill may be split into three sets of changes: those pertaining to the Income Tax Act and also related to the Budget this year; Income Tax Act changes that are not directly related to the Budget; and refinements to the Multinational Enterprise (Minimum Tax) Act, that aim to clarify definitions and rules related to the OECD's BEPS 2.0 project and specifically, Global Anti-Base Erosion (GloBe) Rules in Pillar Two.

My colleagues, MP Louis Chua and MP Kenneth Tiong have dealt with the first and second elements of the Bill. I will confine my reactions to the Multinational Enterprise (Minimum Tax) Act and parts of the Income Tax Act related to multinational enterprises. While I support the Bill, I have a few specific concerns about several legislative elements. I will also speak more broadly about what it means to stick to BEPS 2.0 in a Trump 2.0 world.

Parts G and H of clause 56 of the Bill, insert subsections that define "securitisation entities" and "securitisation arrangements", established by multinationals to help investors manage insolvency risk. On its face, this is unobjectionable. Securitised entities and arrangements are ubiquitous in modern enterprise design and operation and I understand that these may have been introduced as a result of public feedback requesting greater clarity on their treatment when it comes to domestic top-up tax calculations.

My concern has to do with the role that securitised entities have historically played in modern finance and especially how securitisation allowed financial institutions to carry far riskier portfolios than otherwise possible; which contributed in turn to the 2007/2008 Global Financial Crisis. This is because securitised products, such as the infamous collateralised debt obligations (CDOs), CDO-squared and other forms of asset-backed securities, increased the informational distance between regulators and banks, which then elevated the fragility of the system and set the stage for a full-blown crisis.

While there is little reason to believe that similar securitisation arrangements are inducing the sort of undesirable risk-taking in the context of multinational enterprises' (MNEs') approach to BEPS, it is nevertheless useful to keep in mind the key lesson from that earlier episode that corporations can and do employ securitisation to skirt rules and regulations.

Hence, it is important that our authorities be alert to the possibility that MNEs may choose to park otherwise taxable assets in such arrangements and special purpose vehicles, which this legislation explicitly accommodates. Will the Ministry confirm that it will impose GloBe reporting obligations for such associated entities, which are often off-balance sheet as well?

Clause 45 of the Bill deals with RICs. I had, in the debate on last year's Budget Statement, raised my concern that RICs could potentially be used as a strategic loophole by MNEs to shield themselves from their tax liabilities, specifically through recording all innovation activities in a subsidiary located in a jurisdiction with generous R&D credits. In his response at that time, Prime Minister Wong assured the House that "the RIC is compliant with BEPS."

Singapore's approach to transfer pricing currently takes strong reference from the OECD's own guidelines. In practice, this requires that intellectual property (IP) to be valued at arms-length, open-market prices. Presumably, then, this implies that RICs must likewise conform with transfer pricing of intangible IP, including hard-to-value intangibles.

In scrutinising clause 45 of the Bill, however, I did not find any such restrictions written into the language of the proposed legislation. The requirement for arms' length conditions do, however, appear in the original Income Tax Act. May I confirm, then, that this selfsame stipulation on pricing applies with equal force to RICs, via reference to Income Tax Act section 34D?

All in this House are undoubtedly aware that we appear to be transitioning from what had hitherto been a robust, US-led, rules-based international economic order, toward one that is much more transactional, where might makes right, and the US – rather than being a global caretaker – comes across instead as an economic bully. Small countries, such as Singapore, are unavoidably at a disadvantage in such a Machiavellian system. This applies to an international project such as BEPS, which is heavily reliant on the buy-in of nations to sustain it.

Does the exit of the US from the system irreparably undermine BEPS and the multinational minimum tax? This is, of course, the fear that many have. In my view, however, the future of international tax rules is likely to unfold in much the same way that the global trading system has been evolving: steadily grinding forward, even in the absence of the US.

To date, more than 50 countries already have Pillar Two rules in force and the passage of this Bill will further consolidate our nation's own position within this group of like-minded economies. After all, the ability of countries to proceed with top-up taxes, even without the acquiescence or compliance of other countries is largely built into the design of global rules. Admittedly, unilateral action performed without the cover of a treaty may invite retaliatory responses. But given how US has already chosen to proactively wield the terrorist stick under the Trump administration in violation of World Trade Organization rules, the threat of such a tit-for-tat response becomes much less credible.

That said, I note that we have yet to adopt certain elements of Pillar Two, such as the Under-Taxed Payments Rule (UTPR), in Singapore. This is, perhaps, somewhat for fortuitous, since UTPR has been a sore point for the Trump administration. There may yet be room for reconciliation of the disparate positions between US and the rest of the signatories of BEPS. One possibility is, as mentioned by others in this House, a side-by-side regime where American-owned groups receive some form of exceptional treatment vis-a-vis the rest of the world.

This could entail, for instance, the recognition of idiosyncratic MNE minimum taxes, such as the Global Intangible Low-Taxed Income (GILTI) for controlled foreign corporations, such that they are consistent with those prescribed by globe rules. Another might grant US entities permanent safe harbour instead of just a temporary one.

There is some text in the Bill, notably on clause 59, that speaks to safe harbours. But only to the extent that it aligns the timing of elections of globe safe harbours with no real mention of their permanence. Similarly, there is no mention of how GILTI will be addressed in the present legislation. These considerations have yet to be weaved into the Multinational Enterprise (Minimum Tax) Act, which is, at this point, appropriate. I believe it would be premature to do so, given the volatile nature of the Trump administration's policymaking and the BEPS roll out process, more generally.

Still, that does not preclude us from planning ahead. To that end, I hope that the Ministry will share whether, in its view, there is a more plausible or likely scenario among the various possibilities for how the global minimum corporate tax regime will play out and if it has sketched out a tentative plan for how we might revise the legislation as these different potential outcomes unfold.

Mr Deputy Speaker, Sir, I rise in support of the Finance (Income Taxes) Bill. I wish to declare that I am the chief executive officer of an investment management company.

The Bill proposes amendments to the Income Tax Act 1947 and effects the measures announced in Budget 2025. These include the Equities Market Review Group recommended tax incentives. These incentives support our capital markets and can create skilled jobs in analysis, research and compliance – jobs that many young Singaporeans can aspire to.

A key change concerns section 13W of Income Tax Act, which exempts gains on the disposal of ordinary shares. Investors welcome clarity where under the new group-basis rule, the divesting company and its group members must collectively hold at least 20% of the investee for 24 months before disposal in order to qualify. Separately, preference shares will qualify if accounted for as equity under the investee's standards or under the International Financial Reporting Standards.

However, registered business trusts and variable capital companies are not included in this 20% shareholding threshold definition. As these structures are key to our capital markets ecosystem, I urge the Government to consider extending the definition to registered business trusts and variable capital companies.

The Bill also proposes amendments to the Multinational Enterprise (Minimum Tax) Act 2024. This is to align our laws with the OECD's Pillar Two Global Minimum Tax framework. Pillar Two backstops the original BEPS 2.0, which acts as a global minimum tax rate, which sets a global minimum tax rate of 15% to curb tax avoidance and a senseless race to the bottom-style tax competition.

Singapore has long had a pro-enterprise, relatively low-tax environment, which helps attract good investment, fund management, corporate listings and regional headquarters. However, with the global minimum tax framework, centralising business operations into low-tax jurisdictions will no longer be as straight-forward as before.

With Multinational Enterprise (Minimum Tax) Act, Singapore's adoption of the global 15% minimum tax ensures parity across jurisdictions. And for Singapore, it gets its fair share of this minimum global tax. This Bill ensures that our tax base remains defensible while preserving our attractiveness for high-quality investments. By refining definitions in the Multinational Enterprise (Minimum Tax) Act, we align our fiscal framework with international norms, reinforcing Singapore as a transparent and rules-based jurisdiction.

With global minimum taxes, non-tax competitive advantages become more critical. My concern is to ensure that Singapore remains attractive as a business hub via excellent infrastructure, a skilled workforce and political stability, notwithstanding the US decision not to fully not to fully implement the OECD Pillar Two global tax framework affects Singapore's relative competitiveness as a regional hub, particularly for US multinational corporations, headquartered and operating in Singapore.

Therefore, I seek clarification of how the implementation of Singapore's domestic top-up tax under Multinational Enterprise (Minimum Tax) Act will interact with the US' GILTI and what safeguards are in place to prevent overlapping or duplicative taxation of US MNEs operating in Singapore?

Mr Deputy Speaker, as we add new global tax rules and local incentives, compliant costs can grow disproportionately. Therefore, I offer five suggestions: one, issue comprehensive transitional guidelines early and provide simplified tax computation tools or advisory clinics; two, publish a clause-by-clause table of effective dates, listing which provisions are retrospective, prospective or transitional to reduce ambiguity; three, provide transitional or good faith relief, allow self-correction in the next assessment year without penalty for companies that relied on prior law; four, review Pillar Two compliance costs to ensure reporting obligations remain proportionate for multinationals headquartered here; and finally, five, harmonise definitions across tax laws via consolidated glossary, ensuring consistent interpretation across the Income Tax Act, Multinational Enterprise (Minimum Tax) Act and GST Act.

Mr Deputy Speaker, notwithstanding the above, I support the Bill.

Mr Deputy Speaker, I thank the Members for their support of the Bill and for their varied comments and suggestions to improve it. I ask for, first of all, for everybody's understanding that I will not be able to address everybody's suggestions today, and this includes Mr Kenneth Tiong's suggestions on equities market improvements, which are outside the scope of this Bill.

In line with the Standing Order 70(2), specifying that the Second Reading should be on the general merits and principle of the Bill, let me first respond to some of the points that are more specific to the Bill that other colleagues have raised.

Mr Saktiandi Supaat and Mr Victor Lye have asked whether we would adjust our implementation of Pillar Two top-up taxes if other jurisdictions slow or reverse their adoption and whether this would affect our economic competitiveness. Let me try to briefly recap how Pillar Two rules work without ChatGPT.

When a multinational enterprise is taxed below the minimum effective rate of 15% in a jurisdiction, other jurisdictions will have the right to impose a top-up tax on the multinational enterprise. This design ensures that the multinational enterprises pay a minimum effective tax rate of 15% wherever they operate, even if some jurisdictions choose not to implement the rules. Therefore, if we do not implement the Pillar Two taxes, we will cede tax revenue to other jurisdictions as the affected multinational enterprises would have to pay these taxes to other jurisdictions that have implemented Pillar Two rules.

The reopening of negotiations on Pillar Two, including the side-by-side solution, seeks to exempt US multinational enterprises from some of the Pillar Two rules has, indeed, created some uncertainty. But our key consideration for imposing the Pillar Two taxes, to avoid ceding tax revenue, remains valid for now.

It is far from clear what the final arrangement will be. As Mr Shawn Loh said, the less we know, the more we should prepare. And so, MOF will continue to monitor developments very closely and recalibrate our approach, if needed, if and when the situation changes.

Mr Louis Chua asked if companies that received the RIC are required to adopt the arm's length principle. The answer is, yes, the RIC recipients must ensure that qualifying expenditures incurred from transactions with related parties are at arm's length. [Please refer to "Clarification by Senior Minister of State for Finance", Official Report, 6 November 2025, Vol 96, Issue 11, Correction By Written Statement section.]

Mr Shawn Loh spoke about the importance of enhancing Singapore's value proposition to global enterprises and let me assure Members that this is a key priority for the Government. While Pillar Two may reduce the room for tax competition amongst jurisdictions, the competition for foreign investment has intensified.

The Prime Minister explained during past Budget debates that, although BEPS 2.0 was meant to tilt the playing field in favour of governments and to make MNEs pay more taxes, in reality, such enterprises wield considerable leverage, and this is why governments everywhere are, therefore, still spending significant sums to attract investments. Fortunately, our economic competitiveness is not based solely on tax incentives, but on the strength of our overall business ecosystem. And this includes many factors – a deep pool of human capital, strong rule of law, long-term investments in infrastructure and connectivity, and our capacity to deploy and diffuse new technologies.

We are confident about Singapore's economic future. But at the same time, we are under no illusions to the fact that we have to compete harder in this new world where the rules matter less and strategic heft matters more. This is why we established the Economic Strategy Review Committee in August to refresh our economic blueprint.

I chair one of the committees on global competitiveness with Senior Minister of State Low Yen Ling. We are developing ideas to strengthen Singapore's value proposition in the global economy to build new growth sectors, such as advanced manufacturing precision medicine and artificial intelligence; to attract fast growing companies from the US, China, India and elsewhere; to strengthen Singapore's position as a global hub in the flows of goods, capital, talent, data, energy and ideas. The objective, as always, is to secure good growth for Singapore and good jobs for Singaporeans. And this is why our tax system will have to complement the strategy too.

At the company level, we do regularly review the tax system to ensure that it is responsive to industry needs and feedback, and that is why MOF has consulted extensively with SMEs, trade associations and chambers for this Bill. I would like to thank Mr Saktiandi and Mr Lye for their suggestions on tax compliance and support for businesses. Facilitating businesses' tax compliance has been, and always will be, a priority for IRAS.

In this regard, IRAS has been publishing e-tax guides and updating its website to provide clearer guidance for businesses. IRAS has also simplified the tax filing processes for small businesses, such as by reducing the amount of information that they need to submit in their tax returns.

Pillar Two rules are complex, and to help taxpayers better understand and comply with these rules, IRAS has also set up a dedicated mailbox and published e-learning videos and an e-tax guide on the top-up taxes for the businesses to refer to.

Assoc Prof Jamus Lim also asked on the compliance requirement for securitisation entities. Our approach to the top-up tax on such entities, or how we would impose the top-up tax is similar to the treatment in other jurisdictions, including in Australia and Hong Kong. This is to avoid ceding tax revenue to foreign jurisdictions that impose Pillar Two taxes on securitisation entities income. To ensure that securitisation transactions remain viable in Singapore, securitisation entities will not be liable for unpaid tax liability of the multinational enterprise or appointed as a filing entity unless it is the only constituent entity here,

MOF and IRAS will also work closely with businesses and industry associations to address other remaining areas of concern and to further ease the compliance burden for businesses. Mr Saktiandi asked about Singapore's implementation plans for the Crypto-Asset Reporting Framework. This framework provides for the automatic exchange of information on crypto assets for tax purposes with partner jurisdictions. IRAS has announced that Singapore expects to commence these exchanges in 2028 and has been in close consultation with the industry since last year, and it will provide further guidance to the industry in due course.

Mr Saktiandi further highlighted that the short window of the listing corporate income tax rebate incentive and its administrative requirements could discourage participation, and he asked whether or not as well whether the rebate would be effective given our implementation of Pillar Two taxes. While tax measures may be less relevant for large multinational enterprises that are affected by Pillar Two, they will still benefit small businesses or smaller businesses. Ultimately, it is up to each enterprise to consider its own circumstances before applying for any incentive. MOF will monitor the effectiveness of these incentives and we will be open to making further adjustments if necessary.

Mr Chua spoke about how we should review our tax incentives for family officers to strengthen their economic outcomes for Singapore. Indeed, this is what Singapore does for all of our incentives on a regular basis, and I agree with him and I thank him for his feedback.

Mr Victor Lye suggested setting a clear timeline to extend the enhancement to the 20%-shareholding condition for section 13W tax exemption of disposal gains to registered business trusts and variable capital companies. MOF will indeed study the feasibility of his suggestion, but please give us some time as the ownership structures of registered business trusts and variable capital companies are complex.

I would like to also inform Mr Saktiandi that the employment condition does not apply to the corporate tax rebate. This is because a tax-paying company would be considered an active company, and this approach allows for greater administrative efficiency while still meeting our intent of supporting active companies. However, section 92L(5) does give the Government the flexibility to adjust the employment condition if companies are unable to meet it due to unforeseen circumstances.

Finally, I would like to thank Mr Shawn Loh, Mr Saktiandi Supaat and Mr Louis Chua for their views on providing more support for our workers. Indeed, we have shared the upsides of Singapore's economic growth, including through tax rebates with Singaporeans. The SG60 package this year includes a 60% personal income tax rebate to all tax resident individuals. This rebate is estimated to cost almost $400 million.

Mr Saktiandi and Mr Louis Chua suggested making structural changes to our tax system to provide more support for individuals, such as reducing the rates for the lowest income tax brackets, or to increase the quantum of our tax reliefs. Mr Chua also suggested reviewing our personal income tax exemption threshold of $20,000. Our personal income tax exemption threshold is already higher than jurisdictions like Australia and Malaysia, where thresholds range from $1,500 to $16,000. Taken together with our progressive tax rates, tax reliefs and rebates, already around 40% of workers do not pay income tax in Singapore. For those who do, about 80% have an effective tax rate of less than 6%. I thank Mr Chua for his various suggestions to enhance the personal tax regime, and we will continue to regularly review the personal tax regime to ensure that it remains fair and progressive.

I would like to share with Mr Saktiandi that the training allowances provided under the Workfare Skills Support - Basic scheme will not be taxed so that the lower-wage workers who undertake training can receive the full benefits of training allowances. Most lower-wage workers, as I said, do not already pay income tax, but in the event that any worker has paid income tax on the training allowances received, the amendment allows them to obtain a refund of the taxes paid, and this will be publicised by Workforce Singapore, so that such individuals can come forward to do so,

Mr Deputy Speaker, in conclusion, as a small open economy, Singapore must remain nimble and responsive to global developments. Our fundamentals are strong, and we are well placed to seize opportunities amidst the shifts in the global economic environment, this Tax Bill will update our tax regime to provide more clarity to businesses and to respond to industry feedback, and this is a key part of our overall effort to strengthen Singapore's economic competitiveness as the global landscape continues to evolve. Sir, I seek to move.