Singapore’s Budget 2025, delivered on 18 February 2025 by Prime Minister and Finance Minister Lawrence Wong, comes at a pivotal time amid global uncertainties. As Singapore marks its 60th year of independence, this budget carries the theme “Onward Together for a Better Tomorrow”, focusing on strengthening economic resilience, addressing cost pressures, and investing in a sustainable, inclusive future.
The Budget is significant in the current landscape for its dual emphasis on immediate support for businesses and households and strategic long-term initiatives to drive growth. Notably, despite earlier expectations of a deficit, Singapore is projecting a modest fiscal surplus of about S$6.8 billion (0.9% of GDP) for FY2025. This healthy fiscal position—bolstered by higher corporate tax revenues from robust multinational investment—gives the government latitude to fund support measures while maintaining stability.
In the sections that follow, we provide an overview of the Budget’s economic impact, key business incentives, and tax changes, with an analytical lens on what they mean for business leaders.
Singapore’s economy outperformed expectations in 2024, expanding by 4.4%, a strong rebound from 1.8% in 2023. However, the outlook for 2025 is more cautious. Growth is forecast to moderate to 1%–3% in 2025 as global conditions soften, and inflation is expected to ease to around 1.5%–2.5%. The government anticipates broadly stable growth in early 2025, but acknowledges that momentum could falter if external headwinds intensify.
In particular, trade tensions and slower global demand pose risks – any escalation in geopolitical frictions could dampen business investment and export growth, weighing on Singapore’s open economy. Business leaders should therefore brace for a potentially slower pace of expansion and remain vigilant to international developments.
A chief challenge in 2025 is managing cost pressures and safeguarding competitiveness in a higher-cost environment. While inflation is moderating, operating costs – from energy to wages – remain elevated compared to pre-pandemic levels. The Budget addresses this with targeted relief (discussed in the next section) to help firms cope with expenses.
Externally, the global tech downturn and tighter financial conditions have curbed demand in sectors like electronics and finance, sectors which were key growth drivers in 2024. Additionally, rising interest rates worldwide and cautious investor sentiment may temper investment flows into the region.
Despite these challenges, Singapore continues to benefit from its reputation as a stable investment hub. The Finance Minister noted a continued influx of capital-intensive investments by multinational enterprises, as firms seek reliable bases for high-value activities. This trend has not only supported economic activity but also boosted government revenues, underscoring confidence in Singapore’s fundamentals.
Overall, Budget 2025’s economic impact is a carefully calibrated one – providing short-term stimulus to counter headwinds, while channeling resources into productivity and innovation to secure long-term growth.
Budget 2025 introduces a robust suite of business incentives and support measures to help companies navigate current challenges and seize new opportunities. For business leaders, several initiatives stand out for their potential to reduce costs, encourage innovation, and develop talent.
To alleviate immediate cost pressures, the government is providing a one-time Corporate Income Tax (CIT) rebate of 50% for Year of Assessment 2025, capped at S$40,000. All tax-paying companies will benefit, and those that meet the local employment criterion (at least one local employee in 2024) will receive a minimum cash grant of S$2,000 as part of this rebate scheme. This essentially puts cash back into businesses, especially small and medium-sized enterprises (SMEs), helping them manage expenses and cashflow. In addition, the government will increase co-funding under the Progressive Wage Credit Scheme, raising its support to 40% of wage increases in 2025 (up from 30% previously) to encourage wage growth for lower-income workers without overburdening employers. These measures jointly ease operational costs and provide breathing room for companies to invest in other priorities.
Recognizing that long-term competitiveness hinges on productivity and innovation, Budget 2025 commits significant funding in this area. A further S$3 billion top-up to the National Productivity Fund has been announced to finance initiatives that help firms automate and innovate. Additionally, S$1 billion will be invested in R&D infrastructure to strengthen Singapore’s research capabilities and facilitate faster commercialization of new technologies.
Companies can tap into enhanced grants and incentives to adopt advanced technologies and digital tools, including a new Enterprise Compute Initiative (with up to S$150 million funding) aimed at helping businesses leverage AI and high-performance computing resources. These investments signal a continued push to boost productivity growth.
Business leaders, especially in tech and manufacturing sectors, can leverage these funds to upgrade processes, develop new products, and retrain workers, thereby driving efficiency gains in the coming years.
To support companies in expanding their markets and scaling up, the Budget extends and enhances several business schemes. The Market Readiness Assistance (MRA) grant for international expansion is extended to March 2026, and the Double Tax Deduction for Internationalization (DTDi) scheme – which offers 200% tax deductions on qualifying overseas expansion expenses – is extended to 31 December 2030. These extensions provide greater certainty and continuous support for firms looking to venture abroad.
Likewise, the Mergers & Acquisitions (M&A) allowance has been extended to 2030, allowing companies to claim tax allowances (25% of deal value, capped at S$40 million per year) and deduct transaction costs for qualifying acquisitions. This encourages strategic M&A activities that can drive growth and consolidation.
Importantly, access to growth capital is being facilitated through a new S$1 billion Private Credit Growth Fund under EnterpriseSG, which will provide “patient capital” and alternative financing options to high-growth local enterprises.
For startups and innovators, the Economic Development Board (EDB) is launching a Global Founder Programme to attract experienced founders to build their next venture in Singapore.
Collectively, these measures create a more conducive ecosystem for enterprise growth – from easier financing and tax breaks on expansion, to government support in exploring overseas markets.
The Budget also places heavy emphasis on developing a future-ready workforce, recognizing that human capital is key to business success. A new SkillsFuture Workforce Development Grant will provide up to 70% funding support for companies to redesign jobs and upskill their employees.
In tandem, the existing SkillsFuture Enterprise Credit is being enhanced – from mid-2026, eligible firms will receive S$10,000 (up from S$7,000 earlier) to offset costs of enterprise and workforce transformation initiatives. An additional S$200 million will be allocated to the NTUC’s Company Training Committee Grant, enabling more companies (especially SMEs) to implement training programs for their staff. These initiatives make it financially easier for businesses to invest in employee training, job redesign, and digital transformation. For example, a mid-sized company could use the grant to overhaul workflows or adopt new software, while sending mid-career employees for subsidized training, thereby boosting productivity and staff capabilities.
Moreover, the government is continuing targeted wage support programs to foster an inclusive workforce – the Senior Employment Credit, which subsidizes wages for hiring older workers, is extended through 2026, and the Uplifting Employment Credit for hiring ex-offenders through 2028. Employers hiring senior workers will also get a CPF Transition Offset covering half of the 2024–2025 increase in their CPF contribution rates.
For business leaders, these workforce-related incentives are an opportunity to accelerate talent development within their organizations. Companies should consider redesigning jobs to be more productive and age-friendly, taking advantage of government co-funding to do so. In the tight labor market, such measures can improve staff retention and help firms build the skills needed for new growth areas.
Budget 2025 introduces a series of tax changes and adjustments aimed at maintaining Singapore’s competitive tax regime while boosting support for businesses and ensuring fairness in the tax system. For corporate taxpayers, the emphasis is on targeted relief and strategic incentives rather than broad-based rate cuts, whereas individuals see a temporary rebate but no major structural changes to rates. Below is an overview of the key tax measures:
Singapore’s headline corporate income tax rate remains unchanged at 17%, preserving the city-state’s attractive base rate. However, as noted earlier, a one-off 50% CIT rebate (capped at S$40,000) for YA2025 will effectively reduce the tax bills for companies in that year. Eligible companies will receive this rebate automatically when they file taxes, with the separate S$2,000 cash grant ensuring even smaller or less profitable firms get some benefit.
Beyond this rebate, the Budget rolled out new tax incentives to spur business activity. Notably, to encourage innovation, a 100% tax deduction is introduced for qualifying expenditure under approved Cost-Sharing Agreements (CSA) for innovation effective from 19 Feb 2025. This means if companies collaborate (e.g. with research institutions or within a group) on innovation projects and share the costs, their contributions can be fully deducted, lowering the after-tax cost of R&D.
The Budget also adopts recommendations from an Equities Market review to strengthen Singapore’s capital markets, including tax incentives for public listings and fund management. For example, newly listed companies may qualify for a special listing tax rebate (10% or 20%), and fund managers that significantly invest in Singapore-listed equities can enjoy tax exemptions on certain income. These incentives aim to boost equity fundraising and attract more investment activity to the Singapore Exchange.
Additionally, existing tax schemes have been prolonged – as mentioned, the DTDi and M&A schemes are extended till end-2030 to support international growth and corporate restructurings. It’s clear that the government is fine-tuning the tax system to stimulate business dynamism: companies planning regional expansion, innovation projects, or public listings should review these enhanced schemes to maximize their tax efficiency.
In line with international tax developments, Singapore will implement the OECD’s Base Erosion and Profit Shifting (BEPS) 2.0 framework from 2025. Large multinational enterprise groups (with annual revenues ≥ €750 million) will be subject to a 15% minimum effective tax rate on their profits. This will be achieved via a new top-up tax mechanism – the Income Inclusion Rule (IIR) for Singapore-parented groups and a Domestic Top-up Tax (DTT) for foreign MNE groups earning income in Singapore.
On the individual tax front, Budget 2025 provides some temporary relief but leaves the overall tax structure largely unchanged. There are no changes to personal income tax rates or tax bands – Singapore’s progressive tax rates still range from 2% at the lowest band up to 24% for the highest earners (above S$1 million), following the top-tier rate increase that kicked in from YA2024.
To share the budget surplus with citizens and help with cost-of-living pressures, the government declared a special one-time income tax rebate of 60% on tax payable for all resident individual taxpayers for YA2025 (income year 2024), capped at S$200 per person. This means most middle-income earners will effectively get a modest tax cut for the year, though the benefit for high earners is negligible due to the low cap.
From a business leader’s perspective, while this personal rebate is small, it may slightly boost disposable incomes and consumer confidence, supporting domestic demand. Coupled with other household support measures (such as utility rebates and SG60 vouchers for citizens) rolled out in the budget, consumer-facing businesses could see a short-term uptick in spending.
Aside from income tax, the Budget noted that the Goods and Services Tax (GST) remains at 9% (following the planned hike implemented in 2024), and no new changes were announced for property taxes beyond the adjustments already in effect from the previous budget.
The earlier increase in property tax rates for high-end properties (announced in Budget 2024) took effect on 1 Jan 2025, contributing to a more progressive tax system, but in Budget 2025 there were no further hikes.
Overall, the tax changes in Budget 2025 signal continuity and moderation – the government is offering targeted rebates and maintaining a stable tax regime, which should reassure both individuals and companies that there are no sudden cost increases even as Singapore invests in future capabilities.
Singapore Budget 2025 strikes a balance between short-term economic relief and long-term growth initiatives. Business leaders should take advantage of cost relief measures, innovation funding, and workforce development schemes to enhance productivity and resilience. The stable tax environment, with targeted incentives and the implementation of BEPS 2.0, underscores the need for strategic tax planning for multinational firms.
While economic growth may moderate in 2025, the Budget provides ample support for businesses to navigate challenges and seize new opportunities. Companies that align with Singapore’s priorities in digitalization, sustainability, and global expansion will be well-positioned for future success.