Singapore has long cemented its role as a global financial hub, known for its stability, innovation, and strategic positioning in Asia. This, according to an update from KPMG.

However, challenges such as relatively low market liquidity and intensifying regional competition have prompted a proactive response in Budget 2025.

Released in early 2025, this fiscal blueprint introduces targeted measures, including tax incentives, to bolster the Singapore Exchange (SGX) and reinforce the city-state’s status as a destination for companies to list and raise capital.

A recent KPMG viewpoint, outlined in an update on capital markets, delves into these strategies, highlighting how tax policies are pivotal to addressing these challenges while unlocking new opportunities.

One key focus of Budget 2025 is enhancing market liquidity, a persistent issue for the SGX compared to regional peers like Hong Kong and Tokyo.

To counter this, the government has introduced tax incentives aimed at encouraging local companies to list on the SGX.

These include enhanced deductions for listing-related expenses and temporary tax exemptions on gains from SGX-listed equity sales.

Such measures reduce the financial burden on firms, making Singapore a more attractive listing venue.

The KPMG analysis notes that these incentives directly address feedback about the SGX’s competitiveness, aiming to reverse the trend of Southeast Asian firms opting for overseas exchanges.

Regional competition has intensified as neighboring financial hubs vie for capital and listings.

Budget 2025 counters this with tax-driven strategies to retain and attract businesses.

For instance, the government has expanded the scope of the Financial Sector Incentive (FSI) scheme, offering concessional tax rates to fund managers who channel significant investments into SGX-listed equities.

This not only boosts liquidity but also aligns with Singapore’s ambition to remain a regional financial gateway.

KPMG emphasizes that these tax benefits, paired with Singapore’s robust infrastructure and regulatory clarity, provide a compelling edge over rivals, ensuring it remains a top choice for capital-raising.

The budget also seizes new opportunities by incentivizing high-growth sectors.

A notable measure is the introduction of tax credits for companies in emerging fields like green technology and fintech that list on the SGX.

These credits, refundable under specific conditions, aim to draw innovative firms, fostering a vibrant ecosystem of high-potential enterprises.

The KPMG viewpoint underscores this as a forward-looking move, positioning Singapore to capitalize on global trends like sustainability and digital transformation while enhancing the diversity of its capital markets.

However, revitalizing the SGX isn’t solely about tax incentives. The KPMG analysis stresses the need to address non-tax challenges, such as low valuations and investor perception.

While tax policies can lure listings, sustained liquidity and market depth require broader reforms, like improving trading mechanisms and expanding the investor base.

Budget 2025 complements its tax measures with initiatives to strengthen corporate governance and promote SGX-listed funds, creating a holistic approach to market revitalization.

Singapore’s Budget 2025, with its various tax incentives, reflects a key strategy to reinforce its capital markets amid global and regional shifts.

By lowering costs for listings, rewarding investment in SGX equities, and targeting high-potential sectors, these policies aim to solidify Singapore’s standing as a global financial hub.

As the update from KPMG notes, while significant challenges still remain, this blend of fiscal innovation and structural strategies paves the way forward for a more competitive SGX in the foreseeable future.