Singapore Budget 2025: Key Tax Developments for Businesses

The SG60 Budget, themed “Onward Together for a Better Tomorrow,” reinforces Singapore’s commitment to fostering a sustainable and inclusive economy. As the nation celebrates 60 years of independence, this year’s Budget introduces various tax measures aimed at supporting businesses and individuals.

In this edition, we highlight the key tax-related announcements that businesses should take note of.

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Corporate Income Tax Rebate & Cash Grant (YA 2025)

To support businesses with cash flow, the government has introduced a 50% Corporate Income Tax (CIT) rebate for YA 2025, applicable to all tax-paying companies.

Additionally, active companies employing at least one local worker in 2024 will qualify for a CIT Rebate Cash Grant, ensuring a minimum benefit of SGD 2,000.

The maximum benefit a company can receive from the combination of the CIT Rebate and the CIT Rebate Cash Grant is capped at SGD 40,000. The exact amount of the CIT Rebate granted will depend on the company’s eligibility for the CIT Rebate Cash Grant.

Non-Taxation of Gains on Disposal of Shares (Section 13W)

The removal of the sunset clause for Section 13W of the Income Tax Act (ITA) provides greater certainty regarding tax treatment. Additionally, the scope of the exemption has been expanded to include disposals of preference shares that are classified as equity under relevant accounting standards.

Another key update is that the minimum shareholding requirement can now be assessed on a group basis, meaning that related companies’ shareholdings can be combined when determining eligibility.

Note: Gains may still be taxable under Section 10L if economic substance conditions are not met. Further details from IRAS are expected by 30 September 2025.

Mergers and Acquisitions (M&A) Scheme

The M&A Scheme will be extended until 31 December 2030, continuing to provide tax benefits for qualifying transactions.

Senior Employment Credit (SEC), Uplifting Employment Credit (UEC), and Enabling Employment Credit (EEC)

To further support businesses in hiring and retaining older and vulnerable workers, the Special Employment Credit (SEC), Additional SEC (ASEC), Temporary Employment Credit (TEC), and Enhanced Employment Credit (EEC) schemes have been extended. These wage offset initiatives aim to promote workforce inclusivity while ensuring business sustainability.

SEC will be extended to 31 December 2026 and UEC and EEC will be extended to 31 December 2028. And the qualifying age for the highest SEC wage support tier will also be increase from 68 years old to 69 years old.

Partial Wage Credit Scheme (PWCS)

The Partial Wage Credit Scheme (PWCS) will be enhanced to provide greater wage support for employers who retain and hire employees from vulnerable groups. These enhancements are designed to encourage continued employment and workforce resilience.

PWCS co-funding support will be enhanced for wage increases that are given to lower-wage employees in the years 2025 and 2026.

The following table provides the details on the increase in the co-funding:

Qualifying Year	Payout Period	Current rate	New rate
2025	1Q of 2026	30%	40%
2026	1Q of 2027	15%	20%

Approved Cost-Sharing Agreements on Innovation Activities

Effective 19 February 2025, businesses can claim a 100% tax deduction for payments made under an approved Cost-Sharing Agreement (CSA) for innovation activities that do not qualify as research and development (R&D) under the Income Tax Act (ITA).

The scheme is administered by the Economic Development Board (EDB), with further details expected by Q2 2025.

Land Intensification Allowance (LIA) Scheme

To continue encouraging companies to intensify their land use, the LIA will be extended for another five years till 31 Dec 2030.

For LIA applications made from 1 January 2026, the shareholding threshold for related building users is reduced from “at least 75%” to “more than 50%”.

Further guidance from the Building Control Authority (BCA) and EDB is expected by Q3 2025.

Double Tax Deduction for Internationalisation (DTDi) Scheme

To continue supporting businesses in their internationalisation efforts, the Double Tax Deduction for Internationalisation Scheme will be extended for another 5 years till 31 Dec 2030. 

Further details will be provided by Enterprise Singapore (ESG) by the second quarter of 2025.

Personal Income Tax Rebate

Personal Income Tax rebate will be granted to all tax resident individuals for the Year of Assessment 2025. The rebate will be 60% of tax payable, capped at $200. 

Central Provident Fund (CPF)

From 1 January 2026, any cash top-ups made to the MediSave Account (MA) of a Matched MediSave Scheme (MMSS)-eligible Central Provident Fund (CPF) member that attract the MMSS matching grant will not entitle the giver to the CPF cash top-up relief from YA 2027.

Venture Capital Fund Incentive and Venture Capital Fund Management Incentive

The Venture Capital Fund Incentive and the Venture Capital Fund Management Incentive, which grant tax exemption and CTR on certain qualifying income, are scheduled to lapse after 31 December 2025 and will not be extended.

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Final Thought

The Singapore Budget 2025 reinforces a proactive approach toward economic resilience and inclusivity through strategic tax measures and incentives. As businesses and individuals navigate these updates, thoughtful planning and expert advice will be key to leveraging the opportunities presented. Please feel free to reach out to your regular contact with us if there are any topics that are of further interest to you.

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