The tax rate will start at $5 (£2.7) per tonne of greenhouse gas emissions until 2023, following which it will increase to between $10 (£5.4) and $15 (£8) per tonne of emissions by 2030.
Announcing the plans as part of the Budget, Finance Minister Heng Swee Keat said major facilities that produce more than 25,000 tonnes of greenhouse gas emissions will be affected.
They account for around 80% of the nation’s emissions.
The government expects the carbon tax to encourage businesses to take measures to cut emissions.
It stated: “Companies that do so will be more competitive, as more countries impose tighter limits on their carbon emissions and international agreements on climate change like the Paris Agreement take effect. There will also be new opportunities in areas like sustainable energy and clean technology.”