Singapore Financial Sector Incentive Scheme 2025: Eligibility & How to Apply?

Singapore Financial Sector Incentive Scheme 2025: Hey there! If you’re in the financial sector or just curious about how Singapore keeps its place as a global financial hub, you’ve probably heard about the Financial Sector Incentive (FSI) Scheme. It’s one of those government initiatives that sounds a bit technical at first, but once you break it down, it’s a game-changer for businesses in finance. With 2025 bringing some fresh updates to the scheme, I thought it’d be a great time to dive into what the FSI Scheme is all about, who can benefit, what’s new this year, and how it all works.

Singapore Financial Sector Incentive Scheme 2025

Let’s start with the basics. The Financial Sector Incentive Scheme, or FSI for short, is a tax incentive program run by the Monetary Authority of Singapore (MAS). It’s designed to make Singapore a magnet for financial institutions—think big banks, fund managers, or capital market players—by offering them lower tax rates on certain types of income. The idea is simple: if you set up shop in Singapore and do specific financial activities, the government gives you a tax break to make it worth your while. It is being around since 2002 and has played a large role in turning Singapore into a buzzing financial center.

The FSI isn’t just one blanket incentive. It’s split into different sub-schemes, each targeting specific activities in the financial world. Whether you’re syndicating loans, managing funds, or trading bonds, there’s likely a piece of the FSI pie that fits what you do. The goal? To encourage high-value financial activities, create jobs, and keep Singapore competitive on the global stage.

Why Must You Care About the FSI in 2025?

Singapore’s financial sector is always evolving, and the FSI Scheme is a big part of that. With global competition heating up—places like Hong Kong and Dubai are always vying for attention—the MAS keeps tweaking the FSI to make sure it stays relevant. In 2025, there are some exciting updates that make the scheme even more attractive, especially with new tax rates, expanded activities, and a focus on things like sustainable finance and local listings. Plus, the scheme’s been extended until 2028, so there’s plenty of time to take advantage.

Whether you’re a financial institution looking to expand, a fund manager eyeing Singapore, or just someone interested in how government policies shape the economy, the FSI Scheme’s updates are worth understanding. Let’s break it down step by step, starting with what’s new in 2025.

What is New in the FSI Scheme for 2025?

The MAS has rolled out some key changes to the FSI Scheme, effective from January 1, 2024, with further refinements announced in the 2025 Budget. These updates aim to streamline the scheme, make it more flexible, and align it with global tax standards like the OECD’s Base Erosion and Profit Shifting (BEPS) rules. Here’s what’s fresh:

Streamlined Tax Rates

One of the biggest changes is the simplification of the tax rates. Before 2024, the FSI Scheme had a range of concessionary tax rates—5%, 10%, 12%, and 13.5%—depending on the type of activity and sub-scheme. Starting January 1, 2024, these have been consolidated into just two rates: 10% and 13.5%. This makes things less complicated for financial institutions applying for the scheme. If your award is approved on or after January 1, 2024, you’ll fall under these new rates. Existing award holders, though, can keep their current rates until their award expires.

Expanded Qualifying Activities

The FSI Scheme covers a wide range of financial activities, and in 2025, the list has grown to include more modern and high-value areas. For example, there’s a bigger focus on sustainable finance, like green bonds or sustainable loans, reflecting Singapore’s push to be a leader in eco-friendly finance. The scheme also now encourages activities like digital bond issuance and Singapore-based equity listings, which are part of the government’s plan to boost the local capital market.

New Sub-Schemes for Fund Managers

In 2025, the MAS introduced two new sub-schemes specifically for fund managers, as announced in the MAS Circular on July 3, 2025. These are:

• FSI-Fund Management Listing (FSI-FM Listing): This encourages fund managers to list companies on the Singapore Exchange (SGX). It’s a non-renewable 5-year incentive aimed at boosting local capital markets.
• FSI-Fund Management Singapore Equities (FSI-FM SG Equities): This focuses on fund managers investing in Singapore-listed equities, again to strengthen the local market.

Both come with a concessionary tax rate of 10%, and they’re designed to make Singapore a go-to place for equity investments and listings.

Basic Tier Awards

Another big update is the introduction of FSI-Basic Tier (FSI-BT) awards, which started on February 19, 2025. These are aimed at financial institutions that might be affected by global tax rules like BEPS Pillar 2, which sets a minimum tax rate of 15% for big multinational companies. The FSI-BT offers a 15% concessionary tax rate, aligning with these global standards while still providing a benefit compared to Singapore’s standard corporate tax rate of 17%. Existing FSI award holders (like FSI-ST or FSI-HQ) can switch to this new tier, but their old awards will end once the new one kicks in.

Extended Deadline

Good news for anyone thinking about applying: the FSI Scheme has been extended until December 31, 2028. This gives financial institutions plenty of time to plan their operations and apply for the incentive. The application window for the new FSI-BT awards is open from February 19, 2025, to December 31, 2028.

Merging Sub-Schemes

To make things simpler, some of the older sub-schemes have been merged. For example, the FSI-Bond Market (FSI-BM) and FSI-Equity Market (FSI-EM) have been combined into the FSI-Capital Market (FSI-CM) scheme, which now carries a 10% tax rate. Similarly, the five separate FSI-Derivatives Market (FSI-DM) sub-schemes have been rolled into a single FSI-DM scheme. This streamlining reduces confusion and makes it easier for institutions to figure out which sub-scheme fits their activities.

Who is Eligible for the FSI Scheme?

Now that we’ve covered what’s new, let’s talk about who can actually apply for the FSI Scheme. The eligibility criteria are pretty specific, but they’re designed to be flexible enough to cover a wide range of financial institutions. Here’s what you need to know:

Types of Institutions

The FSI Scheme is open to licensed financial institutions operating in Singapore. This includes:

• Banks (think big universal banks or smaller specialized ones)
• Fund managers (those managing assets or investment portfolios)
• Capital market players (like those involved in securities issuance or trading)
• Insurance companies (under a related scheme, but sometimes overlapping with FSI)
• Headquarter operations (for companies setting up regional or global HQs in Singapore)

Basically, if you’re a regulated financial institution with a license from the MAS—or you’re exempt but still meet certain criteria—you’re in the ballpark.

Qualifying Activities

To get the tax break, your institution needs to carry out qualifying activities. These vary depending on the sub-scheme but generally include things like:

• Lending: Loans, credit facilities, or syndicated loans.
• Capital Markets: Issuing or trading bonds, equities, or derivatives.
• Fund Management: Managing investment portfolios or funds.
• Treasury Services: Foreign exchange transactions, cash management, or liquidity services.
• Headquarter Services: Things like risk management, marketing, or general management for regional operations.
• Sustainable Finance: Green bonds, sustainable loans, or other eco-friendly financial activities.

The 2025 updates have expanded this list, so even activities like digital bond issuance or Singapore equity investments now qualify.

Economic Commitment

The MAS isn’t just handing out tax breaks for free. To qualify, you need to show that your operations will contribute to Singapore’s economy. This means:

• Headcount Growth: Hiring staff, especially in key roles like front- or middle-office functions (e.g., traders, analysts, or risk managers).
• Economic Contributions: Your activities should benefit related sectors, like legal or tech services.
• Local Spending: The income you’re getting taxed at a lower rate should come from activities actually performed in Singapore.

For example, a typical FSI-Standard Tier (FSI-ST) recipient might be a bank with 100 employees, where 70% are professionals doing qualifying activities. You’ll need to show plans to grow your team and operations in Singapore, and you’ll be reviewed annually to make sure you’re meeting these commitments.

Specific Requirements for Fund Managers

If you’re a fund manager applying for the FSI-Fund Management (FSI-FM) scheme, there are a few extra boxes to check:

• Your company must be incorporated in Singapore or have a permanent establishment here.
• You need a Capital Markets Services (CMS) license from the MAS (or be exempt).
• You must employ at least three experienced investment professionals, each earning at least S$3,500 per month.
• You need to manage at least S$250 million in assets under management (AUM).

For the new FSI-FM Listing and FSI-FM SG Equities schemes, you’ll also need to show that you’re actively supporting Singapore’s capital markets, either by listing companies on the SGX or investing in local equities.

How Much You Can Save?

The main draw of the FSI Scheme is the concessionary tax rate, which is lower than Singapore’s standard corporate tax rate of 17%. Here’s how it breaks down for 2025:

• Standard Tier (FSI-ST): 13.5% tax rate on income from qualifying activities like lending, trading derivatives, or providing custodian services.
• Enhanced Tier: 10% tax rate for high-value activities like capital markets, fund management, or sustainable finance.
• Basic Tier (FSI-BT): 15% tax rate, introduced to align with global tax rules for larger multinationals.

For example, if your bank earns S$10 million from syndicated loans in Singapore, under the FSI-ST scheme, you’d pay 13.5% tax (S$1.35 million) instead of 17% (S$1.7 million). That’s a savings of S$350,000, which can add up fast for bigger operations.

The award period typically lasts 5 to 10 years, depending on your headcount and the scope of your activities. For the new FSI-FM Listing scheme, it’s a fixed 5-year, non-renewable term. During this time, you’ll enjoy the lower tax rate as long as you keep meeting the eligibility criteria.

When Do You Get the Benefits?

Unlike some government schemes that involve direct cash payouts, the FSI Scheme works through tax relief, so there’s no specific “payment date” like you’d see with a grant. Instead, the benefits kick in when you file your corporate taxes for the income earned from qualifying activities. Here’s how it works:

• Application: You apply to the MAS for the FSI Scheme, usually through a detailed proposal showing your planned activities, headcount growth, and economic contributions.
• Approval: If approved, your award starts on a specific date (often backdated to the application date). For new awards in 2025, you can apply from February 19, 2025, to December 31, 2028.
• Tax Filing: When you file your taxes (typically annually), you report the income from qualifying activities and apply the concessionary tax rate (10%, 13.5%, or 15%, depending on your sub-scheme).
• Annual Reviews: The MAS checks in yearly to make sure you’re still meeting the eligibility criteria, like headcount or local spending.

Since the tax relief is applied when you file your taxes, the “payment” is really about the money you save, which you’ll see reflected in your tax bill. For most companies, this happens annually, with tax filings due by November 30 of the following year (e.g., November 30, 2026, for the 2025 tax year).

How to Apply for the FSI Scheme?

Applying for the FSI Scheme isn’t like filling out a quick online form—it’s a bit more involved, but it’s worth it for the tax savings. Here’s a step-by-step guide:

1. Check Eligibility: Make sure your institution and activities qualify. You might want to consult with a tax advisor or a firm like Mazars or PwC, who specialize in navigating these applications.
2. Prepare a Proposal: You’ll need to submit a detailed plan to the MAS, outlining your business activities, expected headcount growth, and economic contributions. This is where you show how you’ll help Singapore’s financial sector grow.
3. Submit to MAS: Applications go through the MAS, and they’ll review your proposal. For the new FSI-BT awards, you can apply starting February 19, 2025.
4. Get Approved: If the MAS likes your plan, they’ll grant you the award, specifying the sub-scheme, tax rate, and award period. This process can take a few months, though the MAS is aiming to speed things up in 2025.
5. Comply and Report: Once approved, you’ll need to meet the ongoing conditions (like hiring staff or maintaining AUM) and submit annual reports to the MAS.

It’s a good idea to work with professionals—like tax consultants or legal advisors—who know the ins and outs of the FSI Scheme. They can help you craft a strong application and avoid any pitfalls.

Why the FSI Scheme Matters?

At this point, you might be wondering: why does Singapore go to all this trouble? The answer lies in its vision to stay a top-tier financial hub. The FSI Scheme isn’t just about giving tax breaks—it’s about attracting the best financial institutions to set up in Singapore, creating high-quality jobs, and boosting the economy. When a big bank or fund manager sets up shop here, they hire local talent, work with local firms (like lawyers or tech companies), and bring in international business. It’s a ripple effect that benefits everyone.

The 2025 updates show that Singapore is doubling down on this strategy. By focusing on sustainable finance, local equities, and digital innovation, the MAS is making sure the FSI Scheme stays ahead of the curve. Plus, with global tax rules like BEPS Pillar 2 coming into play, the new Basic Tier awards ensure Singapore remains attractive even for big multinationals facing a 15% minimum tax rate.

A Few Things to Keep in Mind

Before you get too excited, there are a couple of things to watch out for:

• Annual Reviews: The MAS will check in every year to make sure you’re meeting your commitments. If you fall short (e.g., not hiring enough staff), you could lose your FSI status.
• Global Tax Rules: If your company is subject to BEPS Pillar 2 (for multinationals with over €750 million in revenue), the new FSI-BT scheme might be your best bet to align with the 15% minimum tax rate.
• Application Effort: Applying for the FSI Scheme takes time and effort. You’ll need a solid business plan and possibly some professional help to get it right.

Conclusion

The Financial Sector Incentive Scheme is one of Singapore’s secret weapons for staying a global financial powerhouse. With the 2025 updates—streamlined tax rates, new sub-schemes for fund managers, and a focus on sustainable finance and local markets—it’s clear the MAS is keeping the scheme fresh and relevant. Whether you’re a bank, a fund manager, or a capital market player, the FSI Scheme offers a real chance to save on taxes while growing your operations in one of the world’s most dynamic financial hubs.

If you’re thinking about applying, start by checking your eligibility and reaching out to a tax advisor or the MAS for guidance. The application window is open until 2028, and with tax savings of up to 7% compared to the standard rate, it’s an opportunity worth exploring. Singapore’s financial sector is thriving, and the FSI Scheme is a big reason why. So, what do you think—ready to take advantage of this and make your mark in Singapore’s financial scene?