Deloitte Singapore’s response to the “Onward Together for a Better Tomorrow” Singapore Budget 2025

SINGAPORE, 18 February 2025 – Deloitte Singapore’s subject matter experts share their reactions and comments to the Singapore Budget 2025, themed “Onward Together for a Better Tomorrow”, announced today.

Overview of Singapore Budget 2025

Mr Shariq BARMAKY, Country Managing Partner (全国主管合伙人), Deloitte Singapore (德勤新加坡):

Prime Minister and Finance Minister Lawrence Wong stays true to the theme of “onward together for a better tomorrow”, making clear that this year’s Budget is for Singaporeans, by Singaporeans.

From providing support for businesses, workers, families, individuals and community groups to pivot and harness the new opportunities in today’s evolving world, to preparing Singapore for the winds of change, and even to gifting SG60 ‘birthday treats’ – Budget 2025 sends a strong rallying call to all Singaporeans and Singapore businesses to unite so that the nation can remain resilient, and continue to grow and thrive in a new phase of nation building that will bring us forward to the next 60 years and beyond.

Mr Daniel HO (何仁奇), Tax & Legal Leader (税务与法务领导合伙人), Deloitte Singapore (德勤新加坡):

Budget 2025 is an upbeat one given the unexpected FY24 budget surplus and celebratory SG60 “gift” vouchers and credits for all Singaporeans. It also marks a pivotal chapter in our Singapore story, balancing economic resilience with forward-looking investments in innovation, sustainability, and workforce transformation.

The government’s multi-pronged, calibrated approach—strengthening Singapore’s R&D ecosystem with the national semiconductor R&D fabrication facility, enhancing business competitiveness through targeted tax reliefs, and encouraging overseas expansion—ensures that Singapore remains a leading hub for investment and enterprise.

The measures introduced, including tax rebates and sustainability incentives, not only provide Singapore businesses with greater clarity and stability that can help them navigate an increasingly complex global landscape, but also provide Singaporeans the security and assurance that no one will be left behind.

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

Prime Minister and Finance Minister Lawrence Wong's Budget 2025 is a commendable step towards a more inclusive and resilient Singapore. With measures like the S$800 worth of CDC vouchers and up to S$760 in utilities rebates for households, and a 50% corporate income tax rebate to support businesses amid rising costs, the Budget reflects a balanced approach to addressing both social and economic needs. Much like the Chingay 2025 theme ‘Joy’, which celebrates unity and shared experiences, this Budget fosters a sense of solidarity and collective progress as we navigate the challenges ahead.

Corporate Income Tax rebate

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

As expected, to provide support for businesses, the Prime Minister has decided to continue offering a corporate income tax (CIT) rebate for Year of Assessment (YA) 2025. The quantum is the same as that of YA 2024 – a 50% CIT rebate capped at S$40,000, which one may recall, was the highest in the past 10 years. Smaller and loss-making companies will stand to benefit as well as they are entitled to a minimum cash payout of S$2,000.

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

Prime Minister and Finance Minister Lawrence Wong's announcement of a 50% corporate income tax rebate for the 2025 year of assessment is a timely measure to support businesses facing higher rent and labour costs. This initiative, coupled with the S$10,000 credit for companies to train workers, underscores the government's commitment to fostering a resilient and skilled workforce. Additionally, the provision of S$800 in CDC vouchers and up to S$760 in utilities rebates for Singaporean households reflects a comprehensive approach to easing the cost-of-living pressures. These targeted measures are crucial in helping both businesses and households to navigate the economic challenges ahead.

BEPS 2.0

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

Though Singapore adopted the Global Minimum Tax regime from 1 January 2025 and expects to raise additional tax revenues in the short to medium term, the Prime Minister’s announcement that Singapore will continue to assess options and adjust its policies sets the right tone and acknowledges geo-political uncertainty surrounding this regime.

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

Whilst it is good news that corporate income tax collections have increased substantially in the past year, it remains uncertain whether this trend will continue in the longer term, especially as the Domestic Minimum Top-up Tax regime goes live in Singapore in 2025. Given new developments in major economies, including the US, we will wait to see how the global tax environment will evolve and its potential corresponding impact on Singapore.

National Productivity Fund Top-Up

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

The proposed S$3 billion top-up to the National Productivity Fund demonstrates Singapore’s commitment to maintaining competitiveness and attracting investments despite international headwinds and the implementation of global minimum tax which came into operation in Singapore from 1 January 2025.

Investments in the R&D ecosystem

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

The significant investment in the R&D ecosystem, particularly the proposed S$1 billion national semiconductor R&D fabrication facility, is a significant boost that will benefit not just companies investing in R&D but also strengthen Singapore’s broader R&D ecosystem, both upstream and downstream.

CSA deductibility for innovation activities

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

The introduction of a tax deduction for payments related to innovation activities made under an approved cost-sharing agreement (CSA) is an interesting development that should encourage more innovation, as this appears to plug a gap experienced by organisations whose innovation activities do not meet the current definition of R&D under Singapore’s R&D tax regime. We look forward to further details from EDB to provide clarity on the definition of “innovation activities”.

Enterprise Compute Initiative

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

The adoption of AI for companies in Singapore is part of the government’s strategy to drive economic competitiveness, productivity and innovation to enable long term economic growth. Beyond leveraging AI to automate routine tasks or optimise supply chains to boost productivity given Singapore’s manpower constraints, the adoption of AI by companies can also foster an ecosystem of AI capabilities, which can position Singapore as a global innovation hub for AI. This is also aligned with the Singapore government’s AI ambitions under the National AI Strategy 2.0.

Land Intensification Allowance

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

The enhancement of the Land Intensification Allowance, which reduces the shareholding requirement for building users to be considered related from 75% to 50%, will allow greater flexibility for businesses, especially businesses that have less than 75% shareholding in subsidiaries to qualify. This enhancement will encourage more businesses to invest in optimising the use of their industrial facility.

Tax incentives for fund managers

Mr LEE Tiong Heng (李忠兴), Southeast Asia Deloitte Private Family Office Leader (德勤民营企业与私人客户服务家族办公室领导合伙人，德勤东南亚) and Mr Klenn YEO (杨毅玮), Financial Services Tax Partner (金融服务税务合伙人), Deloitte Singapore (德勤新加坡):

The announcement of new tax incentives for fund managers to invest in listed equities in Singapore's capital markets is a welcome development. This initiative is expected to encourage investment in the equity markets within the private wealth space where investments are made through fund managers rather than just via Single Family Offices (SFOs).

Scaling up through internationalisation and M&A

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

The proposed support for companies to scale-up through internationalisation and M&A will arm them with necessary ammunition to grow in scale and size. This is a welcome move which demonstrates that the Government is committed to bring Singapore companies on par with their global peers on the international stage and stamp our presence on the global map.

Mr Daniel HO (何仁奇), Tax & Legal Leader (税务与法务领导合伙人), Deloitte Singapore (德勤新加坡):

The extension of the M&A tax allowance scheme is welcomed, as it remains important to support locally headquartered groups to grow inorganically and compete better in an increasingly fragmented global economy. It provides for tax deductions of up to S$10 million per assessment year, which is a sizeable benefit, but it remains to be seen if the conditions can be relaxed to allow easier access to the scheme.

Mr Larry LOW (刘俊彬), Government & Public Services Industry Tax Leader (政府及公共服务行业税务领导合伙人), Deloitte Singapore (德勤新加坡):

Given that Singapore is an open economy and to further encourage and support companies and business to venture out regionally and globally, as expected, the Double Tax Deduction for internationalisation (“DTDi”) scheme has been further extended for another five years, till 31 December 2030.

While this signals the government’s continued commitment and effort to help companies and businesses expand overseas, we await further details as to whether this scheme will be enhanced, such as by increasing the expenditure cap that qualifies for double deduction given the ongoing inflationary pressures, and whether the list of qualifying expenditure that does not require the authorities’ approval will be further expanded.

Non-taxation of shares disposal gains

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

The enhancement to the Section 13W scheme is a welcome and timely development. Removal of the sunset date and expanding the scheme to include gains from the disposal of preference shares, which are classified as equity under applicable accounting principles, within the scope of the tax exemption, is a significant step forward.

Given the widespread use of preference shares as investment instruments, this change provides much-needed clarity and assurance on the non-taxation of disposal gains for a broader range of investors. The shareholding threshold of 20% to be considered on a group basis is also welcome – but we await more details on this which will be announced in Q3 of 2025.

S-REITs

Ms CHAI Sook Peng (蔡淑萍), Mergers & Acquisitions Tax Partner (并购税务合伙人), Deloitte Singapore (德勤新加坡):

There has been significant growth in the Singapore data centre market. The enhancement of the income tax concessions for S-REITs to include all co-location income within the scope of specified income for the tax transparency treatment would enhance the attractiveness of S-REITs and sustain Singapore's position as a global REIT hub.

Mr Klenn YEO (杨毅玮), Financial Services Tax Partner (金融服务税务合伙人), Deloitte Singapore (德勤新加坡):

In order to sustain Singapore's position as a global REIT hub (currently the second largest REIT hub in Asia after Japan), there are a number of enhancements introduced for S-REITs holding Singapore and foreign properties, with both income tax concessions and GST remission (only for qualifying business) extended till 31 December 2030.

For Singapore properties that derive income beyond rental sources, specifically data centres deriving co-location service income and new economy offices deriving co-working income, we welcome the inclusion of such additional income as specified income streams for Singapore's tax transparency treatment.

The expansion of foreign-sourced income under Section 13(12) eligible for tax exemption will now include foreign-sourced rental and ancillary income in addition to what S-REITs and its wholly-owned companies, which going forward, no longer need to be Singapore-incorporated but must remain Singapore tax residents, mainly claim (i.e., foreign-sourced dividend and interest income). With this expansion, the S-REITs will have more leeway to structure their overseas property investments.

Market Readiness Assistance Grant

Mr WONG Meng Yew (王明耀), Global Trade Advisory Leader (球贸易咨询领导合伙人), Deloitte Singapore and Southeast Asia (德勤新加坡及东南亚):

The Market Readiness Assistance (MRA) Grant provides significant financial support for SMEs looking to expand into overseas markets, helping to defray the costs associated with overseas market promotion, business development and market set-up for up to S$100,000 per market.

Since 1 April 2020, the inclusion of Free Trade Agreement and trade compliance advisory in the market set-up pillar under the enhanced MRA grant demonstrates the government's commitment to helping SMEs navigate complex rules of international trade agreements and trade compliance requirements as they expand into new markets.

Having the enhanced MRA grant extended to 31 March 2026 is good news for SMEs as it would provide businesses with a longer timeframe to plan and execute their international expansion strategies, while benefiting from government support.

Tax deductions on new share issuance under the EEBR scheme

Mr Larry LOW (刘俊彬), Government & Public Services Industry Tax Leader (政府及公共服务行业税务领导合伙人), Deloitte Singapore (德勤新加坡):

The introduction of a corporate tax deduction in relation to the issuance of new shares of the holding company under an employee equity-based remuneration (“EEBR”) scheme is definitely a welcome change against the longstanding position in Singapore where tax deduction is available only when treasury shares are used to satisfy these obligations.

This signifies Singapore’s recognition that many multi-national companies commonly issue new shares to their group employees under EEBR scheme, thereby making Singapore a more attractive location for granting EEBR benefits to employees.

Workforce transformation

Mr LEE Tiong Heng (李忠兴), Global Investment & Innovation Incentives Leader (全球投资与创新激励领导合伙人), Deloitte Southeast Asia (德勤东南亚):

It is not surprising that the government has doubled down on the SkillsFuture Enterprise credit scheme to support local companies in their workforce transformation and training efforts. The revamped credit claim process to an online wallet system where companies can directly apply the credit to immediately offset qualifying costs will help with reducing administrative burden and cashflow.

Personal Income Tax rebate

Ms Sabrina SIA (佘爱玲), Global Employer Services Leader (雇主人力资源全球服务领导合伙人), Deloitte Singapore and Southeast Asia (德勤新加坡及东南亚):

While not unexpected given it is SG60, the announcement of a personal income tax rebate of 60% for YA2025, capped at S$200, is a welcome gesture to help provide some relief to address cost of living pressures with the cap in place to ensure progressivity in the individual tax system. Together with additional CDC vouchers and the SG60 vouchers, Singaporeans from all walks of life have been given something to share in the country's 60th birthday celebrations.

Global Founder Programme

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

The proposed new programme to attract global founders to Singapore in 2025 is encouraging and could be music to the ears of those who recognise that charismatic business personalities can generate ‘soft power’ and be of great strategic value.

Relatedly, if the G20-commissioned report in 2024 advocating a global minimum tax on billionaires finds further traction with major economies in the coming years, Singapore may also need to carefully study how this may interact with the parameters of this new programme.

Future Energy Fund

Mr Jack TEY (郑泽麒), Sustainability and Climate Leader (可持续发展与气候变化领导合伙人), Deloitte Southeast Asia (德勤东南亚):

The power trading initiative for clean energy imports is a market-driven solution that can enhance Singapore's collaboration with ASEAN power hubs to boost regional resilience. The S$5 billion Future Energy Fund top up to the S$5 billion announced in 2024 would also go a long way towards building Singapore's clean power supply in line with the country's newly-affirmed net zero pathway.

Ms Josette SOH (苏佩文), Sustainability & Climate Assurance Partner, (可持续发展与气候变化鉴证合伙人), Deloitte Singapore (德勤新加坡):

In the Energy 2050 Committee report, the Energy Market Authority had included Nuclear Energy and named Small Modular Reactors (SMRs) as part of the four scenarios for the future energy mix of our nation. This budget allocation in the form of a $5 billion top up to the Future Energy Fund demonstrates the commitment of Singapore to develop safe, affordable and continuous clean energy solutions that may not exist today.

Mr WONG Meng Yew (王明耀), Sustainability and Climate Tax Leader (可持续发展与气候变化税务领导合伙人), Deloitte Southeast Asia (德勤东南亚):

The S$5 billion boost to the Future Energy Fund is a strong signal of Singapore's commitment to driving the energy transition and securing a more sustainable future. This investment will be instrumental in building critical infrastructure, ensuring that Singapore remains at the forefront of clean energy innovation. Businesses involved in green infrastructure supply chains can now be further incentivised to tap on this funding to contribute towards building a greener Singapore.

Electrification of commercial vehicles

Ms Josette SOH (苏佩文), Sustainability & Climate Assurance Partner, (可持续发展与气候变化鉴证合伙人), Deloitte Singapore (德勤新加坡):

Heavy goods vehicles and buses will be given incentives to switch to electric models, and the new Electric Heavy Charger Grant for fast chargers would further enable EV adoption, as part of the government’s latest push to reduce planet-warming carbon emissions generated by the transport sector. We welcome the acceleration of decarbonising commercial vehicles that belie our infrastructure and industrial developments.

Mr WONG Meng Yew (王明耀), Sustainability and Climate Tax Leader (可持续发展与气候变化税务领导合伙人), Deloitte Southeast Asia (德勤东南亚):

The introduction of the Heavy Vehicle Zero Emissions Scheme and Electric Heavy Charger Grant provides strong incentives for businesses to transition to cleaner fleets, while the Additional Flat Component (AFC) ensures a fair and balanced approach to road usage costs. These measures reinforce Singapore's position as a leader in sustainable urban mobility and businesses in the logistics and transportation sectors should seize this opportunity to future-proof their operations and contribute to a low-carbon economy.

Coastal Protection Fund

Ms Josette SOH (苏佩文), Sustainability & Climate Assurance Partner, (可持续发展与气候变化鉴证合伙人), Deloitte Singapore (德勤新加坡):

The coastal protection fund top up of S$5 billion highlights the urgency of the Singapore government's efforts to shore up our island nation's climate resilience, especially considering that one-third of Singapore is inside a flood zone.

Immigration

Ms Sandip BHANDAL, Global Employer Services Partner (雇主人力资源全球服务合伙人), Deloitte Singapore (德勤新加坡):

Today’s Budget announcement reaffirms the government’s commitment to supporting Singaporeans through lifelong learning and skills upgrading. With initiatives such as educational top-ups and continued investment in productivity, it is clear that the focus remains on equipping the local workforce for long-term success.

It comes as no surprise that there were no major updates on immigration. Singapore’s approach has been consistent; prioritising local talent while ensuring businesses have access to offshore skills where necessary. The COMPASS framework continues to play a crucial role in balancing this need, complementing the local workforce with global expertise in areas where experience and specialised skills are required.

This measured approach aligns with Singapore’s broader economic strategy – strengthening local capabilities while remaining open to global talent that helps drive innovation and competitiveness.

Ms Christina KARL, Immigration Leader (出入境签证服务领导合伙人), Deloitte Singapore and Global (德勤新加坡及全球):

As anticipated, there are no changes to the immigration policy included in this year’s budget given the recent implementation of the COMPASS Framework in 2023. It is clear from today's speech that the government continues to emphasise investment on the local workforce through training, reskilling and upskilling, and that it supports the hiring of seniors and ex-offenders. We are also pleased to hear that the government recognises the need to remain open to people and ideas in order to remain competitive in the evolving geopolitical landscape.

SG Culture Pass

Mr James WALTON, Clients & Markets Leader (客户与市场策略主管合伙人), Deloitte Southeast Asia (德勤东南亚):

Several European countries, including France and Germany, have cultural passes in order to cultivate an appreciation for the arts among younger audiences, particularly those aged 18 and below.

What sets the SG Culture Pass apart is its focus on those aged 18 and above: this signals the government’s intention to support arts organisations that may be grappling with increasing operational costs and wages, especially when price inelasticity means ticket prices have not risen to match. It encourages Singaporeans to attend performances, visit theatres, and engage with cultural and heritage activities, particularly in the post-COVID landscape and hopefully provides a boost to the arts sector.

Matching funds for charity fundraising and social causes

Mr James WALTON, Clients & Markets Leader (客户与市场策略主管合伙人), Deloitte Southeast Asia (德勤东南亚):

The government's move to enhance the amount of matching funds for charity fundraising and social causes showcases its commitment to strengthening the nation's social fabric by encouraging citizens to support those around them and cultivate a giving society.

This move also provides an additional incentive for organisations – especially corporates – who may be organising fundraising activities and events to commemorate SG60, fostering a culture of collective responsibility and uplifting the less privileged.

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