Growing by acquisition is expensive, and the Singapore tax system offers a targeted incentive to soften the cost: the Mergers and Acquisitions (M&A) Scheme. It gives a qualifying acquiring company an allowance on the value of shares it buys, a double deduction on deal transaction costs, and relief from stamp duty on the share transfer. The scheme has been extended to 31 December 2030, so it remains a live planning tool for companies expanding inorganically.
This 2026 guide explains the three benefits, the conditions an acquiring company must meet, and the practical steps to claim. If you are contemplating buying another company, the M&A Scheme should be factored in before you sign, because some conditions must be satisfied at the point of acquisition.
The three benefits of the M&A Scheme
1. M&A allowance
The headline benefit is the M&A allowance, equal to 25% of the qualifying acquisition value, capped at S$40 million of acquisition value per Year of Assessment. That produces a maximum allowance of S$10 million per Year of Assessment. The allowance is written down on a straight-line basis over five years, so a company at the cap claims S$2 million a year for five years. The allowance reduces the acquiring company’s taxable income, subject to the usual rules.
2. Double tax deduction on transaction costs
Qualifying transaction costs incurred on the acquisition attract a 200% tax deduction, capped at S$100,000 of costs per Year of Assessment. Eligible costs are professional deal fees such as legal, accounting, tax advisory and valuation fees. This deduction is available even where the acquisition value is modest, making it useful for smaller deals.
3. Stamp duty relief
The scheme also provides stamp duty relief on the transfer of the target’s shares, capped at S$80,000 per financial year. Because ordinary share transfers otherwise attract stamp duty at 0.2% of the higher of price or net asset value, this relief can be meaningful on a large acquisition.
Summary of the caps
| Benefit | Rate | Cap |
|---|---|---|
| M&A allowance | 25% of acquisition value | On up to S$40m acquisition value per YA (max S$10m allowance), over 5 years |
| Transaction cost deduction | 200% (double deduction) | S$100,000 of costs per YA |
| Stamp duty relief | Full relief up to the cap | S$80,000 per financial year |
Who qualifies: conditions for the acquiring company
The reliefs are available to the acquiring company, not the seller, and the acquiring company must satisfy a set of conditions. In broad terms, the acquiring company must be incorporated in and tax resident in Singapore, must be carrying on a trade or business in Singapore, and must have at least a minimum number of local employees. Where the acquiring company is itself part of a group, the ultimate holding company generally must also be Singapore-incorporated and tax resident.
The acquisition must be of ordinary shares in the target and must take the acquiring company across a qualifying ownership threshold, broadly from 20% or less up to more than 20%, or from 50% or less up to more than 50%. The acquiring company must hold the acquired shares for a specified period after the acquisition, and there are conditions around the target carrying on a trade or business and having employees. Because the detailed conditions are precise and the ownership tiers matter, structuring the deal correctly at the outset is essential.
How to claim
The M&A allowance and the transaction cost deduction are claimed in the acquiring company’s corporate income tax return for the relevant Year of Assessment, supported by the acquisition documents. Stamp duty relief is applied for separately in connection with the share transfer. Because the allowance is spread over five years, the acquiring company continues to claim in each of the following years, so the paperwork and the ownership condition must be tracked across the whole period, not just in the year of acquisition.
How the M&A Scheme fits with other support
The M&A Scheme is a tax relief, not funding. Companies financing an acquisition sometimes pair it with the M&A Loan available under the Enterprise Financing Scheme, which helps fund the purchase of equity stakes. For companies pursuing substantive expansion, the scheme can also sit alongside broader incentives such as the Development and Expansion Incentive. The right combination depends on the deal size, the target and your growth plans.
Frequently asked questions
Does the M&A Scheme apply to buying a business (assets) rather than shares?
The core M&A allowance and stamp duty relief are geared to the acquisition of ordinary shares in a target company crossing the ownership thresholds. An asset purchase is treated differently and may attract other allowances instead, so the deal structure changes the tax outcome.
Can a foreign-owned Singapore company claim?
The acquiring company must be Singapore-incorporated and tax resident and meet the substance conditions. Where it belongs to a group, the ultimate holding company generally must also be Singapore-based. Foreign ownership at the top of the structure can affect eligibility, so check the holding-company condition early.
Is the allowance a cash grant?
No. It is a deduction against taxable income spread over five years. Its cash value depends on the acquiring company having sufficient profits to absorb the allowance.
Raffles Corporate Services can help you assess whether a proposed acquisition qualifies and coordinate the tax and stamp duty claims. Speak to us through our contact page before you complete the deal.
See IRAS’s M&A Scheme guidance at iras.gov.sg and the Income Tax Act on Singapore Statutes Online.
— The Editorial Team, Raffles Corporate Services