Singapore Budget 2024 Digest

The Singapore Budget 2024 was delivered by the Deputy Prime Minister and Minister for Finance, Mr Lawrence Wong, on 16 February 2024.

Budget 2024 marks a crucial step towards strengthening Singapore’s resilience
and adaptability in an era of global uncertainty and change. It underscores a
proactive stance in securing the nation’s future, emphasizing the need for bold,
strategic measures to propel Singapore forward. This budget is a testament to the Government’s commitment to not just foster economic growth but also to ensure a more equitable and inclusive society for all Singaporeans, reflecting a balance between advancement and social cohesion.

Our Budget 2024 theme, “Shaping our united tomorrow,” resonates deeply with Singapore’s Budget 2024 theme, “Building our shared future together,” which necessitates a unified and resilient approach to overcoming global uncertainties and leveraging opportunities for growth. The past year has been challenging for Singapore. It experienced a modest growth of 1.1%, steering clear of recession amidst subdued global economic activity and significant geopolitical risks. With major economies expected to exhibit resilience, the outlook for 2024 is cautiously optimistic, forecasting GDP growth between 1.0% to 3.0%. However, this optimism is tempered by considerable uncertainties, particularly from geopolitical tensions and their potential to disrupt global supply chains and energy markets. Despite these challenges, the easing of global inflationary pressures and a recovery in the global electronics industry present opportunities for growth, particularly in Asia, which continues to be a key driver of economic expansion.

Singapore’s Deputy Prime Minister and Minister for Finance, Lawrence Wong
began his Budget speech by addressing the immediate challenges of cost-of-living pressures by rolling out a comprehensive package of support measures. From enhancements to social service schemes to relief measures for households and businesses, Budget 2024 aims to alleviate the financial strain on Singaporeans. The Minister’s assertion that “We will always have your back”, encapsulates the Government’s unwavering commitment to supporting its citizens through these turbulent times.

Budget 2024 also introduces significant corporate tax reforms aimed at
safeguarding the nation’s taxing rights and enhancing the country’s investment attractiveness. In relation to the former, the introduction of the Income Inclusion Rule (IIR) and Domestic Top-Up Tax (DTT) is a strategic move to ensure that Singapore collects the appropriate level of tax on profits generated within its jurisdiction, rather than ceding these taxes to another country which implements the Pillar Two rules. These measures, which will take effect for Singapore for financial years starting on or after 1 Jan 2025, are designed to maintain fairness in the taxation of multinational enterprises operating across borders. In Budget 2024, we see the introduction of a Refundable Investment Credit (RIC), which incentivises significant investments in strategic sectors and emerging growth areas. The RIC covers qualifying expenditures for up to 10 years, targeting activities like capacity expansion, digital services, R&D, and decarbonisation. With support rates and eligible expenditures (including capital and manpower costs) tailored to economic outcomes, unused credits are refundable within 4 years, aligning with global minimum tax rules.

Among the many notable features of Budget 2024 is the introduction of a temporary financial support scheme for the involuntarily unemployed. This marks a pivotal moment in Singapore’s social policy, recognising the need to provide targeted financial support to a select group of unemployed individuals. Historically, Singapore has been cautious in providing unemployment benefits to avoid potential pitfalls, such as disincentivising work. However, this scheme underscores a commitment to ensuring a safety net for those affected by unforeseen economic shifts.

Budget 2024 focuses on enhancing Singaporeans’ skillsets and retirement adequacy. It strengthens SkillsFuture, aiming at lifelong learning and adaptation to technological advancements, ensuring workers remain competitive globally. Notably, the SkillsFuture Level-Up Programme and enhanced subsidies for mid-career individuals for full-time diplomas at local institutions support in-depth reskilling. Simultaneously, measures to boost retirement adequacy include raising CPF contribution rates for older workers and enhancing the Silver Support Scheme, thereby improving financial stability for the elderly. These initiatives collectively ensure Singaporeans are well-equipped for future challenges and enjoy a secure retirement.

Adjustments in property tax, set to reflect recent market trends and enhance fairness, respond to significant rent increases. From Jan 2025, adjustments in Annual Value bands for owner-occupied residential properties ensure a fair contribution from those staying in higher-value homes.

There are also enhancements to Singapore’s tax regime for specific sectors such as the extension of the tax exemption schemes for qualifying funds, albeit with increased substance requirements. A tonnage tax regime for qualifying shipping entities has also been introduced, while concessionary tax rates for some of the commonly awarded tax incentive schemes have been recalibrated.

Singapore’s Budget 2024 is a balanced approach to navigating the uncertainties of the global economy while laying down a resilient foundation for future growth. By focusing on strategic tax reforms, supporting the vulnerable, and addressing cost-of-living pressures, the budget reaffirms the Government’s commitment to fostering a robust, inclusive, and forward-looking nation.

Our Budget Digest summarises the rollout and enhancement of the novel and existing taxrelated measures and initiatives. We wish you a pleasurable and insightful read!