Budget 2025: Key Highlights

Singapore’s Budget 2025 introduces a range of strategic measures designed to bolster businesses and drive sustainable growth, with a focus on financial relief, workforce transformation, and technological advancement.

Key initiatives include a corporate tax rebate, enhanced support for SMEs, and investments in AI and digital innovation, alongside efforts to improve workforce productivity and skills. At Astria, we are of the view that these Budget measures will provide critical support to businesses navigating economic uncertainty, while also positioning Singapore for long-term competitiveness in the global digital economy.

Here are 9 key announcements:

1. Tackling cost-of-living concerns

Inflation may have eased from the highs of 2022, yet Singaporeans are still adjusting to higher price levels. To cushion the impact, all Singaporean households will receive an extra S$800 in Community Development Council (CDC) vouchers, to be used at participating supermarkets, heartland merchants and hawkers. Eligible households will get additional U-Save rebates for utilities, while families with children will receive S$500 in LifeSG credits per child aged 12 and below.

2. Helping businesses with rising costs

Businesses will also get help for their cost challenges. These include a 50 per cent corporate income tax rebate, capped at S$40,000, for the Year of Assessment (YA) 2025. Active companies that are not profitable will still get at least S$2,000 in cash support, so long as they had at least one local employee last year.

To defray labour costs, the Progressive Wage Credit scheme’s co-funding levels will be raised to 40 per cent, from 30 per cent in 2025 – and to 20% in 2026, from 15% before.

3. SG60 goodies for all Singaporeans

To share the benefits of Singapore’s progress, PM Wong announced a new SG60 package, with three components.

First, Singaporeans aged 21 and above will get a one-off S$600 in SG60 vouchers, with those 60 and older getting another S$200. Similar to CDC vouchers, half of the sum can be spent at supermarkets, and the rest at heartland merchants and hawkers.

Second, individuals will get a 60 per cent personal income tax rebate, capped at S$200, for YA2025.

Third, all Singaporean babies born this year will receive an SG60 Baby Gift.

4. S$4 billion for technology and innovation

As global competition intensifies, Singapore must redouble efforts to stay competitive and dynamic. An additional S$3 billion will be injected into the National Productivity Fund to anchor high-quality investments.

Another S$1 billion will be invested into enhancing research and development (R&D) infrastructure. This includes a new national semiconductor R&D fabrication facility for prototyping and testing innovations, as well as a refresh of biosciences and medtech research infrastructure in the one-north area.

5. S$1 billion private capital fund for high-growth firms

A new S$1 billion Private Credit Fund will give high-growth local companies more financing options.

This is part of several moves to strengthen the “enterprise ecosystem”, including a Global Founder Programme to get global founders to start ventures here. Separately, up to S$150 million will be set aside under the Enterprise Compute Initiative to help companies adopt artificial intelligence. Existing support schemes for internationalisation and for mergers and acquisitions will also be extended.

6. Tax incentives to rejuvenate the local bourse

The Monetary Authority of Singapore equities market review group has made recommendations to strengthen the attractiveness of the local stock market.

PM Wong accepted the group’s recommendations to introduce tax incentives for Singapore-based companies and fund managers that list on the Singapore Exchange. Tax incentives will also be rolled out for fund managers that “invest substantially” in Singapore-listed equities.

7. Fresh injections to support energy, air infrastructure

Singapore’s growth plans must also be supported by world-class infrastructure.

The Changi Airport Development Fund will be topped up by S$5 billion. The government will also provide a guarantee to Changi Airport Group to lower borrowing costs needed to develop Terminal 5 and supporting infrastructure. To meet Singapore’s growing energy needs, a fresh S$5 billion will be injected into the Future Energy Fund.

8. Helping workers upskill

In response to feedback, the SkillsFuture Level-Up Programme – announced in Budget 2024 – will be extended to cover part-time training, with a fixed monthly allowance of S$300. For lower-wage workers aged 30 and above, Workfare Skills Support will be enhanced from 2026 for those who pursue long-term training.

Employers will also get help to train workers. A new SkillsFuture Workforce Development Grant streamlines existing schemes and will provide higher funding support of 70 per cent for job redesign.

The SkillsFuture Enterprise Credit will also be redesigned, with a fresh S$10,000 for eligible companies.

9. New Large Families Scheme for those with three or more children

A Large Families Scheme will support families with three or more children.
This includes a S$5,000 top-up to the Child Development Account First Step Grant for each third and subsequent child born from Feb 18, to be used for preschool and healthcare expenses.

Mothers will also receive a S$5,000 Large Family Medisave Grant for each third and subsequent child born from Feb 18, which can be used to offset pregnancy and delivery costs.

Lastly, families will get S$1,000 a year in LifeSG credits for each of their third and subsequent children, until the child is six years old. This can be used to defray a wide range of household expenses.

Here are some of our analysis and take on the above Budget 2025 measures:

Corporate Tax Rebate

Budget 2025 maintains a 50% corporate income tax rebate, capped at $40k to alleviate financial pressures on businesses, especially SMEs, and support their investments in long-term growth. Even for active companies that are not profitable, they are not forgotten, as they will receive a minimum cash grant of $2,000.

We are glad that the government has heard the clarion call of businesses to help them with business costs and has provided a 50% corporate income tax rebate at the same quantum as last year. This will be especially welcomed by Singapore SMEs pressured by rising business costs as they pivot towards mid-term productivity measures and new opportunities.

Companies should make the most of the corporate income tax rebate to make further investments to enhancing their competitiveness, for example, by tapping into the new Enterprise Compute Initiative.

Progressive Wage Credit Scheme Enhancement

The scheme is enhanced with higher co-funding for wage increases, aiming to ease labour cost pressures for businesses while ensuring fairer wages for lower-income workers. While inflation has eased, the overall costs of doing business remain high for enterprises. The increase in government co-funding for the Progressive Wage Credit scheme can help to tackle the rising labour cost pressures faced by businesses. On the corporate income tax front, the government continues to grant a 50% rebate with a maximum benefit of $40,000 for businesses in the Year of Assessment 2025. Small and medium local enterprises, which have tightened their belts to deal with cost pressures, are likely to benefit the most from these measures.

The enhanced Progressive Wage Credit Scheme is a welcome move, reinforcing support for businesses while ensuring fairer wages for lower-income workers. While higher co-funding helps offset wage increase, businesses must take proactive steps – such as optimising workforce productivity, rethinking cost structures and leveraging technology to stay competitive. Tapping into initiatives like the new SkillsFuture Workforce Development Grant can further support upskilling and reskilling as well as workforce transformation. The key is to treat this as an opportunity to build a more resilient, future-ready business while balancing cost pressures with fair wages.

Technology and AI

The government has allocated $150m for the Enterprise Compute Initiative to support businesses, particularly SMEs, in adopting AI tools and technologies to drive productivity and innovation.

The government’s commitment of $150m towards enterprise AI adoption is a timely and strategic move. As AI becomes a critical driver of business innovation, this initiative will empower enterprises—especially SMEs—to access the necessary compute power, AI tools, and expert guidance to stay competitive. By partnering with major cloud providers, Singapore is ensuring that businesses can harness AI effectively, not just as a tool, but as a transformative force for growth and efficiency.

For enterprises to thrive in today’s digital economy, investing in AI-powered analytics and digital tools is no longer optional—it’s essential. – Through initiatives like the Productivity Solutions Grant and SMEs Go Digital, the Government will continue to support businesses in adopting these technologies. As enterprises scale, AI will play a critical role in optimising business processes and driving sustainable growth.

AI has evolved at an unprecedented pace—just a few years ago, ChatGPT didn’t exist, and today, AI models can generate high-quality content, write code, and even drive research breakthroughs. As AI continues to advance and new disruptive technologies emerge, their impact on industries will be profound and unpredictable. To ensure Singaporeans remain competitive and future-ready, the government is making significant investments in lifelong learning, with SkillsFuture as a key pillar of our social compact.

The budget’s focus on and new investment measures in innovation and technology will continue to drive M&A and financing activity in the hi-tech, advanced manufacturing and med-tech sectors in Singapore. In addition, the announced support to Singapore enterprises to drive their internationalisation and M&A will fuel outbound acquisition activity.

Additional capital deployed by the government in private equity and private credit will create more funding options for local enterprises. Efforts to enhance the SGX as a listing venue will provide local enterprises with a stronger capital-raising alternative alongside private equity and credit markets. Additionally, private equity firms will gain increased opportunities to create liquidity for their investments through SGX listings.

Workforce and SME support

Budget 2025 introduces a $1b Private Credit Growth Fund to provide more financing options for SMEs and support their growth whilst expanding workforce development grants to enhance skills and drive transformation.

To thrive in today’s digital-first world of work, job redesign has emerged as a critical component for organisations to prime its workforce to improve their productivity. Hence, the new SkillsFuture Workforce Development Grant will support companies in upgrading their workforce through comprehensive job-redesign efforts, equipping employees with the necessary skills to excel in high-value and innovative roles. The online wallet for enterprises will make credits accessible and encourage companies to focus on learning and reskilling.

Introduction of the SkillsFuture Workforce Development Grant which is offering up to 90 per cent for reskilling workers and 70% for job redesign activities is a welcomed initiative for Singapore’s enterprises. It empowers companies to invest strategically in their workforce, fostering agility and proficiency in today’s dynamic market. By alleviating the financial burden associated with upskilling, businesses can more readily adopt innovative practices, enhance productivity and sharpen their competitive edge. Furthermore, this investment in human capital not only bolsters individual enterprises but also fortifies Singapore’s overall economic resilience. Enterprises should leverage this grant, along with the SkillsFuture Enterprise Credit and NTUC’s Company Training Committee grant, to drive meaningful transformation.

The Market Readiness Assistance (MRA) Grant provides significant financial support for SMEs looking to expand into overseas markets, helping to defray the costs associated with overseas market promotion, business development and market set-up for up to $100,000 per market. Since 1 April 2020, the inclusion of Free Trade Agreement and trade compliance advisory in the market set-up pillar under the enhanced MRA grant demonstrates the government’s commitment to helping SMEs navigate complex rules of international trade agreements and trade compliance requirements as they expand into new markets. Having the enhanced MRA grant extended to 31 March 2026 is good news for SMEs as it would provide businesses with a longer timeframe to plan and execute their international expansion strategies, while benefiting from government support.

How can Astria help?

At Astria Consulting, we offer a full suite of tax services: corporate and personal tax compliance services, tax controversy and dispute services, tax advisory services, private client services, merger and acquisition tax services, tax governance services, tax incentive services, Goods and Services Tax services, transfer pricing services, and Digital tax transformation and solutions. Our tax team is well placed to assist you in understanding how the Singapore Budget impacts your business.

To learn more about how we can help you leverage the opportunities in Singapore, contact us today and speak with one of our experts.