Singapore’s Budget 2025, unveiled by Prime Minister Lawrence Wong, outlines a comprehensive plan to bolster the nation’s economy amidst global uncertainties. The government has allocated a record S$143.1 billion for the fiscal year, up from S$134.2 billion in 2024, focusing on supporting businesses, upskilling the workforce, and fostering innovation. Economic growth is projected to moderate to between 1.0 and 3.0 percent in 2025, following a 4.4 percent expansion in 2024.
Corporate income tax rebate
To alleviate rising operational costs, the government has introduced a 50% corporate income tax rebate for the Year of Assessment 2025. Active companies employing at least one local worker in 2024 will receive a minimum benefit of S$2,000, with the rebate capped at S$40,000 per company.
Tax incentives for fund managers
To invigorate Singapore’s stock market, tax incentives have been introduced for fund managers who invest substantially in local equities. This initiative aims to attract more companies to list on the Singapore Exchange and enhance market liquidity.
New tax deduction for cost-sharing agreements
To promote collaborative innovation, the Budget introduces a tax deduction for cost-sharing agreements. This measure encourages businesses to jointly invest in research and development, sharing both costs and benefits, thereby fostering a culture of cooperation and technological advancement.
Enhanced Progressive Wage Credit Scheme
The Progressive Wage Credit Scheme has been enhanced to support wage growth for lower-income workers. The government’s co-funding for wage increases will rise from 30% in 2025 to 40 percent, and from 15 percent in 2026 to 20 percent. This initiative aims to encourage businesses to uplift wages sustainably.
Introduction of additional tier under financial sector incentive scheme
A new tier has been added to the Financial Sector Incentive (FSI) scheme to attract financial institutions specializing in green and sustainable finance. This move aligns with Singapore’s commitment to becoming a global hub for sustainable finance and encourages investments that support environmental sustainability.
New Enterprise Compute Initiative
The government has earmarked up to S$150 million for the Enterprise Compute Initiative. This program partners eligible firms with major cloud service providers, granting access to artificial intelligence tools and expert consultancy services. The initiative aims to accelerate digital transformation and enhance competitiveness among local enterprises.
New SkillsFuture Workforce Development grant
To support workforce transformation, the SkillsFuture Workforce Development Grant will offer up to 70 percent funding for job redesign activities undertaken by firms. This grant encourages companies to innovate job roles and processes, ensuring the workforce remains adaptable and resilient in a rapidly evolving economic landscape.
Tax deduction for equity-based remuneration schemes
A new tax deduction has been introduced for equity-based remuneration schemes. This measure incentivizes companies to offer share-based compensation, aligning employees’ interests with company performance and fostering a culture of ownership and long-term commitment.
Extension of the Mergers & Acquisitions scheme
The Mergers & Acquisitions (M&A) scheme has been extended to encourage business consolidation and expansion. This extension provides continued support for companies seeking growth through strategic acquisitions, enhancing their competitiveness in the global market.
Extension of the Double Tax Deduction for Internationalization Scheme
To promote overseas expansion, the Double Tax Deduction for Internationalization (DTDi) scheme has been extended. This allows businesses to claim tax deductions on eligible expenses incurred during international market expansion activities, reducing the financial barriers to entering new markets.
Redesigned SkillsFuture Enterprise Credit
The SkillsFuture Enterprise Credit has been redesigned to function as an online wallet, providing companies with S$10,000 in credit. Available in the second half of 2026 and valid for three years, this credit can be used to fund enterprise and workforce transformation initiatives. Firms with at least three resident workers are eligible, and the current credit scheme will be extended until the new system is operational.
Final advisory for businesses
Singapore’s Budget 2025 presents significant opportunities for businesses to reduce costs, invest in workforce development, and adopt digital innovations. Companies should take full advantage of the corporate income tax rebate, new tax deductions, and funding support for job redesign and AI adoption.
By leveraging these initiatives, companies can enhance resilience, drive innovation, and position themselves for sustainable growth in 2025 and beyond.
Source: ASEAN Breifing
Comments