Deloitte Singapore’s response to the “Building Our Shared Future Together” Singapore Budget 2024

SINGAPORE, 16 February 2024 – Deloitte Singapore’s subject matter experts share their reactions and comments to the Singapore Budget 2024 announced today.

Overview of Singapore Budget 2024

Mr Daniel HO (何仁奇), Tax & Legal Leader (税务与法律领导), Deloitte Singapore (德勤新加坡):

“Deputy Prime Minister and Finance Minister Lawrence Wong presented a strong first instalment of the Forward Singapore programmes that launches the nation on a trajectory towards building a shared future together for a better Singapore. The Singapore Budget 2024’s focus on providing opportunities and assurance across all stakeholders – businesses, workers, community groups, families and individuals – sends a firm message on the Government’s commitment towards pursuing sustainable growth, maintaining an innovative and vibrant economy and safeguarding what makes Singapore resilient. It is indeed a collective responsibility that forges a stronger, more united nation.”

Ms Sharon TAN (陈丽斌), Tax Partner (税务合伙人), Deloitte Singapore (德勤新加坡):

"The Budget 2024 is comprehensive and thoughtful in making sure that every sector of the community, and business needs and challenges have been covered. It will be interesting to see the details and how the various plans will be executed. It was mentioned that we need to respond to the competitive landscape especially to attract investments into Singapore. It will therefore be interesting to see how our incentive programmes differentiate Singapore from other jurisdictions especially that it is now announced that Singapore will implement IIR and DTT in 2025 with UTPR deferred."

Mr YAP Hsien Yew (叶贤佑), Tax Partner (税务合伙人), Deloitte Singapore (德勤新加坡):

“I am very heartened by the government’s commitment to support workers and businesses in this uncertain environment. In particular, the $4,000 SkillsFuture credit top-up for mid-career workers shows foresight in continuing investment in human capital development. As Deputy Prime Minister Lawrence Wong highlighted, technological advances mean expertise is in constant flux, so we must help workers refresh and update their skills. The budget also demonstrates care for lower income families, with enhanced workfare payouts, CDC voucher top-ups, and rebates to ease household expenses. As the saying goes, “when the wind of change blows, some build walls while others build windmills”. Budget 2024 puts Singapore in a good position to build windmills and transition smoothly to the future.”

Mr Rohan SOLAPURKAR, Business Tax Leader (企业税务领导), Deloitte Singapore (德勤新加坡):

“The setting aside of additional funds for R&D coupled with the proposed refundable tax credit is a move in the right direction to make Singapore a knowledge and innovation-based economy.”

Refundable Investment Credit (RIC) scheme

Ms Yvaine GAN (颜心怡), Global Investment & Innovation Incentives Leader (全球投资与创新激励领导), Deloitte Singapore (德勤新加坡):

“The new Refundable Investment Credit (RIC), a tax credit with a refundable cash feature, has been highly anticipated and will be welcomed by both potential investors and existing multinationals in Singapore impacted by BEPS Pillar Two. It is encouraging to see that the Singapore government has incorporated industry feedback and designed this new incentive tool with flexibility to support a wide range of activities, including manufacturing, digital services, headquarter activities, commodity trading, R&D and green transition plans.”

“While the new RIC seems to be expenditure-based, where the quantum of credits will depend on pre-determined support rates on qualifying expenditure, we hope to see the RIC expanded to include output/volume-based features, such as a company’s volume of products manufactured in Singapore. This greater flexibility of having a combination of expenditure-based and output-based credits will address the needs of a broader range of businesses, making the RIC an even more impactful incentive in supporting companies in the changing investment landscape.”

Mr LOH Eng Kiat (卢英杰), Tax Partner (税务合伙人), Deloitte Singapore (德勤新加坡):

“In recognising that the newly-announced Refundable Investment Credit (RIC) may just form “part of the answer” in a more competitive tax landscape increasingly shaped by Global Minimum Tax (GMT) considerations, another feature of Budget 2024’s corporate tax changes lies in the introduction of additional (concessionary) tax rate tiers for some of the most popular incentives accorded to MNEs’ Singapore operations. Broadly, this feature is set to allow the concessionary tax rates for these incentives to be increased to higher rate(s), thus narrowing the gap with the 15% GMT rate. Conceptually, this should reduce the impact of GMT.”

Enterprise Support Package

Mr Rohan SOLAPURKAR, Business Tax Leader (企业税务领导), Deloitte Singapore (德勤新加坡):

“The Enterprise Support Package is a significant boost to SMEs by giving them extra cash in supporting their growth journey amidst global headwinds – which is highest amount in the last 10 years. What stands out is the reintroduction of the corporate income tax rebate after a hiatus of three years. Not only is the tax rebate cap of $40,000 for the Year of Assessment 2024 higher than the quantum in any of the past years, the Minister has also ensured that smaller companies get to benefit as well by offering a minimum cash payout of $2,000.”

“The package underscores the government’s commitment to supporting enterprises, particularly SMEs, which form the backbone of our economy and demonstrate the Government’s commitment to support businesses.”

“It reflects the government’s recognition of the challenges faced by businesses and its readiness to provide timely and targeted assistance to help them navigate these challenges. The focus on capability upgrading and internationalisation also signals the government’s forward-looking stance and its efforts to position Singapore’s enterprises for future growth.”

Mr LOH Eng Kiat (卢英杰), Tax Partner (税务合伙人), Deloitte Singapore (德勤新加坡):

“Intent wise, the measure under the Enterprise Support Package to provide minimum cash payouts of $2,000 to businesses that employ at least one local employee in 2023 appears to bear some similarities to the SME Cash Grant that was introduced more than a decade ago: companies with insufficient taxable profits are simply not able to benefit fully from corporate income tax rebates. While the question in today’s inflationary environment may be whether $2,000 is meaningful enough to corporates, the other side to it would be that this minimum cash payout is a broad-based (rather than targeted) measure and setting too high an amount as a start may not be a prudent Budgetary measure.”

SkillsFuture top-up

Mr LEE Tiong Heng (李忠兴), Tax Partner (税务合伙人), Deloitte Singapore (德勤新加坡):

“The $4,000 SkillsFuture credits top up is very generous. This is a significant enhancement to the SkillsFuture programme. The government is sending a strong message that individuals should take personal responsibility to upgrade themselves, make their skills and knowledge relevant in the new economy with the government providing the support.”

Corporate tax

Mr Daniel HO (何仁奇), Tax & Legal Leader (税务与法律领导), Deloitte Singapore (德勤新加坡):

“The Government has shown strong support for businesses this year. The 50% corporate tax rebate is indeed very generous and the cap of $40,000 is the highest in the last 10 years. The cap ensures that tax-paying small and medium sized companies benefit most from the tax rebate.”

Mr Rohan SOLAPURKAR, Business Tax Leader (企业税务领导), Deloitte Singapore (德勤新加坡):

“The reintroduction of the corporate income tax (CIT) rebate after a 3-year hiatus is very welcome. Not only is the CIT rebate cap of $40,000 for the Year of Assessment 2024 higher than the quantum in any of the past years, the Finance Minister has also ensured that non-tax paying companies get to benefit as well by offering a cash payout – this underscores the Government’s growing emphasis in supporting enterprises.”

Mr Matthew LOVATT, Tax Partner (税务合伙人), Deloitte Singapore (德勤新加坡):

“Small and medium sized businesses are the backbone of Singapore’s economy and are some of those most affected with recent challenges such as rising costs, and a new “higher for longer” interest rate environment. We welcome the 50% corporate tax rebate, capped at $40,000, as a clear example of the government’s efforts to provide targeted and focused support for businesses.”

Personal income tax

Ms Sabrina SIA (佘爱玲), Global Employer Services Leader (全球雇主服务领导), Deloitte Singapore and Southeast Asia (德勤新加坡及东南亚):

“The announcement of the personal income tax rebate of 50% rebate for the Year of Assessment 2024 (income year 2023), capped at $200, is somewhat surprising and unexpected as the last time a personal income tax rebate was announced was for YA2019 (income year 2018). Notwithstanding, it is a welcome gesture that will help provide some relief to address cost of living pressures amongst other measures also announced, especially for the middle income group.”

Ms Sabrina SIA (佘爱玲), Global Employer Services Leader (全球雇主服务领导), Deloitte Singapore and Southeast Asia (德勤新加坡及东南亚):

“The increase in the annual income threshold of $4,000 to $8,000 for individual taxpayers to claim dependent-related reliefs is a recognition that median incomes for Singapore have significantly increased over the years, and should now enable a bigger population of individual taxpayers to claim relief for their dependents if other conditions are met, even though the dependents may be working or have some form of income. A sweetener would be to increase the quanta of the various dependent-related relief claims as these do remain at a relatively low level notwithstanding higher standards of living.”

Ms Sabrina SIA (佘爱玲), Global Employer Services Leader (全球雇主服务领导), Deloitte Singapore and Southeast Asia (德勤新加坡及东南亚):

“While no changes to the current personal income tax exemption threshold of $20,000 were announced despite calls for it to be adjusted to address increases in the median income of Singaporeans over the past twenty years coupled with increase in costs of living, the Budget has sought to address these concerns by more direct support measures like giving additional CDC vouchers, cost of living special payments and U-Save rebates amongst other measures.”

Property tax

Mr Larry LOW (刘俊彬), Tax Partner (税务合伙人), Deloitte Singapore (德勤新加坡):

“Whilst annual values of properties have unexpectedly gone up due to market forces and the change in property tax regime has resulted in certain unintended consequences, the government keeps true to its word that property tax remains a wealth tax and has made the necessary adjustments to ensure only investment residential properties and higher end owner occupied properties would be impacted.”

Income Inclusion Rule and Domestic Top-up Tax

Ms LIEW Li Mei (刘丽梅), International Tax Leader (国际税务领导), Deloitte Singapore (德勤新加坡):

“And as expected, the Finance Minister has confirmed Singapore’s plan to move ahead with the implementation of the Income Inclusion Rule and the Domestic Top-up Tax in 2025, consistent with our immediate neighbours. There is some breathing space (albeit not much) for affected Singapore headquartered MNE Groups to prepare and focus on data collection and compliance efforts. We can also expect Singapore to closely study the implementation by first-movers in Europe, Japan, and Korea, and how best to adjust our efforts to secure Singapore's position as a choice investment destination in the long-term.”

BEPS 2.0

Mr Daniel HO (何仁奇), Tax & Legal Leader (税务与法律领导), Deloitte Singapore (德勤新加坡):

“The Government acknowledges that competition for investment will intensify as Singapore's ability to attract multinationals may be hampered with the introduction of the global minimum tax of 15% in 2025. Although the revenue impact of Pillar Two is still uncertain, directionally Singapore is likely to see an increase in corporate tax revenues in the short-term. Long term competitiveness may be eroded if we do not expand our investment toolkit. The Refundable Investment Tax Credit scheme should be viewed in that light to preserve Singapore's investment competitiveness as its refundable feature means that it is considered part of income and not an offset against taxes, thereby mitigating the impact on the multinational's Singapore effective tax rate.”

Ms LIEW Li Mei (刘丽梅), International Tax Leader (国际税务领导), Deloitte Singapore (德勤新加坡):

“The hype over what we can do more to attract and retain investments in our Little Red Dot has been unveiled - the Refundable Investment Credit. Whilst much welcomed, the devil is in the details whether it will sufficiently move the needle in the post-BEPS Pillar Two world.”

Ms LIEW Li Mei (刘丽梅), International Tax Leader (国际税务领导), Deloitte Singapore (德勤新加坡):

“Incentives are not about paying little or no taxes. MNEs have in the past, relied on tax incentives and subsidies to help defray the high cost of doing business in Singapore. With the changing international tax landscape, the benefit of tax incentives will be eroded for MNEs that are impacted by the GloBE rules. The top-up of the National Productivity Fund by another $2 billion, after a $4 billion top-up in 2023 to support investment promotion efforts, could perhaps be used to help these impacted MNEs to manage their costs of doing business in Singapore.”

Ms LIEW Li Mei (刘丽梅), International Tax Leader (国际税务领导), Deloitte Singapore (德勤新加坡):

“A top-up of $2 billion to the National Productivity Fund to support investment initiatives such as the Refundable Investment Credit Scheme is a generous start to provide support to MNEs impacted by the GloBE rules. Singapore is again leading the way in the region!”

Ms LIEW Li Mei (刘丽梅), International Tax Leader (国际税务领导), Deloitte Singapore (德勤新加坡):

“The eagle(s) have landed! Amidst speculation of whether implementation of the GloBE rules and domestic top up tax may be deferred, Singapore is now ready to move ahead with the intended implementation of the Income Inclusion Rule and Domestic Top-up Tax for businesses’ financial year beginning 1 January 2025, whilst deferring the Undertaxed Profits Rule.”

Mr LOH Eng Kiat (卢英杰), Tax Partner (税务合伙人), Deloitte Singapore (德勤新加坡):

“This Dragon Year’s Budget breathes new fire into the discussion around how Singapore’s fiscal toolkit can be refreshed in the Global Minimum Tax era: the announcement introducing Refundable Investment Credit (RIC) is a clear BEPS 2.0-positioning statement that sharpens our value propositions to multinationals, and one which clearly took industry feedback into account.”

Support for sports

Mr James WALTON, Sports Business Group Leader, Deloitte Asia Pacific (德勤亚太)

“The government continues to seek private support alongside public investment into the arts and sports by encouraging donors, both corporates and individuals, to contribute through the provision of tax deductions and matching contributions. The further extension of the Our SG Arts Plan and One Team Singapore Fund is another positive boost to the sports and arts scenes in Singapore as they both continue to recover from the challenges of the COVID-19 pandemic.”

Enterprise Financing Scheme

Ms Yvaine GAN (颜心怡), Global Investment & Innovation Incentives Leader (全球投资与创新激励领导), Deloitte Singapore (德勤新加坡):

“Singapore SMEs seeking to play a bigger role in the value chain of MNEs, that are similarly balancing their own net zero targets with Scope 3 concerns, will be glad to hear that the Enterprise Financing scheme will be expanded to help them adopt green solutions and be ‘sustainability-ready’.”

Future Energy Fund

Mr Wong Meng Yew (王明耀), Sustainability & Climate Tax Leader (可持续发展与气候变化税务领导), Deloitte Singapore (德勤新加坡):

“The Future Energy Fund is a big step in Singapore’s move towards building up our domestic clean energy sector, with the aim to reduce our reliance on fossil fuels. In addition, the willingness to explore alternative clean energy sources in land scarce Singapore in areas such as geothermal, hydrogen and even nuclear, is in line with solidifying Singapore’s role as a leader and first mover in the region's climate action.”

Mr Brian HO (何智权), Sustainability & Climate Leader (可持续发展与气候变化领导), Deloitte Southeast Asia (德勤东南亚):

“As Deputy Prime Minister Wong highlighted, Singapore cannot achieve its net zero ambition with its current dependence on natural gas. He also stated that, in order to attain this target, the city must achieve a green energy transition within the next two decades or so. The scale of this transition will be massive, and it would have been ideal to see a more defined roadmap for achieving this transition. Therefore, it was encouraging that a $5 billion investment was announced for the Future Energy Fund to support this effort.”

“The government could also consider several other measures. First, sector-specific differentiation and tailoring carbon tax rates based on sectors could be beneficial. High-emission industries could face a higher tax, while those actively transitioning to cleaner practices could receive incentives. Second, having more transparency behind the allocation of carbon tax revenue to specific green initiatives (such as renewable energy projects and R&D) could enhance its effectiveness. Third, more support could be provided for SMEs. While they could benefit from green loans, additional targeted support could be provided. Capacity-building programs and simplified processes could further encourage adoption of sustainability. Finally, offering tax credits or rebates to companies that achieve carbon neutrality or hit their sustainability targets could further motivate proactive climate action.”

Energy Efficiency Grant

Mr Wong Meng Yew (王明耀), Sustainability & Climate Tax Leader (可持续发展与气候变化税务领导), Deloitte Singapore (德勤新加坡):

“The new sectors to be covered by the Energy Efficiency Grant, including manufacturing, construction, maritime and data centres, are typically viewed as high energy users. With the government’s emphasis on pushing for Artificial Intelligence as mentioned in this Budget, new data centres may need to be set up. As such, having a grant to support companies in their journey to drive energy efficiency is definitely helpful towards Singapore achieving this vision, while at the same time still keeping in line with our net zero target. In addition, the requirement that equipment need to demonstrate energy savings of up to 350 tonnes of lifetime carbon abatement is important as it goes towards helping Singapore reduce its emissions and net zero goals by 2050 in line with Singapore’s Green Plan.”

“As announced by DPM Wong, there was a record in terms of FDI flows into Singapore in 2023, which included the setting up of more manufacturing plants and other facilities (e.g. automotive manufacturing, industrial equipment manufacturing, etc.).  This is expected to have an impact in terms of increased energy consumption and emission levels in Singapore. As such, the expansion of the EEG to these new sectors would serve to ensure that as Singapore continues to attract companies and more FDIs into Singapore, the companies can be supported in their journey towards energy efficiency, in line with Singapore’s net zero target by 2050.”

Artificial intelligence

Yvaine GAN (颜心怡), Global Investment & Innovation Incentives Leader (全球投资与创新激励领导), Deloitte Singapore (德勤新加坡):

“Artificial Intelligence is not just about ChatGPT or large language models, it can be used for a greater general purpose. Wonderful to see Singapore topping up $1 billion over the next five years to support the National Artificial Intelligence Strategy 2.0. This would encourage companies to set up AI Centres of Excellence, build specialised AI talent pipelines, spur industry collaborations, leading to greater value creation in Singapore.”

Mr YANG Chi Chih (杨继智), Technology, Media and Telecommunications Industry Leader (科技、传媒和电信行业领导), Deloitte Southeast Asia (德勤东南亚):

“2023 launched generative AI (Gen AI) into the world. Deloitte's Telecom Outlook 2024 anticipates communication service providers bringing Gen AI proofs of concept to market in 2024. The government’s $1 billion investment in AI compute, talent, and industry development showcases its commitment to staying ahead of the curve and fostering a robust AI ecosystem. However, alongside innovation, responsible development through effective governance is crucial. Aligning people, processes, and technologies is essential to build trustworthy AI solutions. Collaborative efforts are needed to establish clear ethical frameworks and robust oversight mechanisms, ensuring responsible innovation for a better future.”

Broadband network

Mr YANG Chi Chih (杨继智), Technology, Media and Telecommunications Industry Leader (科技、传媒和电信行业领导), Deloitte Southeast Asia (德勤东南亚):

“The leap to 10 Gigabit-per-second (Gbps) broadband speeds holds the potential to ignite a wave of transformative technological developments across various sectors, fostering advancements and innovation in areas like healthcare, mobility and ways of working. Remote surgeries can be conducted seamlessly with minimal latency, or AI-powered diagnostics delivered instantaneously to patients at home. Mobility can be enhanced where self-driving vehicles could communicate and react in real-time, maximising safety and efficiency, while smart traffic management systems could optimise transportation flows. Advanced teleworking where the workforce can engage in immersive video conferences and seamless collaboration tools that would further improve work productivity across remote teams, accessibility to global talent pools and flexible work models.”

Additional Buyer’s Stamp Duty (ABSD)

Ms CHAI Sook Peng (蔡淑萍), Real Estate Sector Tax Leader (房地产业税务领导), Deloitte Singapore (德勤新加坡):

“The home buying demand has been weak due to tentative buying sentiments amid the elevated interest rates and uncertain economic conditions.  Lowering the ABSD claw-back for housing developers who sell at least 90% of the units in their development within a prescribed sale time provides timely support to help developers to cushion the slower property market.”

Partnership for Capability Transformation (PACT)

Ms Yvaine GAN (颜心怡), Global Investment & Innovation Incentives Leader (全球投资与创新激励领导), Deloitte Singapore (德勤新加坡):

“The enhancement of the Partnership for Capability Transformation (PACT) scheme to include internationalisation, capability development, and corporate venturing is a welcomed move for businesses as this enables them to better compete in markets abroad. By including corporate venturing, businesses will be encouraged to explore newer, cutting-edge technologies or develop new business models and ideas to help them get ahead of the competition.”

Immigration

Ms Christina KARL, Immigration Leader (出入境签证服务领导), Deloitte Singapore, Southeast Asia & Global (德勤新加坡，东南亚及全球):

“While there are no changes to the immigration policy included in this year’s budget, we are pleased to hear that the Government continues to invest in human capital and recognises the importance of people and talent to economic development.”

“The introduction of the Overseas Networks and Expertise Pass, in addition to the changing framework for Employment Pass applications with the Complimentary Assessment Framework (COMPASS) implemented in the last year allows employers to continue to attract and hire global top talent where skills and experience are not available onshore. With today’s announcements, the Finance Minister has reiterated Singapore’s commitment to enhancing the local workforce whilst encouraging employers to develop a strong Singaporean core.”

Financial Services

Mr Matthew LOVATT, Tax Partner (税务合伙人), Deloitte Singapore (德勤新加坡):

“The introduction of a new concessionary tax rate tier of 10% for the Finance and Treasury Centre incentive should be seen as part of a broader rationalisation of Singapore’s tax incentives, and could possibly be driven by other developments such as BEPS Pillar 2. We do not expect the higher rate to serve as a disincentive, given that many recipients usually have excess foreign tax credits which cannot be utilised. However, we hope that this would afford the EDB sufficient flexibility when administering the incentives.”

Mr Matthew LOVATT, Tax Partner (税务合伙人), Deloitte Singapore (德勤新加坡):

"The Section 13D, 13O, and 13U fund incentives are pillars of a broader strategy to enhance Singapore’s role as a regional fund management hub. They seek to incentivise the management of institutional and family funds in Singapore.”

“The extension of the fund incentives, as well as the refinements to the Section 13O incentive to include Limited Partnerships registered in Singapore are welcome changes, which allow for greater flexibility.”

“Details of the revised economic criteria for qualifying funds will be announced by the MAS by the third quarter of 2024, although we expect revisions to be thematically similar to changes made in 2023, which signaled an increased focus upon developing a strong investment management sector that produces broader spin-off benefits."

Incentives

Ms Yvaine GAN (颜心怡), Global Investment & Innovation Incentives Leader (全球投资与创新激励领导), Deloitte Singapore (德勤新加坡):

“The introduction of additional concessionary tax rate (CTR) tier to various key incentive schemes enhances Singapore's incentive regime as we move to the implementation of Domestic Top-up Tax (DTT). While the difference of the additional CTR may seem marginal as compared to Singapore’s prevailing corporate income tax rate of 17%, this will provide certainty and flexibility to affected MNE groups operating in Singapore as companies re-evaluate their investment plans."

"With the recalibration of incentive rates, we are optimistic that Singapore will stay competitive as a strategic destination for high-value investments in a post-BEPS world.”

Financial Sector Development Fund

Mr Brian HO (何智权), Sustainability & Climate Leader (可持续发展与气候变化领导), Deloitte Southeast Asia (德勤东南亚):

“The $2 billion top up for the Financial Sector Development Fund will further enhance Singapore’s position as a leading sustainable finance hub in the region. This will not only attract investors and capital, but will also direct capital into projects that can drive towards Singapore’s net zero targets. Apart from Governments, Capital Markets are the most influential driving force for improved environmental performance, and this fund can enable that drive.”