The Singapore Budget is the country’s fiscal plan for the current financial year that is planned with Singapore’s current and future needs in mind. 2025 marks Singapore’s 60th years of independence. Prime Minister and Minister for Finance, Mr Lawrence Wong, delivered his Budget 2025 speech on 18 Feb 2025. This article will provide you with the overview on business tax, personal income tax.
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Corporate Income Tax Rebate and Cash Grant
To provide support for companies’ cash flow needs, a CIT Rebate of 50% tax payable will be granted in Year of Assessment (“YA”) 2025. Companies that are active and have employed at least one local employee in Calendar Year (“CY”) 2024 (referred to as the “local employee condition”) will receive a minimum benefit of $2,000 in the form of a CIT Rebate Cash Grant. A company is considered to have met the local employee condition if it has made CPF contributions to at least one local (i.e., Singapore Citizen or Permanent Resident) employee, excluding shareholders who are also directors of the company, in CY 2024. For example, Company A hired two local employees in CY 2024. It has a tax payable of $30,000 for YA 2025. Company A will receive a $2,000 CIT Rebate Cash Grant and another $13,000 [(50% * $30,000) - $2,000] in CIT Rebate.
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Progressive Wage Credit Scheme (PWCS)
The PWCS was introduced at Budget 2022 to provide transitional wage support for employers to adjust to the Progressive Wages moves from CY 2022 to CY 2026, as well as encourage employers to raise wages of lower-wage workers.
The following conditions apply:
(1)
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Employees have average gross monthly wages of up to $3,000, before the wage increase.
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(2)
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Employees have average gross monthly wages of up to $4,000, after the wage increase;
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(3)
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Average gross monthly wage increase must be at least $100 in each qualifying year; and
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(4)
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A wage increase in each qualifying year will be co-funded for two years if the wage increase is sustained.
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Extend the Enhanced Cap for the Market Readiness Assistance Grant
The Market Readiness Assistance (“MRA”) grant helps companies to expand into new markets overseas by defraying the costs of overseas market promotion, business development, and market set-up.
The enhanced grant cap of $100,000 per new market is scheduled to lapse after 31 March 2025. To continue supporting local SMEs in expanding into new markets overseas, the enhanced cap will be extended till 31 March 2026.
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Extend the Double Tax Deduction for Internationalization Scheme
The Double Tax Deduction for Internationalisation (“DTDi”) scheme allows businesses to claim a tax deduction of 200% on qualifying market expansion and investment development Expenses. The scheme is scheduled to lapse after 31 December 2025. To continue supporting business in their internationalisation efforts, the DTDi scheme will be extended till 31 December 2030.
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Enhance the Enterprise Financing Scheme
The Enterprise Financing Scheme (“EFS”) enables Singapore enterprises to access financing more readily across all stages of growth. There will be two enhancements to the EFS. First, the maximum loan quantum under the EFS – Trade Loan will be permanently enhanced from $5 million to $10 million. This will help businesses to meet their increased trade financing needs, especially amid elevated costs, and support their internationalisation efforts. Second, the scope of the EFS – Mergers and Acquisitions Loan will be enhanced beyond equity acquisitions to support targeted asset acquisitions from 1 April 2025 till 31 March 2030. This will provide more flexible and holistic financing support for Singapore enterprises pursuing inorganic growth opportunities.
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Extend the Mergers and Acquisitions Scheme
The Mergers and Acquisitions (“M&A”) scheme allows a Singapore company that makes a qualifying acquisition of the ordinary shares of another company to claim the following tax benefits (subject to conditions):
(1)
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An M&A allowance (to be written down over five years) that is based on 25% of up to $40 million of the value of all qualifying acquisitions per Year of Assessment (“YA”) (i.e., $10 million); and
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(2)
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200% tax deduction on transaction costs incurred on qualifying acquisitions, subject to an expenditure cap of $100,000 per YA.
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The scheme is scheduled to lapse after 31 December 2025. To continue supporting companies to grow through M&A, the scheme will be extended till 31 December 2030.
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Tax Incentive for Equities Market
To encourage new listing in Singapore and increase investment demand for Singapore listed equities, the government will introduce three tax incentives:
(1)
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Listing Corporate Income Tax (“CIT”) Rebate for new corporate listings in Singapore;
Companies and registered business trusts that are tax residents in Singapore may apply for 10% or 20% Listing CIT rebate, capped at SGD6 million per Year of Assessment (“YA”)for qualifying entities with market capitalization of at least SGD1 billion, or SGD 3 million per YA for qualifying entities with market capitalization of less than SGD 1 billion.
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(2)
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Enhanced concessionary tax rate (“CTR”) for new fund manager listings in Singapore; and
Singapore fund managers may apply for an enhanced CTR tier on qualifying income
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(3)
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Tax exemption on fund managers’ qualifying income arising from funds investing substantially in Singapore-listed equities
Singapore fund managers may apply for corporate tax exemptions on income arising from qualifying fund that invest substantially in Singapore-listed equities.
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Items 2 & 3 are enhancement to the Financial Sector Incentive- Fund Management(“FSI-FM”), which currently awards a CTR of 10% on qualifying income derived by fund managers in Singapore from the provision of fund management and investment advisory services.
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Personal Income Tax Rebate
The Government will provide a Personal Income Tax (“PIT”) Rebate of 60% of tax payable for all tax resident individuals for the Year of Assessment (“YA”) 2025 (i.e., for income earned in 2024). The rebate will be capped at $200 per taxpayer. The $200 cap ensures that the PIT Rebate mostly benefits middle-income workers. No application for the PIT Rebate is required. IRAS will compute and grant the rebate automatically to all tax resident individuals.
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