Summary of Singapore's 2025 Budget: Corporate Tax Incentives in the Spotlight
The Singapore Budget covering the financial year, from 1 April 2025 to 31 March 2026, was announced by the Prime Minister and Minister for Finance of Singapore, Mr. Lawrence Wong on February 18, 2025.
The budget not only reflects the local economic outlook but also has significant implications for business decision-making, economic relations with neighboring countries, and foreign investment flows.
What new opportunities or challenges does this present for businesses? What are the changes it might bring for foreign investments and regional cooperation?
Mr. Choi Meng Yee, Director of Simbiosis Consulting Pte Ltd shares his insights.
Question: Singapore has increased the corporate income tax rebate to 50% of the taxable amount, capped at S$40,000. What do you think are the practical impacts of this policy on the cash flow and competitiveness of small and medium-sized enterprises (SMEs)? Will it significantly ease the tax burden on businesses, especially in the context of slowing economic growth?
Answer: The tax rebate will improve the cash flow situation for SMEs.
Eligible companies will receive a cash grant of S$2,000, even if they are not profitable. This provides immediate financial support.
The 50% rebate on corporate income tax, capped at S$40,000, will allow SMEs to retain more of their earnings. They can use the tax savings for their business operations such as acquiring better equipment, deploying AI capabilities and up-skilling their employees.
The rebates are expected to be processed automatically by IRAS from the second quarter of 2025. This ensures timely disbursements without the SMEs having to incur administrative efforts to apply for them.
The tax rebate takes on a targeted approach to assist smaller and loss-making companies, which may be more vulnerable during economic slowdowns. By increasing the disposable income for businesses, the rebate may help stimulate overall economic activity and address potential slowdowns. It may also help specific sectors that may be still recovering from the pandemic or facing ongoing business challenges.
For larger companies with significant profits, the cap of S$40,000 typically represents a smaller proportion of their total tax liability, so the tax savings will be less impactful.
Question: The Double Tax Deduction for Internationalisation (DTDi) and the Mergers & Acquisitions (M&A) scheme have been extended until 2030. How do you think this move will drive the internationalisation efforts and M&A activities of Singaporean businesses? Will it enhance Singapore's attractiveness as a regional business hub?
Answer: The extension of the Double Tax Deduction for Internationalisation (DTDi) and Mergers and Acquisitions (M&A) schemes until 31 December 2030 is likely to play a significant role in promoting internationalisation and M&A activities of Singaporean companies, as well as enhancing Singapore's attractiveness as a regional business centre.
The DTDi scheme allows businesses to claim a 200% tax deduction on qualifying market expansion and investment development expenses. This will support companies in their efforts to expand internationally. The tax savings will encourage companies to explore new markets and develop revenue streams in international markets. The scheme helps companies stay competitive in our rapidly evolving global economy.
Question: The Singapore government has introduced the SkillsFuture Workforce Development Grant, providing up to 70% funding support for businesses. Do you think this policy is sufficient to help companies meet future workforce skill demands? How can businesses maximize the use of this grant to enhance employee skills?
Answer: The Singapore Budget 2025 introduces a new SkillsFuture Workforce Development Grant, which will provide higher funding support of up to 70 per cent for job-redesign activities. It aims to consolidate existing schemes and simplify the application process, making it more accessible for businesses.
Amidst a changing work environment, job redesign becomes increasingly important, as jobs of the past may cease altogether. The grant enables Singapore to upskill and future-proof local talent. The Singapore workforce can equip itself with the right skills now to tackle imminent changes in the work environment.
With a stronger and more resilient workforce, employers will be better prepared to invest in AI, digital tools and innovation at the workplace. Employees can diversify their existing skills and expand their capabilities in new areas.
To maximize the use of this grant, businesses can consider the following approach:
- Identify the skills needed for future growth and assess their current workforce capabilities.
- Prioritize training in areas with growing demand, such as: AI, Cybersecurity, Digital skills.
- Redesign jobs and sequences, adding in new technologies and procedures.
- Create structured, long-term training plans that tap on various learning methods.
- Combine the Workforce Development Grant with other programs like the redesigned SkillsFuture Enterprise Credit to maximize support.
- Partner with universities and polytechnics to develop tailored training programs that meet specific industry needs.
- Foster a culture of lifelong learning within the organization, motivating employees to upgrade their skills.
Budget 2025 focuses on economic strategies, encouraging skills upgrading and providing support to businesses and individuals amidst rising costs.
For 2025, Singapore expects a more moderate outlook with growth projected at 1% to 3%, while inflation is expected to average 1.5% to 2.5%.
The three key thrusts to drive Singapore’s economic and market competitiveness strategy are: technology and innovation; enterprise ecosystem; and infrastructure investments, amidst resource constraints.
The corporate income tax (CIT) rate remains unchanged at 17%. For YA 2025, the CIT rebate will be 50% of tax payable, capped at S$40,000. Non-profitable companies that employed at least one local employee in 2024 will receive a minimum benefit of S$2,000 as CIT Rebate cash Grant.
GST remains unchanged at 9% in 2025.
The personal income tax rates remain unchanged, ranging from 0% to 24%. Tax residents are given a personal income tax rebate of 60%, capped at S$200, for the YA 2025.
The Double Tax Deduction for Internationalisation scheme (“DTDi”) will be extended till 31 December 2030 to continue supporting companies in their internationalisation efforts.
The Mergers and Acquisitions (“M&A”) scheme will be extended till 31 December 2030 to continue supporting companies to grow through M&A.
A 100% tax deduction for payments made by companies under an approved cost-sharing agreement (“CSA”) for innovation activities will be introduced with effect from 19 February 2025 to support collaborative innovation activities.
Photo credit: Try Sutrisno Foo. Taken from www.channelnewsasia.com
Effective 1 January 2026, CPF contribution rates will increase to 34% for employees aged above 55 to 60 and 25% for those aged above 60 to 65. Employers will receive a one-year CPF Transition Offset covering 50% of the increase in CPF contributions to help mitigate the rise in business costs.
The Progressive Wage Credit Scheme (“PWCS”) co-funding support will be enhanced for wage increases that are given to lower-wage employees in the calendar years 2025 (30% to 40%) and 2026 (15% to 20%).
Picture taken from asianews.it
The Senior Employment Credit (“SEC”) will be extended to 31 December 2026 to support companies for hiring senior workers.
The Uplifting Employment Credit (“UEC”) and Enabling Employment Credit (“EEC”) schemes will be extended to 31 December 2028 to encourage companies to hire ex-offenders and persons with disabilities.
To encourage lifelong learning, the SkillsFuture Mid-Career Training Allowance to selected part-time long-form training programmes will be extended to better support employed mid-career Singaporeans who wish to pursue substantive training on a part-time basis.
The Workfare Skills Support (“WSS”) scheme will be enhanced by providing a monthly training allowance to support lower-wage workers who wish to take up more substantive training.
To support workforce transformation, a new SkillsFuture Workforce Development Grant with up to 70% funding support for job redesign will be introduced. The SkillsFuture Enterprise Credit of S$10,000 will be provided for eligible companies from the second half of 2026 to offset out-of-pocket costs for eligible workforce transformation initiatives.
Three tax incentives will be introduced upon the recommendation of the Equities Market Review Group to encourage new listings in Singapore and increase investment demand for Singapore-listed equities.
Budget snippets for individuals
Under the SG60 Package, all Singaporeans aged 21 to 59, and aged 60 and above, will receive S$600 and S$800 SG60 Vouchers respectively in July 2025.
The Government will provide an SG60 Baby Gift for all Singapore Citizen babies born in 2025.
A one-time S$600 SG60 Rental Support will be provided to each stall in hawker centres and markets managed by Government and Government-appointed operators to recognize their roles as part of National Identity and heritage and appreciate their contributions.
All Singaporean families living in private property will receive Climate Vouchers of S$400 purchase more efficient household appliances.
Eligible HDB households will receive a one-off U-Save rebate of S$760 in 2025 to offset their utilities expenses.
The Government will introduce a Large Families Scheme (“LFS”) to provide greater support for couples who have three or more children. Eligible families will receive an increased CDA First Step Grant of S$10,000, Large Family MediSave Grant of S$5,000, and S$1,000 annually in Large Family LifeSG Credits.
Parents will receive S$500 in one-off Child LifeSG Credits for each Singapore Citizen child aged 0 to 12 in 2025. Each Singapore Citizen child aged 13 to 20 in 2025 will receive a one-off S$500 top-up to their Edusave account or PSEA.
To support Singapore Citizens and Permanent Residents with costs of long-term care, the Government will enhance means-tested subsidies and grants for Long-Term Care.
The Government will enhance the Home Caregiving Grant monthly payout by up to S$200 and raise the Per Capita Household Income eligibility threshold by S$1,200.
The Government will introduce a five-year Matched Medisave Scheme (“MMSS”) from January 2026, to boost MediSave adequacy for seniors with lower balances.
The Matched Retirement Savings Scheme (“MRSS”) aims to help senior Singapore Citizens with lower retirement savings to save more for their retirement, by providing a dollar-for-dollar matching grant top-up for cash top-ups made to their CPF Retirement Account. From 1 January 2026, the Government will expand the MRSS to include eligible persons with disabilities of all ages.
Table 1 – Partial tax exemption for companies
Table 2 - Tax exemption scheme for new start-up companies
Table 3 - Personal income tax rates
This Singapore Budget 2025 summary was prepared by Simbiosis, a YYC company. A special thanks to Mr. Choi Meng Yee, Director of Simbiosis Consulting Pte Ltd for his profound analysis of this budget.
The full Budget 2025 speech by the Prime Minister and Minister of Finance of Singapore, Mr. Lawrence Wong is available at https://www.gov.sg/budget-2025
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