Singapore Budget 2024: Dollars and Cents on Singapore Businesses

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This article was originally published in BDO Spotlight - October 2024


It has been more than six months since the announcement of Singapore's 2024 Budget in February.  Now is a good time to revisit the key policy shifts and changes impacting businesses and the workforce. This is also an opportune moment to look ahead and anticipate the potential priorities and implications of the 2025 Budget.

Here is a summary of ten key tax and non-tax measures from the 2024 Budget that all businesses and working groups should be aware of:

  1. Corporate Income Tax (CIT) Rebate for the Year of Assessment (YA) 2024: All companies will enjoy a one-time CIT Rebate of 50% of tax payable, capped at S$40,000. Companies that employed at least one local employee in 2023 will receive a minimum cash grant of $2,000.
  2. Enhanced Tax Deduction for Renovation or Refurbishment (R&R) Expenditure: Starting from YA 2025, companies are allowed tax deductions on designer and professional fees incurred on R&R. Companies will also have the option to claim R&R deductions in one YA or over three YAs.  The prevailing expenditure cap of S$300,000 for any relevant 3 YAs remains.
  3. Enhanced Fund Tax Incentive Schemes:  The funds tax incentive schemes will be extended to 31 December 2029 from the current 31 December 2024, and the economic criteria of the funds will be revised in general.  
  4. Overseas Humanitarian Assistance Tax Deduction Scheme (OHAS):  All individual and corporate donors are allowed 100% deduction on qualifying overseas cash donations made through designated charities for emergency humanitarian assistance causes 4 years with effect from 1 January 2025. Deductions will be capped at 40% of the donor’s statutory income.  
  5. Base Erosion and Profit Shifting (BEPS) Pillar Two: Following the international Base Erosion and Profit Shifting (BEPS) Pillar Two 2.0 guidelines, Singapore will implement the following: 
    • A global minimum effective tax rate of 15% for large multinational enterprises (MNEs) through the Income Inclusion Rule and Domestic Top-up Tax, commencing January 2025.
    • A new “Research, Innovation, and Capability” (RIC) scheme, has been introduced. The RIC scheme is consistent with the Qualified Refundable Tax Credits under BEPS Pillar Two rules.  It aims to support up to 50% of qualifying expenditures in certain promoted activities. The credits are to be offset against corporate income tax payable and any unutilised tax credits will be refunded to the company as cash within four years from when the company satisfies the conditions for receiving the credits.
  6. Personal Income Tax (PIT): All individual taxpayers will enjoy a PIT Rebate of 50% of tax payable for YA 2024, capped at S$200. Dependant’s or caregiver’s income threshold for dependant related reliefs will be increased from S$4,000 to S$8,000. 
  7. Central Provident Fund (CPF): CPF contribution rates for senior workers aged above 55 to 65 will be increased by a total 1.5% commencing 1 January 2025. Government will provide a one-year CPF Transition Offset equivalent to half of the 2025 increase in employer CPF contribution. The maximum amount that members aged 55 and above can place in their CPF Retirement Account will be raised from 3 times the Basic Retirement Sum to 4 times, effective from 1 January 2025. 
  8. New SkillsFuture Programme for Mid-Career Workers: Singaporeans aged 40 and above are given a S$4,000 top-up in SkillsFuture Credit for selected courses, subsidies for a second full-time diploma, and a monthly training allowance equivalent to 50% of the worker’s average income over the last 12 months, capped at S$3,000 for selected full-time courses. 
  9. Annual Value (AV) Bands for Owner-Occupier Residential Property: From 1 January 2025, the lowest AV band threshold which does not attract property tax will be raised from S$8,000 to S$12,000. The highest threshold will increase from over S$100,000 to over S$140,000. 
  10. Goods and Services Tax (GST): An additional S$600 Community Development Council (CDC) Vouchers will be given to each Singaporean household.  A one-off special payment payout between S$200 and S$400 will be given to all eligible adult Singaporeans aged 21 and above. 


The various measures, as outlined above, including tax incentives, GST payouts, and talent development initiatives, are aimed at helping businesses address immediate challenges while positioning them to build a competitive edge for the future. 

According to the Ministry of Trade and Industry’s August forecast1, Singapore’s economy is set to perform better than last year, with Gross Domestic Product (GDP) growth projected to range between 2% and 3% in 2024. 

Recent data from the Singapore Commercial Credit Bureau (SCCB)2, released on 9 September 2024, indicates a continued upward trend in local business sentiment for the fifth consecutive quarter, reaching a two-year high in Q4 2024. The relatively positive outlook among local firms is primarily driven by robust growth prospects within the financial, construction, and transportation sectors. 

According to a poll by the Singapore Business Federation3, more businesses expect the economy to improve than worsen, with 40% of businesses planning to increase hiring in the coming year, despite mixed economic expectations. Concerns about rising manpower costs, tighter workforce policies, and a shortage of local talent persist, with rising labour costs being the most frequently cited challenge for 2024.

However, despite these encouraging signs, Singapore’s open economy remains highly vulnerable to global economic shifts. Trade disruptions, inflationary pressures, and geopolitical tensions continue to pose significant risks, raising concerns about the potential onset of a recession. 

As a valued member of our business community, we would like to invite you to share your perspectives on business sentiment and key concerns for the year ahead. We value your input on Budget 2024 and would like to understand their impact on your business operations and strategic planning. As your partner in supporting your business journey, we are keen to hear your priorities and focus areas for future Budget 2025 measures that can best address your needs.

As a token of appreciation, all survey participants will be entered into a lucky draw for complimentary tickets to our BDO Budget 2025 event, which includes an exclusive buffet lunch!



Article by:
Wong Sook Ling, Executive Director, Tax Advisory


References:

1Performance of the Singapore Economy in 2Q2024: https://www.singstat.gov.sg/-/media/files/news/gdp2q2024.ashx
2Q4 Business Expectations Surveys by Singapore Commercial Credit Bureau (SCCB): https://sccb.com.sg/wp-content/uploads/2024/09/Local-business-sentiment-hits-a-2-year-high-in-Q4-2024-_090924-3.pdf
3Singapore Business Federation National Business Survey 2024 Manpower and Wages Edition: https://www.sbf.org.sg/newsroom/media/press-releases/detail/sbf-national-business-survey-2024-manpower-and-wages-edition