Budget 2025 to empower businesses for growth and success
Last updated on 8 April 2025
Budget 2025 featured a range of handouts given to individuals and households to mitigate living costs and inflationary pressures from the external environment. Additionally, recognising businesses’ pressures, the government has introduced various budget measures to “empower businesses for growth and success”.
Corporate income tax rebate (CIT) and cash grant
In a follow-up to measures from Year of Assessment (YA) 2024, companies will receive a CIT rebate of 50% for YA2025. Companies that are active but not profitable will receive a cash grant but must have at least one local employee in 2024. The minimum benefit for companies is S$2,000 and rises to S$40,000.
Progressive Wage Credit Scheme (PWCS)
The government has enhanced funding for the PWCS, encouraging businesses to offer fair compensation whilst helping them manage their costs.
In the enhancement, the following changes were introduced:
- From 30% to 40% for wage increases given in 2025.
- From 15% to 20% for wage increases given in 2026.
However, businesses need to meet the following conditions to qualify for the co-funding:
Employee’s average gross monthly wage
- Less than S$3,000 before the wage increase; and
- Less than S$4,000 after the wage increase.
Wage increase
- At least S$100 in each qualifying year
Sustainability:
- The wage increase must be sustained, with co-funding applicable for two years.
R&D and National Productivity Fund
The government has made research and development (R&D) and innovation a cornerstone of its economic strategy, allocating S$1 billion to refresh and develop biotech and semiconductor R&D infrastructure and to establish state-of-the-art national semiconductor fabrication facilities.
Looking to encourage artificial intelligence (AI) adoption and capabilities, particularly in small and medium enterprises, Budget 2025 allocated S$150 million to the Enterprise Compute Initiative to empower businesses to leverage AI more effectively in their transformation journey.
In search of that competitive edge in a changed world, the government announced a S$3 billion top-up to the National Productivity Fund to support initiatives that drive productivity across various industries.
Tax incentives to develop Singapore’s equities market
Singapore introduced new tax incentives to strengthen its equities market and attract more companies to list on the Singapore Exchange (SGX).
Corporate Income Tax (CIT) Rebate for Listings
- Companies that list primarily on SGX will qualify for a 20% CIT rebate annually for five years, capped at S$1 million annually.
- Those opting for a secondary listing can receive a 10% CIT rebate per year for five years, also capped at S$1 million annually.
- These incentives aim to make SGX listings more appealing by reducing tax costs for newly listed firms.
Tax Benefits for Fund Managers
- Newly listed fund managers in Singapore will enjoy a 5% concessionary tax rate on eligible income for five years under the Financial Sector Incentive – Fund Management (FSI-FM) scheme.
- Existing fund managers investing in Singapore-listed equities will receive a five-year tax exemption on qualifying income.
- These measures encourage fund managers to invest in local equities and expand Singapore’s asset management sector. Fund accounting and fund administration services can expect a boost from these measures.
Faster Listing Process
- The government is working on streamlining IPO approvals, reducing review periods to six to eight weeks to facilitate quicker listings.
- These efforts reflect Singapore’s commitment to boosting its stock market’s competitiveness and attracting more investments.
CPF contribution rate for seniors
Prime Minister Lawrence Wong announced that CPF contribution rates for employees aged 56 to 65 will increase by 1.5% starting 1 January 2026. For those aged 56 to 60 earning more than S$750 a month, employer contributions will rise by 0.5% to 16%, while employee contributions will increase by 1% to 18%. The change is to enhance the retirement savings of senior workers.
The government will extend the CPF Transition Offset (CTO) until 2026 to help businesses adjust to the higher CPF contribution rates. Since this is only temporary, businesses should prepare for the full cost impact once the CTO ends.
Companies can approach accounting firms in Singapore providing outsourced HR services to assist them in calculating the full impact of the increase.
