Budget 2025 – Overview of Tax Changes
On 18 Feb 2025, Prime Minister and Minister for Finance Lawrence Wong delivered the Budget 2025 Statement in Parliament.
In this Budget, he outlined plans on how the Government will work with Singaporeans to:
- Tackle cost pressures,
- Advance our growth frontier,
- Equip workers throughout life,
- Build a sustainable city,
- Nurture a caring and inclusive society, and
- Rally as one united people.
For companies and businesses:
The Singapore Budget 2025 introduces several initiatives aimed at supporting Small and Medium Enterprises (SMEs), fostering growth, and enhancing competitiveness. Key measures include:mof.gov.sg
Singapore Budget 2025: Key Benefits for SMEs
The Singapore Budget 2025 introduces various initiatives aimed at supporting Small and Medium Enterprises (SMEs), fostering growth, and enhancing competitiveness. Below are the key measures that will benefit SMEs:
1. Corporate Income Tax Rebate
To alleviate cost pressures, a 50% Corporate Income Tax rebate will be granted for the Year of Assessment 2025. Eligible companies that employed at least one local worker in the previous year will receive a minimum benefit of $2,000, with a cap of $40,000 per company.
2. Enhanced Progressive Wage Credit Scheme
The government will increase the co-funding levels for wage increases under the Progressive Wage Credit Scheme:
- 2025: From 30% to 40%
- 2026: From 15% to 20%
This enhancement aims to support businesses that commit to uplifting lower-wage workers.
3. Expansion of Tender Lite
To make government procurement more accessible, the Tender Lite initiative will be expanded to cover construction and ICT contracts. This simplifies procurement conditions, reduces administrative processes, and shares risks with businesses.
4. Innovative Procurement Partnership
A new Innovative Procurement Partnership will allow the government to award contracts that cover both pilot testing and full deployment of innovative solutions. This initiative provides businesses with an assured scaling-up process if their pilot projects succeed.
5. Extension of GST Registration Grace Period
The grace period for businesses to begin charging Goods and Services Tax (GST) will be extended from one month to two months, effective from 1 July 2025. This extension helps SMEs better prepare for GST compliance.
6. Simplification of Tax Reporting for Self-Employed Persons
The Inland Revenue Authority of Singapore (IRAS) will gradually require intermediaries to pre-fill income details for self-employed individuals, reducing compliance burdens and simplifying tax reporting.
7. Removal of Approval Requirement for GST Gross Margin Scheme
Starting from 1 July 2025, second-hand goods dealers will no longer need prior approval from IRAS before using the GST Gross Margin Scheme. This simplifies compliance and benefits businesses dealing in second-hand goods.
8. Commitment to Environmental Sustainability
The government has committed $10 billion towards the Singapore Green Plan 2030, including sustainable procurement incentives. SMEs that offer eco-friendly goods and services can build credibility in the green economy.
9. Extension of Support Schemes for Internationalization
- Market Readiness Assistance (MRA) Grant will be extended until 31 March 2026, providing up to $100,000 per new market.
- Double Tax Deduction for Internationalization (DTDi) Scheme will be extended until 31 December 2030, allowing a 200% tax deduction on qualifying expenses for international expansion.
10. Enhancements to the Enterprise Financing Scheme (EFS)
- Trade Loan Cap Increase: EFS – Trade Loan cap will be permanently raised from $5 million to $10 million.
- Mergers and Acquisitions (M&A) Loan Expansion: EFS – M&A Loan will now include targeted asset acquisitions, from 1 April 2025 to 31 March 2030.
11. Launch of the Global Founder Programme
A new Global Founder Programme (GFP) will be introduced to attract multinational firms and entrepreneurs to set up and scale businesses in Singapore. (Click here for greater details from EDB)
12. Introduction of the S$1 Billion Private Credit Growth Fund
A $1 billion Private Credit Growth Fund will be launched to provide alternative financing options for high-growth local enterprises.
13. Tax Incentives for Local Listings
New tax incentives will be introduced for Singapore-based companies that list on the Singapore Stock Exchange (SGX) to encourage local economic growth. For greater details, click here for greater details in MAS website.
14. Support for Digital Transformation
Budget 2025 includes measures to help businesses adopt digital solutions and offset the cost of implementing AI and automation technologies. The government has allocated $150m for the Enterprise Compute Initiative to support businesses, particularly SMEs, in adopting AI tools and technologies to drive productivity and innovation. The $150m injection is a step forward to provide tailored technological solutions to address their unique business trends.
15. Workforce Development Initiatives
Funds will be allocated to enhance workforce skills and productivity, including training programs for SMEs to upskill employees.
16. Sustainability Incentives
The government will introduce sustainability incentives for businesses that adopt energy-efficient solutions, reducing operational costs and improving market competitiveness.
17. Enhanced Financing Support
To improve SME financing access, the government will provide additional support for businesses to tap into AI-driven solutions and funding opportunities.
Conclusion
Singapore Budget 2025 offers a range of measures to support SMEs by reducing tax burdens, enhancing financing accessibility, promoting digital transformation, and driving sustainability. These initiatives ensure that businesses remain competitive, resilient, and prepared for future growth.
For more details, visit the official Singapore Budget 2025 website.
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