Introduction
Singapore’s Budget 2025, themed “Onward Together for a Better Tomorrow,” presents a strategic roadmap focused on both immediate economic recovery and sustainable long-term growth. Arriving at a pivotal moment, marking Singapore’s 60th year of independence, the budget addresses global uncertainties and aims to strengthen Singapore’s resilience and collective spirit.
Key Highlights
- Corporate income tax rebate and cash grant, up to S$40,000
- New, redesigned and extended initiatives to support rising labor costs, workforce transformation and hiring diverse workers
- Extended schemes for global expansion and new financing alternative
- New tax deduction for cost-sharing agreements for innovation activities
- S$3 billion top-up to National Productivity Fund to reduce operational costs
- New Global Founder Programme to attract international founders to Singapore
- Tax incentives for fund managers and entities to revitalize Singapore stock market
- Tax deduction for equity-based remuneration schemes
- More than S$10 billion Investment in R&D and infrastructure
- New Enterprise Compute Initiative to support use of artificial intelligence (AI)
- New Private Credit Fund for high-growth local enterprises
- S$5 billion top up to Future Energy Fund
ADDRESSING SME PAIN POINTS AND SUPPORTING BUSINESSES
Recognizing the difficulties businesses face, the key measures in the Budget 2025 focus on easing the cost pressures and supporting companies navigate the current economic climate, and their workforce development efforts.
Raising Cost Pressures and Demanding Challenges
The budget acknowledges the challenges faced by Singapore’s small and medium-sized enterprises (SMEs). With rising costs and pressure on profitability, the government is extending multiple support schemes to assist SMEs in navigating these difficulties.
Like the Corporate Income Tax (CIT) Rebate and CIT Rebate Cash Grant granted for Year of Assessment (YA) 2024, companies will receive a 50% CIT Rebate for YA 2025. Active ones, employing at least one local employee in the Calendar Year 2024, will receive a minimum cash grant of S$ 2,000. The total benefit under this initiative is capped at S$ 40,000 per company. This measure provides substantial financial relief for struggling companies.
Extending Multiple Support Schemes
The SkillsFuture Enterprise Credit was redesigned, where companies with at least three local employees will receive a fresh S$10,000 credit to defray the costs for workforce transformation. Next, a new co-funding (SkillsFuture Workforce Development Grant) with support up to 70% is introduced for job-redesign activities.
The Progressive Wage Credit Scheme is extended. The co-funding percentage increases from the current 30% to 40% in 2025, and 15% to 20% in 2026. Due to the 0.5% increase in Employer’s CPF contributing rates for senior workers, the CPF Transition Offset and Senior Employment Credit schemes will be extended for another year. To meet the increased financing needs, the Enterprise Financing Scheme (EFS) has also rolled out major updates:
- EFS – Trade Loan cap goes up permanently from S$5 million to S$10 million
- The scope in EFS – Mergers and Acquisitions Loan includes targeted asset acquisitions from 1 April 2025 till 31 March 2030.
SUPPORTING GLOBAL EXPANSION AND HIGH-GROWTH ENTERPRISES
Aimed to provide more support for local SMEs for overseas expansion, Singapore government extends the schemes for internationalisation, and mergers and acquisitions (M&A).
Market Readiness Assistance (MRA) Grant Extended
Expiring on 31 March 2025, the MRA grant of S$100,000 per new market will be extended until 31 March 2026.
The grant provides support for overseas market promotion, business development, and market setup costs, helping companies access new markets and expand their global footprint. Businesses can get support for multiple markets at the same time.
Double Tax Deduction Scheme Enhanced
The Double Tax Deduction for Internationalization (DTDi) scheme will continue until 31 December 2030. Businesses can claim 200% tax deduction on qualifying market expansion and investment development expenses under this scheme. Companies can use both DTDi and MRA support for the same expenses, with tax deductions calculated after subtracting the MRA grant.
More Financing Options
Singapore’s Budget 2025 introduces a S$1 billion Private Credit Growth Fund to help high-growth local enterprises bridge financing gaps. This initiative underscores the government’s commitment to providing more financing options and raising awareness among SMEs about emerging private credit as a form of capital, without the need for bank borrowing or equity selling. This introduction has brought light to those companies which are not eligible for bank loans.
TRANSFORMING BUSINESS MODELS AND BOOSTING PRODUCTIVITY
The budget recognizes the need for Singapore companies to transform their business models in response to changing customer demands and technological disruption. Initiatives aim to boost productivity and efficiency through the adoption of digital solutions.
Driving AI Adoption and Digital Transformation
Recognizing the transformative potential of artificial intelligence, S$150 million has been set aside for a new Enterprise Compute Initiative to enhance AI adoption among local enterprises. Eligible businesses will collaborate with major cloud service providers to access AI tools and computing power, as well as consultancy services. This effort helps companies leveraging AI solutions effectively in their business transformation and fostering innovation and competitiveness in the global market.
Companies are encouraged to adopt digital tools and technologies to reshape their operations and improve customer service. The government also provides support for skills development, ensuring the workforce is equipped to adapt to the changing demands of the digital economy.
CONCLUSION
Singapore’s Budget 2025 represents a strategic effort to address immediate challenges, support businesses, and position the nation for long-term sustainable growth. With a focus on innovation, workforce development, regional integration, and sustainability, Budget 2025 aims to create a resilient and thriving economy for the benefit of all Singaporeans.
