In February 2025, Prime Minister and Minister for Finance Mr. Lawrence Wong unveiled Singapore’s Budget 2025, introducing a suite of tax reforms and enterprise support initiatives aimed at bolstering economic resilience, enhancing competitiveness, and supporting businesses amid global uncertainties.
Key Tax Changes
1. Corporate Income Tax (CIT) Rebate and Cash Grant
To alleviate financial pressures on businesses, especially Small and Medium Enterprises (SMEs), the government has introduced a 50% Corporate Income Tax rebate for the Year of Assessment (YA) 2025, capped at S$40,000 per company.
Additionally, active companies that employed at least one local employee in 2024 are eligible for a CIT Rebate Cash Grant of S$2,000. This initiative ensures that even non-profitable firms with local hires receive support.
2. Equity Market Development Incentives
To invigorate Singapore’s equity market, the government has introduced:
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A 20% tax rebate for companies undertaking primary listings on the Singapore Exchange (SGX).
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A 10% tax rebate for secondary listings involving share issuance.
These rebates are part of a broader S$5 billion Equity Market Development Program aimed at attracting more Initial Public Offerings (IPOs) and enhancing market liquidity.
3. Tax Deductions for Employee Equity-Based Remuneration (EEBR)
Starting from YA 2026, companies can claim tax deductions for payments made to holding companies or Special Purpose Vehicles (SPVs) for the issuance of new shares under approved EEBR schemes. This measure supports startups and high-growth enterprises in attracting and retaining talent through equity-based compensation.
4. 100% Tax Deduction for Innovation Activities
To foster innovation, a 100% tax deduction is now available for payments made under approved Cost Sharing Agreements (CSAs) for innovation activities, even if they don’t qualify as Research and Development (R&D) under existing definitions. This broadens the scope of deductible innovation-related expenditures.
Enterprise Disbursements and Support Measures
Beyond tax incentives, Budget 2025 outlines several initiatives to support enterprises:
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Enhancement of the Enterprise Financing Scheme (EFS): Adjustments to the EFS aim to improve access to financing for businesses, particularly in sectors poised for growth.
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Extension of the Double Tax Deduction for Internationalization (DTDi): The DTDi scheme has been extended to encourage businesses to expand overseas, promoting international trade and investment.
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Land Intensification Allowance (LIA) Enhancements: The LIA scheme has been enhanced to support businesses in optimizing land use, particularly in sectors where land is a critical input.
Conclusion
Singapore’s Budget 2025 reflects a strategic approach to sustaining economic growth and competitiveness. By introducing targeted tax incentives and enterprise support measures, the government aims to empower businesses to navigate current challenges and seize new opportunities in the evolving global landscape.
For detailed information on these initiatives, please refer to the official IRAS Budget 2025 overview. Check out our website at https://ebos-sg.com/ to explore more articles and discover how our Cloud Accountant Services can support you on your business.
