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Consolidation Exemptions for Intermediate Holding Companies under SFRS(I) 10 vs. FRS 110

Overview

For Singapore intermediate holding companies, determining whether consolidated financial statements must be prepared is a crucial year-end financial reporting requirement.

While both SFRS(I) 10 (Consolidated Financial Statements) and FRS 110 (Consolidated Financial Statements) offer a practical exemption under Paragraph 4(a), the accounting framework applied by the ultimate or higher-tier parent dictates whether the exemption is valid.

A common pitfall during audit preparation is assuming these two frameworks share identical conditions. In this technical update, we outline the operational differences between SFRS(I) 10 and FRS 110 to help management teams and financial controllers evaluate their reporting obligations correctly.

The Core Criteria: Paragraph 4(a)

Under both Singapore Financial Reporting Standards (International) [SFRS(I)] and Singapore Financial Reporting Standards [FRS], a parent company is generally required to present consolidated financial statements.

However, an intermediate parent need not present consolidated financial statements if it satisfies four mandatory conditions under Paragraph 4(a):

  1. Owner Non-Objection: It is a wholly-owned subsidiary, or its non-controlling owners have been informed about and do not object to the exemption.

  2. Unlisted Status: Its debt or equity instruments are not traded in a public market.

  3. No Public Filings: It is not in the process of filing financial statements with a securities regulator for the purpose of issuing public instruments.

  4. Higher-Tier Parent Financial Statements: Its ultimate or intermediate parent produces publicly available financial statements that fulfill specific framework requirements.

Key Framework Differences in Condition (iv)

The critical difference lies within sub-clause (iv) of Paragraph 4(a), which governs the accounting framework acceptable at the higher-tier parent level.

1. Applying SFRS(I) 10

FRS(I) 10 is fully aligned with International Financial Reporting Standards (IFRS Accounting Standards). As a result, its exemption rule is strict:

SFRS(I) 10.4(a)(iv):

“Its ultimate or any intermediate parent produces consolidated financial statements that are available for public use and comply with SFRS(I)s or IFRS Accounting Standards.”

  • Impact: If an intermediate holding company reports under SFRS(I) 10, but its higher-tier parent prepares consolidated statements under local FRS (Singapore) or another non-IFRS local GAAP, the intermediate entity cannot claim the exemption. It must prepare consolidated financial statements.

Applying FRS 110

FRS 110 provides broader operational flexibility for entities reporting under standard Singapore FRS:

FRS 110.4(a)(iv):

“Its ultimate or any intermediate parent produces financial statements that are available for public use, in which subsidiaries are consolidated or are measured at fair value through profit or loss.”

  • Impact: Under FRS 110, the requirement centers on whether the higher-tier parent’s statements are publicly available and properly consolidate subsidiaries (or measure them at fair value through profit or loss). As long as this condition is met—regardless of whether the parent uses FRS, SFRS(I), IFRS, or another recognized public GAAP—the intermediate parent can claim the exemption (provided conditions 4(a)(i)–(iii) are satisfied).

How We Can Help

Navigating group financial reporting structures and accounting framework transitions requires careful review. If you require assistance evaluating your group consolidation exemptions or preparing your financial statements, please reach out to our Technical Accounting Advisory team.

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Budget 2026 – Workforce & Employment Policy Updates

Local Qualifying Salary (LQS) Increase

What is LQS?
The Local Qualifying Salary (LQS) sets the minimum salary that local full-time workers must be paid at companies that hire foreign workers (e.g., Work Permit, S Pass or EP holders). Local workers paid at least the LQS help determine a firm’s foreign worker quota.

Budget 2026 Update:

  • From 1 July 2026, the LQS will be raised from S$1,600 to S$1,800 per month for full-time local employees.

  • Part-time local workers must be paid at least S$10.50 per hour.

  • The LQS is used to compute foreign worker quota as:

    • 1 local workforce count: local employee earning ≥ S$1,800/month

    • 0.5 count: local employee earning ≥ S$900 but < S$1,800

    • Local employees earning < S$900 are not counted toward quota.

Business Impact:

  • Employers hiring foreign workers must budget for higher base salaries for local employees.

  • Workforce planning and foreign worker quota calculations now require adjustment.

  • The change supports wage growth for lower-wage local workers.

Employment Pass (EP) & S Pass Minimum Salary Revisions

Budget 2026 also revised minimum qualifying salaries for foreign skilled passes to better align them with local wage standards as wage levels rise:

Employment Pass (EP) Minimum Salary

  • New pass applicants (from Jan 1 2027):

    • Non-financial sector: S$6,000/month (up from S$5,600)

    • Financial services sector: S$6,600/month (up from S$6,200)

  • Renewal applications will align with these thresholds from Jan 1 2028.

S Pass Minimum Salary

  • New pass applicants (from Jan 1 2027):

    • Non-financial sector: S$3,600/month (up from S$3,300)

    • Financial services sector: S$4,000/month (up from S$3,800)

  • Renewal alignment begins Jan 1 2028.

Business Impact:

  • Companies hiring foreign professionals must factor in higher salary thresholds from 2027/2028.

  • The changes aim to ensure that foreign pass holders’ wages keep pace with local workforce norms.

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Budget 2026

Corporate Income Tax (CIT) Rebate – YA 2026

Purpose: Provide operating cost relief to all active companies to support cash flow and competitiveness.

Details

  • Rebate Rate: 40 % of corporate tax payable for Year of Assessment (YA) 2026.

  • Minimum benefit: S$1,500 (if company employed at least one local worker in 2025).

  • Cap: S$30,000 total benefit (rebate + cash grant)

Enterprise Innovation Scheme (EIS)

Purpose: Encourage innovation, capability building and tech adoption (including AI) through enhanced tax deductions.

Under EIS, companies can claim up to 400% tax deductions or allowances on qualifying expenditures. Eligible businesses may also opt to convert part of the qualifying expenditure into a 20% non-taxable cash payout, subject to conditions.

Qualifying Activities (existing base)

  • Qualifying R&D conducted in Singapore.

  • Registration of Intellectual Property (IP) rights.

  • Acquisition/licensing of IP rights.

  • Training courses eligible for SkillsFuture funding aligned to the national Skills Framework.

  • Innovation projects with approved partner institutions (e.g., polytechnics, ITE).

New AI-related Activity

From YA 2027 to YA 2028, qualifying AI-related expenditure will be added to the list of activities eligible for 400% deduction.

Important Clarification:

AI-related expenditure is not eligible for the cash conversion option (see below).
The enhanced deduction applies only to qualifying AI adoption and implementation costs as defined by IRAS.

Typical AI-related spend that may qualify:

  • AI platform subscriptions used for business transformation
  • Implementation costs for AI systems integrated into workflows
  • Fees for AI development services

(The final scope of qualifying AI expenditure will be published by IRAS.)

Market Readiness Assistance (MRA) Grant

Purpose: Help companies defray costs of entering and expanding in overseas markets (overseas promotion, business development, set-up).

Pre-Budget (Prior Structure)

  • SMEs could get 50 % co-funding, capped at S$100,000 per company per new market.

  • Eligible activities included trade fair participation, overseas partner searches, overseas staff deployment, and advisory/legal services.

Budget 2026 Enhancements

  • Support levels:

    • SMEs: Up to 70 % of eligible costs (from 1 Apr 2026 until 31 Mar 2029).

    • Non-SMEs: Up to 50 % of eligible costs.

  • Enhanced cap S$100,000 per company per market continues.

  • The prior requirement of selling <S$100,000 in a target market to qualify is phased out later in 2026.

Where To Apply

Double Tax Deduction for Internationalisation (DTDi)

Purpose: Support companies expanding overseas by allowing enhanced tax deductions on internationalisation expenses.

Qualifying Activities (Expanded)
Businesses can automatically claim a 200 % tax deduction on qualifying expenses up to S$400,000 per YA (raised from S$150,000). Qualifying activities (without prior approval) now include:

  • Overseas market development and investment study trips.

  • Market feasibility and surveys.

  • Master licensing and franchising costs.

  • Overseas business development (e.g., trade visits).

  • Production of corporate brochures for overseas distribution.

Note: Expenses beyond S$400,000 or specific campaigns (trade offices, e-commerce campaigns) still require approval by EnterpriseSG or Singapore Tourism Board.

Where To Apply/Claim

  • Claim via the company’s tax return (Form C) with supporting documentation.

  • Prior approval for large or special categories through EnterpriseSG/STB as needed.

Enterprise Financing Scheme (EFS)

Purpose: Provide financing support and credit for business expansion (trade, working capital and asset financing).

Budget 2026 Enhancements

  • Higher loan quantum options for trade and fixed asset loans.

  • Overall exposure cap raised to up to S$50 million per borrower (group cap).

  • This allows larger firms or groups to access higher financing limits under the scheme.

Where To Apply

  • Via Enterprise Singapore’s EFS portal (accessible through the Business Grants Portal or EnterpriseSG site).

  • Applications involve business financials, loan purpose, and risk assessment.

Startup SG Equity Scheme

Purpose: Government co-invests with independent private investors into Singapore-based startups to catalyse funding and growth.

Budget 2026 Investment

  • S$1 billion top-up to support both early-stage and growth-stage companies.

Where To Apply / Eligibility

  • Administered by Enterprise Singapore / SEEDS Capital / EDBI.

  • Typical eligibility (for early-stage startups):

    • Singapore-incorporated private limited company.

    • Innovative product/service with IP or strong technical foundation.

    • Scalable business with global market potential.

    • A ready, independent third-party investor (e.g., VC) for co-investment engagement.

How To Apply

  • Contact EnterpriseSG, SEEDS Capital or EDBI directly (find contacts via EnterpriseSG soft-landing pages).

  • Submit company profile, business plan, financials and investor term sheet.

Champions of AI Programme

Purpose: Help companies adopt and scale enterprise-wide AI transformation.

What It Is

  • A new initiative to provide tailored support to companies undertaking comprehensive AI adoption — beyond point solutions.

  • May include transformation planning, capability building, workforce training and advisory support.

Where To Find Details

  • Exact scheme details and application modalities are likely to be announced by Enterprise Singapore or government agencies in 1H 2026. (Watch EnterpriseSG and MOF announcements.)

Add Your Heading Text Here

Senior Employment Credit (SEC)

Purpose: Provide wage offsets to help employers hire and retain senior Singaporean workers.

Details (Post-Budget 2026)

  • Extended until 31 Dec 2027.

  • Employers receive wage offsets for Singaporean workers aged 60+ earning under S$4,000 per month.

  • Offset rates vary by age band, up to 7 % of wages (for older age tiers).

How It Works

  • Payouts are automatic (through IRAS) if eligibility conditions are met — no separate application required.

Progressive Wage Credit Scheme (PWCS)

Purpose: Help employers adjust to mandatory wage increases and voluntarily raise wages of lower-wage workers.

Key Features

  • Co-funding support for wage increases of eligible resident employees continues through 2026.

  • 2025: 40 % co-funding; 2026: 20 % co-funding (on qualifying wage increases).

  • Employers do not need to apply — payouts are computed and disbursed based on CPF contribution data.

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Tax Alert: Missing Trader Fraud and GST Input Tax Exposure

The Inland Revenue Authority of Singapore (IRAS) continues to emphasise the risks associated with Missing Trader Fraud (MTF). Businesses claiming GST input tax may face denial of claims, penalties, and interest where suppliers fail to report or remit output tax, even if the purchaser acted in good faith.

What is Missing Trader Fraud?

Missing Trader Fraud typically occurs when a supplier:

  • Charges GST on taxable supplies;

  • Fails to report or remit the corresponding output tax to IRAS; and

  • Becomes uncontactable or ceases operations.

IRAS may disallow input tax claims where it determines that the purchaser knew or ought reasonably to have known that the transaction was linked to fraudulent activity.

Further information on IRAS’ approach to audits and investigations can be found here:
IRAS – Audits and Investigations on Missing Trader Fraud

IRAS’ Knowledge Principle

Under the Knowledge Principle, input tax may be denied if a business:

  • Had actual knowledge of the fraud; or

  • Did not take reasonable steps and therefore should have known of the risk.

The absence of intent to participate does not automatically protect a business. IRAS’ assessment focuses on whether reasonable due diligence was performed.

IRAS’ Three-Pillar Due Diligence Framework

IRAS has published an e-Tax Guide, “Due Diligence Checks to Avoid Being Involved in Missing Trader Fraud”, providing guidance for managing MTF risks:
e-Tax Guide – Due Diligence Checks

The framework comprises three pillars:

Pillar 1: Identify and Assess Risk Indicators

Key risk indicators include:

  • Pricing significantly below market norms;

  • Newly incorporated or low-substance suppliers;

  • Unusual transaction structures or payment arrangements;

  • Transactions lacking clear commercial rationale.

Pillar 2: Perform Due Diligence Checks

Businesses should carry out reasonable checks and document them, including:

  • Verification of the supplier’s GST registration status;

  • Assessment of the supplier’s business activities and operational presence;

  • Review of contractual terms and supporting documents;

  • Validation of payment flows and bank account ownership.

Pillar 3: Respond to Identified Risks

Where risks are identified, appropriate follow-up is required:

  • Obtain clarifications or supporting evidence from the supplier;

  • Escalate matters internally;

  • Refrain from proceeding if risks cannot be adequately mitigated.

Merely identifying risks without taking action may be insufficient to protect input tax claims.

Potential Consequences of Non-Compliance

Where due diligence is not performed to a reasonable standard, IRAS may:

  • Disallow GST input tax claims;

  • Impose penalties and late payment interest;

  • Expand the scope of audits or investigations.

These consequences may arise even where goods or services were genuinely received and payments were made.

Key Takeaways

  • GST input tax entitlement is conditional on performing reasonable due diligence.

  • Robust documentation of checks and risk assessments is essential.

  • High-risk transactions require enhanced scrutiny and controls.

  • Businesses should periodically review internal GST procedures and supplier onboarding practices.

Conclusion

Missing Trader Fraud remains a priority area for IRAS audits. Businesses are expected to adopt structured due diligence procedures, assess risk indicators, and take appropriate action to protect input tax claims.

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CPF Contribution Changes Effective 1 January 2026

The Central Provident Fund (CPF) contribution adjustments taking effect on 1 January 2026 introduce changes to both the wage ceiling and the contribution rates for senior workers. Employers should assess the financial and administrative impact early, as these updates will directly affect payroll costs, manpower budgeting and HRIS configurations.

Adjustment to CPF Ordinary Wage (OW) Ceiling

From 1 Jan 2026, the monthly OW ceiling will increase from S$7,400 to S$8,000.
Implication:

  • A larger portion of monthly wages becomes CPF-liable.

  • Employers with mid- to higher-income earners will see a corresponding increase in employer CPF contributions.

  • No change to the annual CPF salary ceiling (S$102,000), meaning the combined OW + AW cap remains unchanged.

Increased CPF Contribution Rates for Senior Workers

Higher contribution rates will apply to employees aged 55 to 65, for wages above S$750/month:

Age 55–60

  • Total contribution rate: 32.5% → 34%

  • Employer: 15.5% → 16%

  • Employee: 17% → 18%

Age 60–65

  • Total contribution rate: 23.5% → 25%

  • Employer: 12% → 12.5%

  • Employee: 11.5% → 12.5%

Allocation:
The incremental contribution will be directed fully to the Retirement Account (RA), up to the Full Retirement Sum. Excess, where applicable, will flow into the Ordinary Account.

Impact Assessment for Employers

Payroll Cost Increase

Employers should recalibrate manpower costs, particularly where:

  • The workforce has a significant proportion of employees aged 55–65.

  • Employees earn between S$7,400 and S$8,000, or exceed the current OW ceiling.

  • Annual budgeting cycles begin before 2026, requiring accurate cost forecasting.

HR & Payroll System Updates

System changes will be required to reflect:

  • New CPF wage ceiling (S$8,000).

  • Updated age-indexed contribution rates.

  • Adjustments to payroll formulas, caps, and validation rules.

  • Review of Additional Wage (AW) capping logic in HRIS.

Cash Flow & Accrual Adjustments

Finance teams should:

  • Update monthly accrual models to incorporate higher CPF expenses.

  • Re-evaluate manpower budgets and salary bands for 2026.

  • Ensure accurate forecasting for year-end provisions tied to CPF liabilities.

Transitional and Compliance Considerations

  • Employers should ensure payroll teams are fully briefed before the first 2026 pay cycle.

  • Review and update HR policies, employment contracts (where contribution details are referenced), and staff communication templates.

  • Companies planning workforce restructuring or remuneration reviews should factor in higher CPF cost impact for senior workers.

Recommended Employer Actions

✔ Incorporate new CPF rates into FY2026 budget and manpower plans
✔ Update payroll and HR management systems
✔ Conduct staff cost impact analysis for employees aged 55–65
✔ Communicate upcoming changes to affected employees
✔ Review salary structures and hiring plans in light of increased statutory costs

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What are ESG Scope 1 and Scope 2

As sustainability reporting becomes mandatory in Singapore, organisations must clearly understand how to classify and measure greenhouse gas (GHG) emissions under internationally recognised standards. The definitions of Scope 1 and Scope 2 are derived from the GHG Protocol and adopted in ISSB/IFRS S2 Climate-related Disclosures, which underpin Singapore’s climate reporting framework.

Emission Calculation Formula

GHG emissions are commonly calculated using the following formula:

Emissions (tCO₂e)  = Activity Data × Emission Factor × Global Warming Potential (if applicable)

Singapore-recommended emission factors are typically sourced from:

  • National Environment Agency (NEA)

  • IPCC (where local factors are unavailable)

Scope 1: Direct Emissions

Scope 1 emissions refer to direct GHG emissions from sources owned or controlled by the organisation. Examples include:

  • Fuel combustion from company-owned vehicles

  • Diesel or natural gas used in generators or boilers

  • Refrigerant leakage from air-conditioning systems

  • Onsite industrial process emissions

Example – Diesel Vehicle

  • Annual diesel usage: 5,000 litres

  • Emission factor: 2.68 kg CO₂e per litre

Emissions = 5,000 × 2.68 = 13,400 kg CO₂e
= 13.4 tCO₂e

Scope 2: Indirect Energy Emissions

Scope 2 emissions cover indirect GHG emissions from purchased electricity, steam, heating or cooling consumed by the organisation. In Singapore, this primarily relates to grid electricity used in offices, warehouses, and factories.

Example – Electricity Consumption

  • Annual electricity use: 50,000 kWh

  • Singapore grid emission factor: 0.408 kg CO₂e per kWh

Emissions = 50,000 × 0.408 = 20,400 kg CO₂e
= 20.4 tCO₂e

Accurately identifying and quantifying emissions is essential for meeting Singapore’s climate reporting requirements and demonstrating environmental accountability. If your organisation requires support in emissions measurement or reporting, our team is ready to assist.

 
 
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Singapore’s Evolving ESG and Climate-Reporting Requirements

Singapore is entering a new phase of ESG regulation, driven by climate-reporting standards aligned with the ISSB/IFRS framework. The objective is to strengthen transparency, comparability, and market confidence while supporting sustainable finance.

What’s Changing

For SGX-listed companies

  • From FY2025: Mandatory ISSB-aligned climate disclosures, including Scope 1 & 2 emissions.

  • From FY2026: Broader ISSB requirements and mandatory Scope 3 reporting for STI companies.

  • By FY2029: External limited assurance for Scope 1 & 2 emissions.

For large non-listed companies

  • From FY2030: Mandatory ISSB-aligned climate disclosures (Scope 1 & 2) for firms meeting size thresholds.

Why It Matters

  • Listed companies: Must enhance data systems, emissions accounting and governance to meet stricter disclosure and assurance expectations.

  • Large private companies: Need to begin capability-building early due to upcoming obligations.

  • Investors and lenders: Benefit from consistent, comparable and auditable climate information.

  • Singapore’s broader ecosystem: Gains stronger global alignment and improved access to sustainable finance.

Commercial Impact — Procurement

Government and major private buyers now integrate environmental criteria into tender evaluations.
Examples:

  • Government procurement may allocate up to 5% of tender points to environmental factors.

  • Changi Airport Group requires minimum environmental scores to qualify.

  • SMRT assigns a 5% sustainability weighting and requires Scope 3 emissions disclosures from bidders.

ESG compliance is increasingly tied to contract eligibility and competitive advantage.

Conclusion

Singapore’s ESG landscape is advancing rapidly, with mandatory climate disclosures expanding across sectors. Organisations must strengthen reporting capabilities, emissions measurement and governance to stay compliant and competitive.

If your organisation needs support with ESG compliance, climate reporting or tender-readiness, our team can assist at every stage.

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IFRS 18: Key Changes and Implications for Singapore Companies Ahead of 2027 Adoption

IFRS 18: Key Changes and Implications for Singapore Companies Ahead of 2027 Adoption

The International Accounting Standards Board (IASB) has issued IFRS 18 – Presentation and Disclosure in Financial Statements, which introduces a fundamental overhaul to how financial performance is presented. Singapore is expected to adopt IFRS 18 into SFRS(I), with an effective date for annual periods beginning on or after 1 January 2027.

Given the extent of the changes—and the requirement to restate comparative information—entities should begin preparing well ahead of the effective date.

Summary of Key Changes Under IFRS 18

Mandatory New Profit or Loss Categories

IFRS 18 replaces the traditional P&L format with three standardised, prescriptive categories:

  • Operating

  • Investing

  • Financing

All income and expenses must be reclassified into these categories based on detailed application guidance. This creates greater consistency across entities and industries, but requires extensive remapping of existing accounts.

Introduction of Management-Defined Performance Measures (MPMs)

IFRS 18 formally defines and regulates Management-Defined Performance Measures, which are subtotals of income and expenses that:

  • Are used in public communications outside the financial statements; and

  • Reflect management’s view of an aspect of financial performance of the entity as a whole.

Examples include Adjusted EBITDA, underlying profit, or other non-GAAP measures.

Entities must now:

  • Clearly define each MPM

  • Reconcile each MPM to the nearest IFRS-defined subtotal

  • Disclose explanations, rationale and consistency of application

This framework aims to enhance transparency around customised performance metrics.

Enhanced Disaggregation Requirements

IFRS 18 significantly raises the threshold for disaggregation. Entities must:

  • Break down material income and expense items into more granular components

  • Avoid overly broad or “catch-all” line items

  • Provide entity-specific breakdowns, not boilerplate disclosures

This will require detailed mapping and improved data capture within accounting systems.

Disclosure of “Unusual” Income and Expenses

Entities must separately disclose items that:

  • Are not expected to recur in the near term, and

  • Significantly affect the understanding of financial performance.

The standard prescribes how these items must be described and reconciled, improving comparability across entities.

Key Implications for Singapore Companies

1. Mandatory Restatement of Comparatives

For 2027 reporting, entities must restate all comparative periods using the new IFRS 18 structure. This includes:

  • Reclassifying prior-year income and expenses

  • Reconstructing MPMs for earlier periods

  • Providing comparative disclosures for “unusual” items

Practically, companies must be IFRS 18-ready for 2026 financials.

2. Revisions to the Chart of Accounts and Accounting Policies

To align with the new categories, entities will need to:

  • Re-map GL accounts to operating, investing, and financing classifications

  • Update internal accounting policies

  • Establish rules for consistent classification across reporting periods

3. ERP, System and Reporting Impacts

IFRS 18 will require:

  • More granular data collection

  • New P&L mapping structures

  • Additional reporting templates and automated reconciliations

Early system assessment is critical to avoid bottlenecks close to adoption.

4. Potential Impact on KPIs, Covenants and Investor Communication

New required subtotals and category definitions may affect:

  • KPI calculations (e.g., operating profit, EBITDA variants)

  • Bank covenants tied to performance metrics

  • Investor presentations and management commentary

Entities should evaluate these impacts proactively.

5. Expanded Narrative and Note Disclosures

IFRS 18 introduces new disclosure obligations relating to:

  • MPM definitions and reconciliations

  • Category-specific accounting policies

  • Disaggregation analyses

  • Unusual income and expense items

Disclosure preparation will require coordination across finance, operations, and management.

Preparing for 1 January 2027: Actions to Take Now

1. Conduct an IFRS 18 Gap Assessment

Evaluate:

  • Required P&L restructures

  • Classification impacts

  • Disaggregation and data gaps

  • Effects on KPIs, covenants, and management reporting

2. Begin Comparative Restatement Planning

Start re-mapping trial balances for 2024–2026 to ensure:

  • Sufficient granularity for retrospective presentation

  • Availability of historical data for MPM reconciliations

3. Redesign Chart of Accounts and Update Policies

Define the entity’s approach to:

  • Category classification

  • Identification of unusual items

  • MPM definitions, governance and reconciliation processes

4. Upgrade ERP and Reporting Tools

Ensure systems can:

  • Capture the granularity required

  • Track category-level information

  • Produce IFRS 18-compliant statements and disclosures

5. Train Finance Teams and Engage Stakeholders

Training should focus on:

  • New P&L structure

  • Disaggregation requirements

  • MPM rules and disclosure obligations

Stakeholders such as audit committees, banks, and investors should be briefed early.

6. Perform Dry Runs Before 2026

Trial restatements help identify:

  • Classification inconsistencies

  • Missing data

  • System limitations

  • Impacts on covenants and KPIs

Conclusion — Early Preparation Is Critical

Although IFRS 18 applies from 1 January 2027, the need to restate comparative periods means companies must begin preparing well in advance. Early assessment, system readiness, and robust policy development are essential to ensure a smooth transition.

If you require assistance with IFRS 18 impact assessments, comparative restatement planning, policy updates, or full implementation support, our team is ready to help.

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Accounting for Cryptoassets

Companies Are Increasingly Investing in Cryptoassets – What Does This Mean for Accounting?

In recent years, the investment landscape has evolved rapidly, with businesses showing growing interest in cryptoassets. Once considered niche, cryptoassets like Bitcoin and Ethereum have become part of mainstream finance. Major companies are making headlines for allocating a portion of their treasury to digital assets, signaling a shift in how corporate funds are being diversified.

Notable Companies Investing in Cryptoassets

Some prominent examples of companies that have invested in cryptoassets include:

  • Tesla Inc. – Made headlines in 2021 with its US$1.5 billion investment in Bitcoin.
  • MicroStrategy – A pioneer in corporate crypto investment, with billions of dollars held in Bitcoin.
  • Block Inc. (formerly Square Inc.) – Has invested significantly in Bitcoin as part of its belief in the asset’s potential.
  • Coinbase – While a cryptocurrency exchange, it also holds substantial cryptoassets on its balance sheet. 
  • Singapore-based DBS Bank – Launched a digital exchange and has exposure to tokenised assets, reflecting local market interest.

These moves signal increased corporate confidence in cryptoassets, but they also bring new challenges—especially in financial reporting.

Accounting for Cryptoassets: Summary of ISCA Guidance

The Institute of Singapore Chartered Accountants (ISCA) has issued FRG 2 – Accounting for Cryptoassets from a Holder’s Perspective, which provides useful guidance for entities on how to account for such holdings.

Although cryptocurrencies are often referred to as “digital currencies,” they typically do not meet the definition of cash or cash equivalents under SFRS(I) 1-7, because they are not legal tender and are not widely accepted as a medium of exchange. In addition, they do not qualify as financial assets under SFRS(I) 9, as they do not give rise to a contractual right to receive cash or another financial asset.

Possible Accounting Treatments for Cryptoassets

CryptocurrencyUtility Token Asset Token Security Token
Nature“A digital or virtual currency that uses cryptography for security.

Cryptocurrencies are used as payment for acquiring goods or services or transfer of funds.		Utility tokens provide the holder with rights to access a product or
service.		Asset tokens provide the holder with rights to an asset.

Rights to assets may be split among many holders by “tokenising” them. In this way, the issued tokens, called asset tokens, indicate rights over a stake in these underlying assets.
Security tokens provide the holder with rights to a security.

Security tokens are similar in nature to an interest in the debt or equity of the issuer by, for instance, giving the holder the right to a share of future profits or cash flows.
GuideThe holding of a cryptocurrency is accounted for as inventory under FRS 2 Inventories if an entity holds it for sale in the ordinary course of business or if the entity is a broker-trader of cryptocurrencies. If FRS 2 is not applicable, the holding is accounted for as an intangible asset under FRS 38 Intangible Assets.If FRS 2, FRS 38 or FRS 109 do not apply, an entity considers recognising the utility token as a prepayment if it represents payment that has been made before receiving the product or service.An entity applies the FRS relevant to the underlying asset if the asset token represents control over the underlying asset.An entity applies FRS 32 to consider whether a security token is a financial asset and if yes, applies FRS 109 to recognise and measure it in the financial statements.
FRS 2 Inventories
SFRS(I) 2 Inventories		If the entity holds it for sale in the ordinary course of
business or if the entity is a
broker-trader of
cryptocurrencies		If the entity holds it for sale in the ordinary course of business or if the entity is a broker-trader of cryptocurrenciesThe relevant FRS depends on the underlying asset, and not the asset tokenIf it meets the definition of a
financial asset in FRS 32
FRS 38 Intangible Assets
SFRS(I) 1-38 Intangible Assets		If it meets the definition and
recognition criteria of an intangible asset and FRS 2 is not applicable		If it meets the definition and recognition criteria of an intangible asset and FRS 2 and FRS 109 are not applicableThe relevant FRS depends on the underlying asset, and not the asset tokenNot applicable
FRS 116 Leases
SFRS(I) 16 Leases		Not applicableIf it represents a right to use
an underlying asset for the
lease term		The relevant FRS depends on the underlying asset, and not the asset tokenNot applicable
PrepaymentNot applicableIf it represents payment
made in advance of the entity
obtaining a right to access
goods or receiving services		The relevant FRS depends on the underlying asset, and not the asset tokenNot applicable

Conclusion

Cryptoassets are gaining traction in corporate finance, but they challenge traditional accounting approaches. ISCA’s FRG 2 helps ensure consistent, transparent classification and reporting. Each case requires judgment based on substance over form.

If your company holds or plans to hold cryptoassets, we’re here to guide you through proper classification and disclosure.

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BUDGET 2023: MOVING FORWARD IN A NEW ERA

Supporting Businesses

Singapore Global Enterprise Initiative

The Singapore Global Enterprises initiative helps promising companies with customised assistance in areas such as innovation, internationalisation and fostering of partnerships with other companies, will receive a S$1 billion shot in the arm in Budget 2023.

Promising companies will be offered specialised capability building programmes tailored to their needs. This could involve working with experts to strengthen the core leadership team, accelerate their internationalisation plans, and build a strong talent pipeline.

Enterprise Singapore will also support companies to secure resources to execute their growth plans, and to build sustained research and innovation capabilities so as to strengthen their value proposition and stay competitive.

More information can be found here:

https://www.enterprisesg.gov.sg/keepgrowing/go-global

SME Co-Investment Fund

Government will set aside additional $150 million via SME Co-Investment Fund to invest in promising SMEs.

The Programme aims to catalyse the supply of patient growth capital for growth-oriented SMEs based in Singapore, through co-investing with the private sector.

The Government, as co-investor, would rely principally on the private sector fund managers to assess investment worthiness, so as to avoid eroding commercial discipline in investment decisions.

Private equity fund managers (“Fund Managers”) with experience in SME investing and the ability and aspiration to grow Singapore-based SMEs into globally competitive companies are invited to submit a proposal.

National Productivity Fund

Government will top up $4 billion to National Productivity Fund and expand scope to support investment promotion as a supportable activity. 

The fund will be used to anchor more quality investments in Singapore. This includes supporting companies to build new capabilities, add greater value to our domestic ecosystems, and upskill our workers. Ultimately, these efforts will lead to better-paying jobs for Singaporeans.

Enterprise Innovation Scheme

The following suite of tax measures will be enhanced or introduced under the Enterprise Innovation Scheme to encourage businesses to engage in research and development (R&D), innovation, and capability development activities.

(A) Enhanced Tax Deduction for Staff Costs and Consumables Incurred on Qualifying R&D Projects Conducted in Singapore

Currently, businesses enjoy a 100% tax deduction for all qualifying R&D expenditure incurred on qualifying R&D projects, and an additional 150% tax deduction for staff costs and consumables incurred on qualifying R&D projects conducted in Singapore.

Announced in Budget 2023, the enhanced tax deduction will allow businesses to enjoy a 400% tax deduction for the first $400,000 of staff costs and consumables incurred on qualifying R&D projects conducted in Singapore for each Year of Assessment (YA) from YA2024 to YA2028.

All other existing eligibility criteria and conditions for tax deductions on staff costs and consumables incurred on qualifying R&D projects conducted in Singapore are applicable to the enhancement.

  

(B) Enhanced Tax Deduction for Qualifying Intellectual Property (IP) Registration Costs

Currently, businesses enjoy a 200% tax deduction on the first $100,000 of qualifying IP registration costs on registration of patents, trademarks, designs, and plant varieties. Subsequent qualifying IP registration costs can enjoy a 100% tax deduction.

Announced in Budget 2023, the enhanced tax deduction will allow businesses to enjoy a 400% tax deduction for the first $400,000 of qualifying IP registration costs incurred for each YA from YA2024 to YA2028. 

All other existing eligibility criteria and conditions for tax deductions on qualifying IP registration costs are applicable to the enhancement. 

(C) Enhanced Tax Allowance/Deduction for Acquisition and Licensing of Qualifying IP Rights

Under existing tax measures for IP rights, companies and partnerships can enjoy a 100% writing-down allowance on capital expenditure incurred on the acquisition of qualifying IP rights. Businesses can enjoy a 200% tax deduction on the first $100,000 of qualifying expenditure on licensing of qualifying IP rights. Subsequent expenditure on licensing of qualifying IP rights can qualify for a 100% tax deduction.

Announced in Budget 2023, the enhancement will allow businesses to enjoy tax allowances/deductions of 400% for the first $400,000 of qualifying expenditure incurred on the acquisition and licensing of qualifying IP rights for each YA from YA2024 to YA2028. The expenditure cap of $400,000 is applied across IP rights acquisition and licensing collectively. The enhancement will only be available to businesses that generate less than $500 million in revenue in the relevant YA.

All other existing eligibility criteria and conditions for tax allowances/deductions on acquisition and licensing of qualifying IP rights are applicable to the enhancement. 

(D) Enhanced Tax Deduction for Qualifying Training Expenditure

Today, businesses can claim a 100% tax deduction on training expenditure as a deductible business expense.

Announced in Budget 2023, the enhancement will allow businesses to enjoy a tax deduction of 400% for the first $400,000 of qualifying training expenditure incurred for each YA from YA2024 to YA2028.
The enhancement is only applicable to qualifying training expenditure incurred on courses that are eligible for SkillsFuture Singapore funding and aligned with the Skills Framework. The list of courses that are eligible is available on go.gov.sg/eis-training.

All other existing eligibility criteria and conditions for tax deductions on training expenditure are applicable to the enhancement.

(E) Introduce Tax Deduction for Innovation Projects Carried Out with Polytechnics, the Institute of Technical Education (ITE) or Other Qualified Partners

To encourage businesses to kickstart their innovation journey by tapping on existing technical and innovation capabilities within the polytechnics, the ITE or other qualified partners (collectively termed as partner institutions), the Government will introduce a new tax deduction where businesses can claim a 400% tax deduction for up to $50,000 of qualifying innovation expenditures incurred on qualifying innovation projects carried out with partner institutions for each YA from YA2024 to YA2028. 

The current list of partner institutions include: 

a) Singapore Polytechnic 

b) Ngee Ann Polytechnic 

c) Republic Polytechnic 

d) Nanyang Polytechnic 

e) Temasek Polytechnic 

f) The Institute of Technical Education 

g) Precision Engineering Centre of Innovation at A*STAR SIMTech 

Qualifying innovation projects with partner institutions refer to projects that predominantly involve one or more of the following innovation activities: 

a) Research and experimental development activities; 

b) Engineering, design, and other creative work activities; 

c) IP-related activities; and 

d) Software development and database activities. 

The relevant partner institutions will validate the project as a qualifying innovation project and issue the innovation project invoice. Expenditure incurred outside of the collaboration with the partner institution will not qualify for this tax deduction. 

(F) Cash Conversion

Eligible businesses can opt for a non-taxable cash payout at a cash conversion ratio of 20% on up to $100,000 of total qualifying expenditure across all qualifying activities (described under (A) to (E) above) for each YA, in lieu of tax deductions/allowances. The cash payout will be capped at $20,000 per YA. Applications for the cash payout are to be submitted together with the filing of the businesses’ income tax returns. 

Eligible businesses refer to companies, registered business trusts, partnerships and sole-proprietorships with at least three full-time local employees (Singapore Citizens or Permanent Residents who are paid CPF contributions) earning a gross monthly salary of at least $1,400, in employment for six months or more, in the basis period of the relevant YA. 

Supporting Workers

Jobs-Skills Integrators

Pilot Jobs-Skills Integrators in Precision Engineering, Retail, and
Wholesale Trade sectors to bring together key players to develop
industry-relevant training and facilitate job matching.

Progressive Wage Credit Scheme

To further strengthen support for employers in uplifting lower-wage employees, the Government will enhance PWCS co-funding support for wage increases in the qualifying year 2023 (see Table 1). The enhanced 2023 co-funding support will also apply to wage increases given in qualifying year 2022 and sustained in 2023. All other scheme parameters remain unchanged.

Senior Employment Credit (SEC)

Under the SEC, the Government provides wage offsets to help employers that employ Singaporean workers aged 55 and above adjust to the higher Retirement Age and Re-employment Age. The SEC will be extended from 2023 to 2025 to continue providing wage offsets, and encourage employers to offer flexible work arrangements and structured career planning.

Details to be announced at MOM’s Committee of Supply (COS) 2023.

Part-time Re-employment Grant

The Part-time Re-employment Grant (PTRG) helped to increase the availability of part-time re-employment to senior workers in participating companies. The Part-time Re-employment Grant will be extended to 2025 to continue providing wage offsets, and encourage employers to offer flexible work arrangements and structured career planning.

Details to be announced at MOM’s Committee of Supply (COS) 2023.

Enabling Employment Credit (EEC)

To encourage more employers to hire persons with disabilities, the EEC will be enhanced to cover a larger proportion of wages and a longer duration for PwDs who have not been working for at least six months.

Details to be announced at MOM’s Committee of Supply (COS) 2023.

Uplifting Employment Credit

The Uplifting Employment Credit is a hiring incentive that encourages firms to employ ex-offenders, so as to support their reintegration into
society.

Details to be announced at MOM’s Committee of Supply (COS) 2023.

CPF Transition Support for Platform Workers

To improve the retirement and housing adequacy of Platform Workers (PWs), in November 2022, the Government accepted the Advisory Committee on Platform Workers’ (“the Committee”) recommendation to align CPF contribution rates by PWs and Platform Companies with the rates of employees and employers respectively (“Aligned CPF Contribution Rates”), over a phase-in period of five years.

PWs from mandatory cohorts as well as PWs who choose to opt in to the Aligned CPF Contribution Rates will see the additional CPF contributions from Platform Companies go towards their total earnings. The alignment will boost their savings in their CPF Ordinary and Special Accounts (CPF-OSA), so that they have more for retirement, and can finance their housing loans using CPF instead of cash. At the same time, the Committee recognised that some of these PWs might experience a reduction in take-home pay as they contribute more to their CPF accounts, and therefore recommended that the Government consider providing support for PWs to ease the impact.

Government Introduces the PW CPF Transition Support Scheme in Budget 2023 

In line with the Committee’s recommendation, the Government will introduce the PW CPF Transition Support (PCTS) to provide support for lower-income PWs during the phase-in period. The PCTS will offset part of the PW’s share of the year-on-year increase in CPFOSA contribution rates from Years 1 to 4. Singaporean PWs earning $2,500 or less per month (including from platform work and other employment sources) will be eligible if they are required to or opt in to make contributions based on the Aligned CPF Contribution Rates. 

More details about the PCTS will be announced at the Ministry of Manpower’s Committee of Supply 2023.

Changes to CPF Contribution Rates

The following Budget 2023 initiatives will help enhance the retirement adequacy of seniors who are preparing for or are already in retirement, and help middle-income Singaporeans to save more for retirement.

(A) Increase in Senior Worker CPF Contribution Rates

In 2019, the Government announced that CPF contribution rates will be raised gradually over the next decade or so for Singaporean and Permanent Resident workers aged above 55 to 70 (see Table 1). When the increases have been fully implemented, those aged above 55 to 60 will have the same CPF contribution rates as younger workers.

The first two steps of increases took effect on 1 January 2022 and 1 January 2023. The next increase in senior worker CPF contribution rates will take place on 1 January 2024, as shown in Table 2. As with previous increases, this increase will be fully allocated to the Special Account, to help senior workers save more for retirement.

To mitigate the rise in business costs due to this increase, as part of Budget 2023, the Government will provide employers with a one-year CPF Transition Offset equivalent to half of the 2024 increase in employer CPF contribution rates for every Singaporean and Permanent Resident worker they employ aged above 55 to 70 (see Table 2). This will be provided automatically and employers do not need to apply for the offset.

(B) Increase in Minimum CPF Monthly Payouts for Seniors on the RSS

The Government continues to provide targeted support for seniors with less resources to rely on in retirement. The Silver Support Scheme, which covers a third of all seniors aged 65 and above, provides quarterly cash supplements of up to $900 to eligible seniors in addition to their CPF payouts and other forms of Government support, such as the Workfare Income Supplement and ComCare. Many seniors also receive additional retirement support from their loved ones and from their private savings.

Currently, the minimum CPF monthly payout that seniors on the RSS1 can receive is $250. As part of Budget 2023, the Government will raise the minimum CPF monthly payout to $350 from 1 June 2023 for all seniors on the RSS. This will mean higher monthly payouts for seniors who are currently receiving less than $350 per month. Payouts will continue until CPF savings are depleted. These seniors on the RSS can opt to join CPF LIFE any time before turning age 80 to receive lifelong payouts.

(C) Increase in the CPF Monthly Salary Ceiling

The CPF monthly salary ceiling sets the maximum amount of CPF contributions payable for Ordinary Wages, and is currently set at $6,000. There is also the CPF annual salary ceiling which sets the maximum amount of CPF contributions payable for all wages received in the year, inclusive of both Ordinary Wages and Additional Wages. It is currently set at 17 times of the monthly salary ceiling to account for bonuses equivalent to five months’ salary, and is currently set at $102,000. Both salary ceilings were last updated in 2016.

To keep pace with rising salaries, as part of Budget 2023, the Government will raise the CPF monthly salary ceiling from $6,000 to $8,000 by 2026. The increase will take place in four steps, as shown in Table 3, to allow employers and employees to adjust to the changes.

There will be no change to the CPF annual salary ceiling at this juncture, but it will be reviewed periodically to ensure it continues to cover the broad majority of CPF members.


To ensure that employees earning the same annual salary receive the same CPF contributions regardless of their salary structure, the CPF monthly salary ceiling will eventually be set at one-twelfth of the CPF annual salary ceiling at steady state.

Measures To Encourage Philanthropy And Volunteerism

The following Budget 2023 measures aim to foster a culture of giving in Singapore by encouraging philanthropy and volunteerism.

(A) Extension of the 250% Tax Deduction for Qualifying Donations to Institutions of a Public Character (IPCs) and Eligible Institutions

To continue to encourage giving, the Government will extend the 250% tax deduction for qualifying donations made to IPCs and other eligible institutions (see Table 1) for another three years, i.e., for donations made during the period 1 January 2024 to 31 December 2026 (both dates inclusive).

(B) Enhancement of the Corporate Volunteer Scheme.

The Business and IPC Partnership Scheme (BIPS) provides businesses with 250% tax deduction on wages and qualifying expenses when their staff volunteer, provide services, or are seconded to IPCs. The qualifying expenditure is subject to an annual cap of $250,000 per business, and $50,000 per IPC. 

BIPS is due to lapse after 31 Dec 2023. BIPS will be enhanced into a broader Corporate Volunteer Scheme, and extended for three more years to 31 December 2026. In addition, the following enhancements will be made with effect from 1 January 2024. First, the scope of qualifying volunteering activities will be expanded to include activities which are conducted virtually (e.g., online mentoring and tuition support for youths/children) or outside of the IPCs’ premises (e.g., refurbishment of rental flats). Second, the cap on qualifying expenditure per IPC will be doubled from $50,000 to $100,000 per calendar year. All other conditions of the scheme will remain the same.

Global Anti-Base Erosion (GloBE) Rules (I.E., Income Inclusion Rule And Undertaxed Profits Rule) And Domestic Top-Up Tax (DTT)

Existing Tax Treatment

In Budget 2022, Minister for Finance announced that in response to the global minimum effective tax rate under the Pillar 2 GloBE rules of the Base Erosion and Profit Shifting (BEPS) 2.0 project, and based on consultation with industry stakeholders, MOF would study the introduction of a top-up tax. If introduced, this would top up the effective tax rate of multinational enterprises operating in Singapore with annual group revenue of at least €750 million, as reflected in the consolidated financial statements of the ultimate parent entity, to 15%.

New Tax Treatment

Singapore plans to implement the GloBE rules and DTT from businesses’ financial year starting on or after 1 January 2025. We will continue to monitor the international developments and adjust our implementation timeline as needed if there are delays internationally.

We will also continue to engage businesses and provide them with sufficient notice ahead of any rules becoming effective.

Enterprise Innovation Scheme (EIS)

Existing Tax Treatment

Currently, the following tax measures are available to
encourage research and development (R&D),
intellectual property (IP) registration, IP rights
acquisition and IP rights licensing:

a) 250% tax deduction for staff costs and consumables incurred on qualifying R&D projects conducted in Singapore under sections 14C and 14D of the Income Tax Act 1947(ITA). Current sunset date is Year of Assessment (YA) 2025. 

b) 200% tax deduction for the first $100,000 (and 100% for amounts exceeding $100,000) of qualifying IP registration costs under section 14A of the ITA. Current sunset date is YA2025. 

c) 100% writing-down allowance (WDA) over a period of five, 10 or 15 years on acquisition cost of qualifying IP rights under section 19B of the ITA. Current sunset date is YA2025. 

d) 200% tax deduction for the first $100,000 (and 100% for amounts exceeding $100,000) of qualifying IP rights licensing expenditure under sections 14 or 14C, and 14U of the ITA. Current sunset date for section 14U is YA2025. In addition, 100% tax deduction can be claimed for training expenditure incurred, subject to the general tax deduction rules under sections 14 and 15 of the ITA.

New Tax Treatment

To encourage businesses to engage in R&D, innovation and capability development activities, the following suite of tax measures will be enhanced or introduced under the EIS:

a) Enhance the tax deduction to 400% for the first $400,000 of staff costs and consumables incurred on qualifying R&D
projects conducted in Singapore for each YA from YA2024 to YA2028.

b) Enhance the tax deduction to 400% for the first $400,000 of qualifying IP registration
costs incurred per YA from YA2024 to YA2028.

c) Enhance the tax allowance/deduction to
400% for the first $400,000 (combined cap) of qualifying expenditure incurred on
the acquisition and licensing of IP rights per YA from YA2024 to YA2028. This enhancement will only be available to businesses that generate less than $500
million in revenue in the relevant YA.

d) Enhance the tax deduction to 400% for the first $400,000 of qualifying training expenditure incurred on qualifying courses
(i.e. courses that are eligible for SkillsFuture Singapore funding and aligned with the Skills Framework) per YA from YA2024 to YA2028.

e) Introduce a 400% tax deduction for up to $50,000 of qualifying innovation expenditure incurred on qualifying innovation projects carried out with polytechnics, the Institute of Technical Education, and other qualified partners per YA from YA2024 to YA2028.

f) Allow businesses to, in lieu of tax deductions/allowances, opt for a non-taxable cash payout at a cash conversion ratio of 20% on up to $100,000 of total qualifying expenditure across all qualifying activities in (a) to (e) above per YA. The cash payout option will be capped at $20,000 per YA, and will only be available to businesses which have at least three full-time local employees (Singapore Citizens or Permanent Residents with CPF contributions) earning a gross monthly salary of at least $1,400 in employment for six months or more in the basis period of the relevant YA. 

g) The sunset dates for section 14A (Deduction for costs of protecting IP), section 14C (Deduction for qualifying expenditure on R&D), section 14D (Enhanced deduction for qualifying expenditure on R&D), section 14U (Enhanced deduction for expenditure on licensing IP rights) and section 19B (WDA for capital expenditure on acquiring IP rights) of the ITA will be extended till YA2028, in line with the above enhancements.

All other conditions under sections 14A, 14C, 14D, 14U and 19B of the ITA remain the same.

For more information on this scheme, please refer to Annex D-1 IRAS will also provide further details of the changes by 30 June 2023.  

Enhance Double Tax Deduction For Internationalisation (DTDi) Scheme

Existing Tax Treatment

Under the DTDi scheme, businesses are allowed a tax deduction of 200% on qualifying market expansion and
investment development expenses, subject to prior
approval from Enterprise Singapore (EnterpriseSG) or
Singapore Tourism Board (STB).

The DTDi scheme is in place until 31 December 2025.

New Tax Treatment

E-commerce is an increasingly important and relevant mode of overseas expansion for businesses. To support businesses in their efforts to overcome initial challenges and build up capabilities in internationalising via e-commerce, the scope of the DTDi scheme will be enhanced to include a new qualifying activity “e-commerce campaign” and cover the following e-commerce campaign startup expenses paid to e-commerce platform/service providers:

a) Business advisory: Advisory on market promotion and execution plans (e.g. choice of suitable e-commerce platforms);

b) Account creation: Assistance with setting up accounts on e-commerce platforms, and the right to sell on e-commerce platforms;

c) Content creation: Design of e-commerce campaign publicity materials (e.g. e-store banners, online product images); and

d) Product listing and placement: Uploading content on products/services to ecommerce platforms, and selection of suitable frequency and timing to display content on products/services. Prior approval is required from EnterpriseSG to enjoy DTDi on the new qualifying activity. For each business, EnterpriseSG will only approve DTDi support for e-commerce campaigns for a maximum period of one year applied on a per country basis. The above enhancement will take effect for qualifying e-commerce campaign startup expenses incurred on or after 15 February 2023.

EnterpriseSG will provide further details of the changes by 28 February 2023.

Option to Accelerate the Write-off of the Cost of Acquiring Plant and Machinery (P&M)

Existing Tax Treatment

Businesses that incur capital expenditure on the acquisition of P&M may claim capital allowance (CA) under section 19 (i.e. write-off over the working life of the assets as specified in the Sixth Schedule) or section 19A (i.e. write-off over one or three years) of the ITA.

New Tax Treatment

To provide temporary broad-based support to businesses during this period of restructuring, businesses that incur capital expenditure on the acquisition of P&M in the basis period for YA2024 (i.e. financial year ending in 2023) will have an option to accelerate the write-off of the cost of acquiring such P&M over two years. This option, if exercised, is irrevocable.

The rates of accelerated CA allowed are as follows:

a) 75% of the cost incurred to be written off in the first year (i.e. YA2024); and

b) 25% of the cost incurred to be written-off in the second year (i.e. YA2025). The above option will be in addition to the options
currently available under sections 19 and 19A of
the ITA. No deferment of CA claims is allowed under the
above option. This means that if a business opts for the accelerated write-off option, it needs to claim the capital expenditure incurred for acquiring P&M based on the rates of 75% (in YA2024) and 25% (in YA2025) over the two
consecutive YAs.

Provide Option to Accelerate Deduction for Renovation or Refurbishment (R&R) Expenditure

Existing Tax Treatment

Under section 14N of the ITA, businesses that incur qualifying expenditure on R&R may claim tax deduction on such expenditure over three consecutive YAs on a straight-line basis, starting from the YA relating to the basis period in which the R&R expenditure is incurred. A cap of $300,000 for every relevant period of the three consecutive YAs applies. 

New Tax Treatment

To provide temporary broad-based support to businesses during this period of restructuring, businesses that incur qualifying expenditure on R&R during the basis period for YA2024 (i.e. financial year ending in 2023) will have an option to claim R&R deduction in one YA (i.e. accelerated R&R deduction). The cap of $300,000 for every relevant period of three
consecutive YAs will still apply. This option, if exercised, is irrevocable.

This option will be in addition to the existing option currently available under section 14N of the ITA. 

Extend Investment Allowance (IA) Scheme

Existing Tax Treatment

The IA scheme provides an additional tax allowance for businesses which incur qualifying fixed capital
expenditure on approved projects. This is calculated as a percentage of the amount of capital expenditure incurred, net of grants, on an approved project. 

The IA scheme, which is administered by the Singapore Economic Development Board, Building and Construction Authority, and EnterpriseSG, is scheduled to lapse after 31 December 2023.

New Tax Treatment

To continue encouraging businesses to make capital investments in plant and productive equipment in Singapore, the IA scheme will be extended till 31 December 2028.

Extend IA-100% Scheme for Automation Projects

Existing Tax Treatment

Businesses can enjoy 100% IA support on the amount of approved capital expenditure, net of grants, for automation projects approved by EnterpriseSG.

The IA-100% scheme is scheduled to lapse after 31 March 2023.

New Tax Treatment

To continue to encourage businesses to transform
through automation, the IA-100% scheme will be extended till 31 March 2026, with the same parameters.

Extend Pioneer Certificate Incentive (PC) and Development and Expansion Incentive (DEI)

Existing Tax Treatment

Both the PC and DEI aim to encourage companies to grow capabilities, conduct new or expanded economic activities, and establish their global or regional headquarters in Singapore.

a) Under the PC, recipients are eligible for corporate tax exemption on income from qualifying activities.

b) Under the DEI, recipients are eligible for concessionary tax rates of 5% or 10% on qualifying income.

The PC and DEI are scheduled to lapse after 31 December 2023.

New Tax Treatment

To continue encouraging companies to anchor and grow strategic high value-added manufacturing and services activities in Singapore, the PC and DEI will be extended till 31 December 2028.

Extend the IP Development Incentive (IDI)

Existing Tax Treatment

The IDI aims to support companies that use and
commercialise IP rights arising from R&D in Singapore. Under IDI, recipients are eligible for concessionary tax rates of 5% or 10% on a percentage of qualifying IP income.

The IDI is scheduled to lapse after 31 December 2023.

New Tax Treatment

To continue supporting the use and commercialisation of IP rights arising from R&D activities in Singapore, the IDI will be extended till 31 December 2028.

Extend and Refine Qualifying Debt Securities (QDS) Scheme

Existing Tax Treatment

The QDS scheme offers the following tax concessions on qualifying income from QDS:

a) 10% concessionary tax rate for qualifying companies and bodies of persons in Singapore;
and

b) Tax exemption for qualifying non-residents and qualifying individuals. To qualify as QDS, debt securities must be substantially arranged in Singapore as follows:

a) All debt securities must be substantially arranged by a financial sector incentive (capital
market) company or a financial sector incentive (standard tier) company (collectively referred to as “FSI company”); and

b) For insurance-linked securities (ILS)6 that are unable to meet the condition in (a) above, at least 20% of the ILS issuance costs incurred by the issuer is paid to Singapore businesses.

The QDS scheme is scheduled to lapse after 31 December 2023.

New Tax Treatment

To continue supporting the development of Singapore’s debt market, the QDS scheme will be extended till 31 December 2028.

The scope of qualifying income under the QDS scheme will be streamlined and clarified such that it includes all payments in relation to early redemption of a QDS. To ensure continued relevance, the requirement
that the QDS has to be substantially arranged in Singapore will be rationalised, as follows:

a) For all debt securities that are issued on or after 15 February 2023, they must be substantially arranged in Singapore by a
financial institution holding a specified licence (instead of a FSI company).

b) For ILS that are issued on or after 1 January 2024, if they are unable to meet the condition in (a) above, at least 30% of the ILS issuance costs incurred by the issuer must be paid to Singapore businesses.

All other conditions of the scheme remain the same. The Monetary Authority of Singapore (MAS) will provide further details by 31 May 2023. 

Extend Tax Exemption on Income Derived by Primary Dealers from Trading in Singapore Government Securities(SGS)

Existing Tax Treatment

Tax exemption is granted on income derived by primary
dealers from trading in SGS.

The tax exemption is scheduled to lapse after 31 December 2023.

New Tax Treatment

To continue supporting primary dealers and encourage trading in SGS, the tax exemption on income derived by primary dealers from trading in SGS will be extended till 31 December 2028.

All other conditions of the scheme remain the same.

Extend and Refine Tax Incentive Scheme for Approved Special Purpose Vehicle (ASPV) Engaged in Asset Securitisation Transactions (ASPV scheme) and Introduce a New Sub-scheme to Support Covered Bonds

Existing Tax Treatment

The ASPV scheme grants the following tax concessions to an ASPV engaged in asset securitisation transactions:

a) Tax exemption on income derived by an ASPV from asset securitisation transactions;

b) Goods and Services Tax (GST) recovery on its qualifying business expenses at a fixed rate of 76%; and

c) Withholding tax (WHT) exemption on payments to qualifying non-residents on over-the-counter financial derivatives in connection with an asset securitisation transaction. 

The ASPV scheme is scheduled to lapse after 31 December 2023.

New Tax Treatment

To continue developing the structured debt market, the ASPV scheme will be extended till 31 December 2028.
Instead of a fixed rate of 76%, the GST recovery rate will be the prevailing GST recovery
rate/methodology accorded to licensed full banks under MAS for the specific year in question.

All other tax concessions and conditions of the ASPV scheme remain the same. Further, to support the issuance of covered bonds in Singapore, a new sub-scheme named ASPV (Covered Bonds) will be introduced for the special purpose vehicle holding the “cover pool” in relation to the covered bonds as defined in MAS Notice 648. 

The ASPV (Covered Bonds) scheme will take effect from 15 February 2023 to 31 December 2028 and will be administered by MAS. 

MAS will provide further details by 31 May 2023. 

Extend and Refine the Financial Sector Incentive (FSI) Scheme

Existing Tax Treatment

The FSI scheme accords concessionary tax rates of 5%, 10%, 12% and 13.5% on income from qualifying banking and financial activities, headquarters and corporate services, fund managing and investment advisory services.

The FSI scheme is scheduled to lapse after 31 December 2023.

New Tax Treatment

To continue supporting the growth of financial sector activities in Singapore, the FSI scheme will be extended and refined as follows:

a) The FSI scheme will be extended till 31 December 2028.

b) The existing concessionary tax rates will be streamlined to two tiers of 10% and 13.5% for new and renewal awards approved on or after 1 January 2024, as follows:

i) FSI-Capital Market, FSIDerivatives Market and FSICredit Facilities Syndication – from 5% to 10%;

ii) FSI-Fund Management and FSIHeadquarter Services –remain at 10%;

iii) FSI-Trustee Companies – from 12% to 13.5%; and

iv) FSI-Standard Tier – remain at 13.5%.

c) The qualifying activities will be updated to ensure continued relevance.

MAS will provide further details of the changes by 31 May 2023.

Extend Insurance Business Development – Insurance Broking Business (IBD-IBB) Scheme

Existing Tax Treatment

The IBD-IBB scheme grants approved insurance and
reinsurance brokers a concessionary tax rate of 10% on commission and fee income derived from insurance
broking and advisory services.

The IBD-IBB scheme is scheduled to lapse after 31 December 2023.

New Tax Treatment

To further strengthen Singapore’s position as a leading insurance and reinsurance centre, the IBD-IBB scheme will be extended till 31 December 2028.

All other conditions of the scheme remain the same.

Extend Tax Concession for Deduction of General Provisions for Doubtful Debts and Regulatory Loss Allowances Made in Respect of Non-credit impaired Financial Instruments for Banks (Including Merchant Banks) and Qualifying Finance Companies

Existing Tax Treatment

Under section 14G of the ITA, banks, merchant banks
and qualifying finance companies can claim a tax deduction for general provisions on non-credit impaired loans and debt securities made under the Financial Reporting Standard 109 or Singapore Financial Reporting Standard (International) 9, and any additional loss allowances as required under prevailing
MAS Notices, subject to a cap. The tax deduction under section 14G is scheduled to lapse after YA2024 (for banks, merchant banks and qualifying finance companies with a 31-December financial year end (FYE)) or YA2025 (for banks, merchant banks and qualifying finance companies with a non-31-December FYE).

New Tax Treatment

To continue to promote the overall robustness and stability of the Singapore financial system, the tax deduction under section 14G of the ITA will be extended till YA2029 (for banks, merchant banks, and qualifying finance companies with a 31-December FYE) or YA2030 (for banks, merchant banks, and qualifying finance companies with a non-31-December FYE).

Extend Three Tax Measures Relating to Submarine Cable Systems

Existing Tax Treatment

Currently, there are three tax measures relating to submarine cable systems:

a) WHT exemption on payments made to non-residents for use of international telecommunications submarine cable capacity under indefeasible right to use (IRU) agreements. This is scheduled to lapse after 31 December 2023. 

b) WDA for the acquisition of an IRU over their useful life. This is scheduled to lapse after 31 December 2025. 

c) IA for the construction and operation of submarine cable systems in Singapore. 

This is scheduled to lapse after 31 December 2023.  

New Tax Treatment

To maintain and enhance Singapore’s international connectivity, all three tax measures will be extended till 31 December 2028, with the same parameters.

Withdraw Tax Deduction for Expenditure Incurred on Building Modifications for Benefit of Disabled Employees

Existing Tax Treatment

Under section 14F of the ITA, employers can claim tax deductions for approved expenditure incurred on any addition or alteration to business premises for the purpose of facilitating the mobility or work of any disabled employee, subject to a one-off cap of $100,000.

New Tax Treatment

The scheme will be withdrawn from 15 February 2023. 

Introduced in Budget 1989, the scheme has become less relevant over the years. Since then, other support schemes (e.g. the Open Door Programme Job Redesign Grant) have been introduced to help employers recruit and retain disabled employees, or to support employers for accommodations beyond (and including) physical modifications of the workplace. Section 14N on tax deductions for Renovation and Refurbishment, introduced in Budget 2008, can also be tapped upon for workplace modifications without the need for prior approval from government agencies.

Buyer's Stamp Duty and Additional Conveyance Duties for Buyers

Existing Tax Treatment

Currently, transactions in residential and non-residential properties are subject to marginal BSD rates of 1% to 4% and 1% to 3% respectively:

New Tax Treatment

To enhance the progressivity of our BSD regime, higher marginal BSD rates will be introduced for higher-value residential and non-residential properties.

For residential properties, a new marginal BSD rate of:

a) 5% will apply to the portion of the property value in excess of $1.5 million and up to $3 million; 

and

b) 6% will apply to the portion of the property
value in excess of $3 million.

For non-residential properties, a new marginal BSD rate of:

a) 4% will apply to the portion of the property value in excess of $1 million and up to $1.5
million; 

and

b) 5% will apply to the portion of the property value in excess of $1.5 million.

The revised rates will apply to all properties acquired on or after 15 February 2023.

Tobacco Excise Duty

To discourage the consumption of tobacco products, we will raise the excise duties by 15% across all tobacco products. These tax changes will take effect on and after 14 February 2023:

(A) Cigars, Cheroots, Cigarillos and Cigarettes, and Other Manufactured Tobacco:

From $427/kgm or 42.7 cents/stick of cigarette to $491/kgm or 49.1 cents/stick of cigarette.

(B) Beedies, Ang Hoon, and Other Smokeless Tobacco: 

From $329/kgm to $378/kgm.

(C) Unmanufactured and Cut Tobacco and Other Tobacco Refuse: From $388/kgm to $446/kgm.

Vehicular Tax Changes

(A) Additional Registration Fee Changes

To make our vehicular tax structure more progressive, the following changes will be made to the Additional Registration Fee (ARF) payable for cars, taxis, and goods-cum-passenger vehicles (GPVs):

The new ARF structure will apply to all new and imported used cars and GPVs registered with Certificate of Entitlements (COEs) obtained from the second bidding exercise in February 2023 onwards. The second COE bidding exercise in February 2023 will take place from 20 to 22 February 2023. 

For cars that do not need to bid for COEs (e.g. taxis, classic cars), the new ARF structure will apply for those registered on or after 15 February 2023.

(B) Preferential Additional Registration Fee Rebate Changes

To make our vehicular tax system more progressive, PARF rebates will be capped at $60,000. For example, a vehicle with an OMV of $90,000 paying an ARF of $168,000 under the new rates would receive $60,000 in PARF rebates, instead of $84,000, if it is deregistered when it is nine years old. For cars that need to bid for COEs, the PARF cap will apply to those that are registered with COEs obtained from the second bidding exercise in February 2023 onwards and are subsequently deregistered within their PARF eligibility period. For cars that do not need to bid for COEs (e.g. taxis), the PARF cap will apply to those that are registered on or after 15 February 2023 and are subsequently deregistered within the PARF eligibility period. The PARF cap does not apply to vehicles that are not eligible for PARF rebates, such as GPVs, classic cars, and vehicles that have been laid-up.