Singapore Budget 2025: What the Tax Changes Mean for Companies

The corporate tax rebate

The rebate equals 50% of tax payable for YA 2025. Companies that were active and employed at least one local employee in calendar year 2024 receive a minimum benefit of S$2,000 as a CIT Rebate Cash Grant. A company meets the local employee condition if it made CPF contributions to at least one Singapore Citizen or Permanent Resident employee in 2024, excluding shareholders who are also directors. Total benefits are capped at S$40,000 per company, and the Economic Development Board says eligible companies will receive them automatically from the second quarter of 2025. Individuals also get an SG60 personal income tax rebate of 60% for YA 2025, capped at S$200.

Schemes extended or widened

Singapore Budget 2025 extends several incentives that were due to lapse after 31 December 2025:

• The Double Tax Deduction for Internationalisation scheme, which gives a 200% deduction on qualifying market expansion expenses, runs to 31 December 2030.
• The Mergers and Acquisitions scheme, with its allowance based on 25% of up to S$40 million of qualifying acquisitions per YA and a 200% deduction on transaction costs capped at S$100,000, is also extended to 31 December 2030.
• The Land Intensification Allowance is extended to 31 December 2030, with the related-party shareholding test for building users lowered from at least 75% to more than 50% for applications from 1 January 2026.

Section 13W of the Income Tax Act, which gives upfront certainty that gains on disposals of ordinary shares are not taxed where a 20% shareholding has been held for at least 24 months, loses its sunset date. For disposal gains derived on or after 1 January 2026, it will also cover preference shares accounted for as equity and allow the shareholding test to be met on a group basis.

New deductions

From YA 2026, companies may deduct payments to a holding company or special purpose vehicle for new holding company shares issued under employee equity-based remuneration schemes. A 100% deduction is also introduced, with effect from 19 February 2025, for payments under an approved cost-sharing agreement for innovation activities. On wages, the EDB notes that government co-funding under the Progressive Wage Credit Scheme rises from 30% to 40% for 2025 and from 15% to 20% for 2026. The relevant agencies are to publish further details on several measures during the second and third quarters of 2025.

Sources

• Ministry of Finance Singapore: Budget 2025, Annex H-2, Tax Changes
• Singapore Economic Development Board: Singapore Budget 2025, corporate tax rebate and enhanced wage support