Budget 2026: Singapore to proceed with BEPS Pillar Two top-up tax; corporate revenues to rise
The updates to the framework will increase the effective tax rate for large multinational enterprises operating here to 15%
Add BT as a preferred source
For more of BT’s Budget 2026 coverage, go to bt.sg/budget26
[SINGAPORE] The Republic will proceed with the implementation of the top-up tax under Pillar Two of the Base Erosion and Profit Shifting (BEPS) 2.0 framework, said Finance Minister Lawrence Wong during his Budget statement on Thursday (Feb 12).
This will raise the effective tax rate for large multinational enterprises operating in Singapore to 15 per cent, said Wong, who is also prime minister.
Therefore, Singapore can expect higher corporate tax collections from the 2027 financial year onwards.
Firm fiscal footing
At the same time, Singapore’s spending needs will grow across multiple fronts, said PM Wong.
First, Singapore will need to invest more in expanding its overseas partnerships, and in building up deeper capabilities to keep Singapore safe and prepared for emerging threats, he said.
Second, even with the BEPS initiative, many other countries are rolling out generous incentives to re-shore and on-shore major investments.
“This is the reality of today’s competitive landscape,” he added. To remain attractive and “stay in the game”, Singapore must update and strengthen its investment promotion toolkit.
“That’s one reason why (the Ministry of Trade and Industry’s) expenditure has risen sharply in this Budget, and why it is likely to remain elevated in the years ahead.”
SEE ALSO
A third area that will see more spending is social needs.
While the government had anticipated higher spending for healthcare – which was provided for through the goods and services tax rate increase – PM Wong said it is not the only social need that must be addressed.
“We also need to strengthen assurance for families, enhance social mobility, and boost retirement adequacy – so that Singaporeans can face each stage of life with confidence and peace of mind.”
Finally, PM Wong said Singapore must prepare for longer-term challenges.
This means setting aside resources for major future needs, including critical infrastructure investments for the country’s energy transition and coastal protection.
Thus, there will be further top-ups to relevant funds to support the development of Changi Airport as part of Singapore’s longer-term economic strategies.
“We therefore expect both revenues and expenditures to continue rising,” said PM Wong.
“The government will manage this increase carefully, ensuring that spending remains supported by revenues and consistent with our objective of maintaining a balanced budget over the medium term.”
He added that sound public finances give Singapore the ability to act decisively, and to invest where it matters the most.
“This puts Singapore in a very different position from many other countries, where governments are constrained by debt and deficit pressures, and forced into difficult trade-offs over what to cut.”
In contrast, Singapore begins this term of government on a firm fiscal footing, he said. “We are therefore able to invest meaningfully and responsibly in policies and programmes that benefit all Singaporeans – now and in the years ahead.”
For more of BT’s Budget 2026 coverage, go to bt.sg/budget26
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Copyright SPH Media. All rights reserved.
