Singapore Budget 2025: The Key Highlights For Businesses

The Singapore Budget 2025 arrives at a pivotal time in the nation’s history, addressing both immediate economic pressures and long-term structural priorities. Designed to fortify resilience amid global volatility, one of the Budget’s key focus points is promoting workforce agility, innovation-driven growth, and sustainable development while alleviating operational challenges for businesses.

This article explores key fiscal measures that will benefit organisations both big and small, including grants for digital transformation, tax incentives, workforce development initiatives, and collaborative ecosystems. Below, we outline the major announcements businesses must navigate in the coming fiscal year.

1. Enhancing Workforce Transformation and Upskilling

At the heart of the Budget is a renewed focus on workforce transformation. In recognition of the rapid evolution driven by digitalisation and artificial intelligence, the government has introduced measures to ensure that both businesses and employees remain agile in an increasingly competitive global landscape.

• Revamped SkillsFuture Initiatives

The new SkillsFuture Workforce Development Grant is structured to support job redesign activities and technology integration by offering up to 70% funding for initiatives that restructure roles and enhance operational efficiencies. This measure empowers companies to innovate and better prepare their workforce for future challenges.

Complementing this is the redesigned SkillsFuture Enterprise Credit, which now operates on an online wallet model. Under this revamped system, eligible companies – defined as those with at least three resident workers – will receive S$10,000 in credit to immediately offset the costs of workforce and enterprise transformation initiatives. For the time being, businesses may continue using the current credit, which has been extended until the new credit is ready.

This redesigned credit scheme, available from the second half of 2026 for a period of three years, represents a significant shift from the previous reimbursement-based approach, ensuring that firms can invest in their human capital without delay.

2. Accelerating Digital Transformation and Innovation

The Budget also places a strong emphasis on technological advancement and research, recognising that digital transformation is central to maintaining a competitive edge.

• Enterprise AI and Compute Initiatives

With an allocation of S$150 million dedicated to the Enterprise Compute Initiative, the government aims to accelerate the adoption of artificial intelligence and associated technologies among local enterprises. Eligible companies will be partnered with major cloud service providers to gain access to state-of-the-art AI tools and enhanced computing power. Additionally, this will include expert consultancy services. This initiative is intended not only to boost productivity and competitiveness but also to drive a broader digital transformation across industries.

• R&D and Innovation Funding

In addition to the focus on AI, a further S$3 billion top-up to the National Productivity Fund is earmarked to bolster research and development. This infusion of capital is designed to attract high-quality investments and position Singapore as a leading innovation hub in the region.

3. Stimulating Market Liquidity and Collaborative Growth

Recognising the importance of vibrant capital markets and collaborative innovation, the Budget introduces targeted measures to enhance market liquidity and incentivise joint investments in research and development.

• Equities Market Incentives

The Budget introduces new tax incentives that cater to fund managers and encourage making significant investments in local equities. These measures are aimed at making the Singapore Exchange (SGX) a more attractive venue for listings, thereby improving market liquidity and fostering a more dynamic financial ecosystem.

• Support for Collaborative R&D

To further stimulate innovation, the Budget offers a new suite of tax deductions for cost-sharing agreements. This policy is designed to encourage companies to pool resources for R&D projects, thereby reducing the financial burden of innovation while ensuring that the benefits of such investments are shared across the industry.

4. Providing Financial Relief and Wage Support

In an environment marked by rising operational costs, the Budget incorporates several measures to alleviate the financial strain on businesses while simultaneously supporting the workforce.

• Income Tax Rebates and Cash Grant

A 50% rebate for corporate income tax for YA 2025 has been introduced to help businesses offset higher costs related to rent and labour. For companies that may not fully benefit from the rebate due to profitability constraints, an automatic CIT Rebate Cash Grant guarantees a minimum benefit of $2,000 for active companies that employed at least one local worker in 2024. The combined benefit, which may reach up to S$40,000 per company, will be applied automatically from Q2 2025, ensuring a streamlined process.

• Improved Progressive Wage Credit

The government is also strengthening its commitment to wage growth for low-income workers through an enhanced Progressive Wage Credit Scheme. Under the revised framework, government co-funding will increase from 30% to 40% in 2025 and from 15% to 20% in 2026. This initiative is contingent on salary thresholds (S$3,000 before and up to S$4,000 after the wage increase) and a minimum annual salary boost (at least S$100 annually.), ensuring that the benefits of wage support are both targeted and sustainable.

5. Facilitating Business Expansion and Access to Capital

In support of business growth and internationalisation, the Budget extends existing schemes and introduces new financing options aimed at stimulating expansion.

• Extended Incentives for Strategic Growth

The Mergers & Acquisitions (M&A) scheme, which provides tax benefits for qualifying acquisitions, has received a substantial extension and will now last until 31 December 2030. This extension offers companies continued support as they pursue growth via strategic consolidation. Similarly, the Double Tax Deduction for Internationalization scheme has been extended, reducing financial barriers for businesses seeking to expand into new markets by offering tax reductions on eligible expenses spent for overseas expansion endeavours.

• New Private Credit Growth Fund

Recognising the financing challenges faced by high-growth local enterprises, particularly SMEs, the Budget introduces a S$1 billion Private Credit Growth Fund. This new fund is designed to diversify financing options beyond traditional bank loans, thereby supporting the growth of businesses that are critical to Singapore’s economic dynamism.

6. Promoting Sustainable Finance and Green Investments

In alignment with Singapore’s broader commitment to sustainability, the Budget introduces an additional tier under the Financial Sector Incentive scheme. This new tier is specifically tailored to attract financial institutions that specialise in green and sustainable finance, reinforcing the country’s ambitions to be a global hub for environmentally responsible investments.

Conclusion

Singapore Budget 2025 is a carefully calibrated response to the dual imperatives of immediate cost relief and long-term strategic positioning. For businesses, the array of tax incentives, workforce development grants, and innovative financing measures provides a robust platform to enhance competitiveness, drive digital transformation, and support sustainable growth. As Singapore continues to evolve in a milestone year like SG60, these measures are set to play a pivotal role in shaping a competitive, inclusive, and forward-looking economy.