How to Claim the M&A Allowance in Singapore (2026): Step‑by‑step & Form M&A Checklist

Understanding how to claim the M&A allowance in Singapore in 2026 is critical for any deal team closing an acquisition and seeking to maximise post‑transaction tax relief. Under Section 37O of the Income Tax Act, the Inland Revenue Authority of Singapore (IRAS) grants acquiring companies a writing‑down allowance equal to 5% of the acquisition value of qualifying shares, amortised on a straight‑line basis over five years of assessment. The 2026 filing cycle introduces a strict three‑month submission window for Form M&A, making early preparation essential for corporate finance teams, in‑house tax counsel, and private equity buyers alike.

This guide walks through every stage of the claim process, from confirming eligibility to responding to IRAS queries, complete with document checklists, a timeline table, costs breakdown, and the key procedural changes affecting Year of Assessment (YA) 2026 and YA 2027.

Overview of the M&A Allowance Process and Who It Applies To

The IRAS M&A allowance is a corporate income tax incentive designed to encourage companies to grow through acquisitions. It allows a qualifying acquiring company to claim an annual writing‑down allowance of 5% of the acquisition value of ordinary shares in a target company, spread equally over five consecutive years of assessment. The total acquisition value on which the allowance may be computed is capped at S$100 million, resulting in a maximum annual allowance of S$5 million per YA.

The statutory basis for the scheme is Section 37O of the Income Tax Act (Cap. 134), administered by IRAS. The allowance applies to acquisitions of ordinary shares in a target company that result in the acquirer obtaining at least 20% ownership, or that increase an existing stake of 20% or more. It is available to Singapore‑resident companies and, subject to additional conditions, to certain acquiring entities with operations in Singapore. Companies that complete a qualifying acquisition must file Form M&A with IRAS within three months of the date of acquisition to preserve their entitlement.

M&A Allowance Eligibility and Prerequisites

Before preparing Form M&A, the deal team must confirm that the acquisition satisfies every statutory eligibility test. Failing any one of these M&A allowance requirements will invalidate the claim, regardless of how promptly the form is filed. The tests fall into three categories.

Ownership and Control Tests

The acquiring company must acquire ordinary shares in the target entity such that, after the acquisition, the acquirer holds at least 20% of the total ordinary shares in the target. Alternatively, if the acquirer already holds 20% or more, the acquisition must further increase that shareholding. The 20% threshold is measured by reference to total issued ordinary shares at the point of acquisition. Share acquisitions that do not meet or exceed this threshold, such as portfolio investments below 20%, do not qualify.

Qualifying Shares and Acquisitions

Only acquisitions of ordinary shares qualify. Preference shares, convertible instruments that have not yet been converted, and asset acquisitions are excluded from the M&A allowance eligibility criteria. The target company must be incorporated and tax‑resident in Singapore, or incorporated outside Singapore but carrying on a trade or business through a permanent establishment in Singapore. The acquisition must be a genuine arm’s‑length transaction; acquisitions from related parties are subject to additional scrutiny and may be disallowed where IRAS determines that the primary purpose is to obtain the allowance.

Tax Residency and Anti‑Abuse Checks

The acquiring company must be tax‑resident in Singapore for the basis period in which the acquisition occurs. IRAS applies substance‑over‑form principles to assess whether a transaction has been structured primarily to obtain the allowance. Where a foreign buyer uses a Singapore‑incorporated special purpose vehicle (SPV) as the acquirer, additional evidence of the SPV’s commercial substance, such as local employees, decision‑making in Singapore, and operational premises, may be required. Foreign acquirers should also be prepared to provide a tax residency certificate issued by the relevant foreign tax authority if requested.

Step‑by‑Step Procedure: How to Claim the M&A Allowance in Singapore

The claim process runs from the point of completion through to the inclusion of the allowance in the acquirer’s corporate income tax return. The following numbered steps, mapped to the mandatory M&A allowance timeline below, set out exactly what must happen, in what order, and who is responsible.

Step 1: Confirm the Qualifying Acquisition and Compute the Acquisition Value

Immediately after completion, the deal team should verify that the acquisition satisfies the ownership threshold (at least 20% ordinary shares), that the target is an eligible entity, and that the acquirer is Singapore tax‑resident. The acquisition value is typically the total consideration paid for the ordinary shares, including cash, fair value of non‑cash consideration, and any deferred or contingent payments crystallised at the date of acquisition. Where non‑cash consideration is involved, an independent valuation may be required. The acquisition value must be recorded net of any vendor rebates or adjustments reflected in the completion accounts.

Step 2: Assemble Supporting Documents

This step frequently causes delays, particularly in cross‑border transactions where the seller’s counsel is slow to release executed documents. The deal team should collect the signed Sale & Purchase Agreement, evidence of completion (closing statement, escrow release, or bank confirmation of funds transfer), the updated share register showing the acquirer’s post‑acquisition holding, share transfer forms filed or to be filed with ACRA, and board minutes or shareholder resolutions approving the acquisition. A full list of Form M&A documents needed appears in the Required Documents section below. Where documents are not in English, certified translations must be prepared before filing.

Step 3: Complete Form M&A and Supporting Annexes

Form M&A requires the acquirer to provide structured information about the transaction: the identity and tax reference number of the acquirer and target, the date and nature of the acquisition, the number and class of shares acquired, the total acquisition value, the pre‑ and post‑acquisition shareholding percentages, and details of the consideration paid. Each field should be mapped to the corresponding supporting document. For example, the acquisition value field should match the figure in the SPA and completion statement; the shareholding percentage field should match the updated share register. Where the acquisition was completed in stages, each tranche must be separately disclosed.

Step 4: Submit Form M&A to IRAS Within Three Months

This is the most time‑critical step. IRAS requires Form M&A to be submitted within three months of the date of acquisition. The three‑month clock runs from the completion date, not the date of signing the SPA, unless signing and completion occur simultaneously. Submission is made electronically via the IRAS e‑services portal. The submitting party should retain a copy of the submitted form, the electronic acknowledgement receipt, and all supporting documents for at least five years. Missing this M&A allowance claim deadline is the single most common reason for forfeiture of the allowance.

Step 5: Respond to IRAS Queries and Finalise the Claim in the Tax Return

After submission, IRAS may raise queries on the claim, requesting additional documentation, clarification on the acquisition value, or evidence of the acquirer’s tax residency. Responses should be prompt and comprehensive; industry observers expect that initial IRAS review typically takes two to eight weeks for straightforward domestic acquisitions, with more complex cross‑border claims taking longer. Once IRAS confirms the claim, the acquirer records the annual M&A allowance (5% of the qualifying acquisition value) in its corporate income tax return for the relevant YA, and continues to claim the allowance annually over the remaining four years.

Required Documents and Information for Form M&A

Assembling the correct documents before completing Form M&A avoids delays and reduces the risk of IRAS queries. The following table lists every document typically required, together with guidance on who issues it and what format is acceptable.

Evidence of Completion and Consideration

IRAS places particular emphasis on the date of completion, because it triggers the three‑month filing window. Acquirers should ensure the completion statement or closing confirmation clearly records the date, the amount of consideration transferred, and the identity of the payer and recipient. Where consideration is paid in instalments, evidence of each payment should be filed.

Supporting Corporate Records

The updated share register is the definitive proof of the acquirer’s post‑acquisition shareholding. If the share transfer has not yet been registered, the deal team must expedite lodgement with ACRA to avoid evidential gaps.

Valuation Evidence When Needed

An independent valuation is not required for every claim, but it becomes essential where consideration includes shares in the acquirer, earn‑out payments, or other non‑cash elements. The valuation should be prepared by a qualified independent valuer, dated no later than the completion date, and should clearly state the methodology used.

M&A Allowance Timeline and Key Deadlines

The following table consolidates the critical deadlines that deal teams must track when preparing to submit Form M&A. Missing the three‑month filing window is the most consequential deadline failure, because IRAS may refuse to accept a late submission and the allowance may be permanently forfeited.

What Triggers the Three‑Month Clock

The filing window begins on the date of acquisition, which IRAS defines as the date of completion, not the date of signing the SPA (unless both occur on the same day). In a typical transaction with a split signing and completion, the clock starts at completion. Where the acquisition occurs in multiple tranches, each tranche that independently meets or increases the 20% ownership threshold triggers a separate three‑month window. Deal teams should diarise the deadline immediately upon completion and build in a buffer of at least two weeks for document assembly and form preparation.

Costs, Fees, and Tax Considerations for the M&A Allowance

The M&A allowance itself does not carry a filing fee. However, acquirers should budget for the professional costs of preparing and submitting the claim, and should understand how the allowance interacts with other available tax reliefs.

Interaction With Double Tax Deductions and CIT Rebates

Qualifying transaction costs, such as legal fees, due diligence costs, and stamp duties directly attributable to the acquisition, may be eligible for a double tax deduction (DTD) under a separate IRAS scheme. The DTD operates independently of the M&A allowance; claiming one does not preclude claiming the other, provided the costs are not double‑counted. For YA 2026 and YA 2027, acquirers should also check whether any corporate income tax (CIT) rebate announced in the Budget applies, as rebates may reduce the effective tax liability and therefore the net benefit of the allowance. The Ministry of Finance publishes rebate details each Budget cycle.

What Changed in 2026: Budget and Administrative Updates

The M&A allowance framework has been a feature of Singapore’s corporate tax landscape since its introduction, but the 2026 cycle has brought procedural changes that deal teams must account for. These changes affect how, when, and through what channel the claim is submitted.

2026 Filing Mechanics: The Three‑Month Window

IRAS’s updated guidance confirms the strict requirement to submit Form M&A within three months of the date of acquisition. While this deadline existed in prior years, early indications suggest that IRAS is applying it with greater rigour in the 2026 filing cycle, with fewer accommodations for late filings. Industry observers expect that deal teams will need to engage their tax advisers at the term‑sheet stage, rather than post‑completion, to ensure all documents are assembled in time.

Caps and Rate Continuity

As of YA 2026, the 5% allowance rate and the S$100 million acquisition value cap remain unchanged. The resulting maximum annual allowance of S$5 million per YA continues to apply. No changes to these parameters were announced in the Singapore Budget 2026.

E‑Submission and Portal Updates

IRAS continues to emphasise electronic submission of Form M&A through its e‑services portal. The likely practical effect of recent portal enhancements is faster processing and automated acknowledgement receipts, which in turn create a clearer audit trail for claimants. Deal teams should ensure that their tax agents have valid Corppass access to the IRAS e‑services portal before the filing deadline approaches.

Common Pitfalls and How to Avoid Them

• Late filing of Form M&A. The most frequent cause of forfeiture. Remedy: diarise the three‑month deadline immediately upon completion and assign ownership to a named individual on the deal team.
• Missing completion evidence. Filing without a clear completion statement or escrow release letter invites IRAS queries and delays. Remedy: make the completion confirmation a condition precedent to internal deal closure procedures.
• Mis‑calculated acquisition value. Errors arise where deferred or contingent consideration is included or excluded incorrectly. Remedy: engage the tax adviser to reconcile the SPA consideration clause with the completion accounts before completing Form M&A.
• Lack of certified translations. Documents in languages other than English submitted without notarised translations are not accepted. Remedy: commission translations in parallel with document assembly, do not wait until the form is ready.
• Share register not updated before filing. If the target company’s register of members has not been updated to reflect the acquirer’s holding, the ownership threshold cannot be evidenced. Remedy: instruct the company secretary to update the register within days of completion and lodge with ACRA promptly.
• Double‑counting DTD and allowance claims. Transaction costs eligible for DTD must not also be included in the acquisition value used to compute the M&A allowance. Remedy: maintain separate schedules for the allowance and DTD claims, cross‑referenced to the same invoice set.
• Incorrect YA mapping. Recording the allowance against the wrong YA results in an incorrect tax return and potential penalties on reassessment. Remedy: confirm the basis period for the YA in which the acquisition falls, and align the first‑year allowance claim accordingly.
• Inadequate responses to IRAS queries. Generic or incomplete responses prolong the review and may result in partial disallowance. Remedy: assign a single point of contact for IRAS correspondence, supported by the tax adviser, and respond with referenced documents within the timeframe specified by IRAS.

Sources

1. Inland Revenue Authority of Singapore, Mergers & Acquisitions (M&A) Allowance
2. IRAS, Claiming Allowances
3. Singapore Statutes Online (Attorney‑General’s Chambers), Income Tax Act
4. Ministry of Finance, Singapore Budget 2026
5. Accounting & Corporate Regulatory Authority (ACRA)