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Budget 2025 represents a pivotal moment for businesses in Singapore, introducing a mix of measures aimed at addressing both immediate challenges and long-term growth prospects. From easing cost pressures to supporting regional expansion, sustainability goals, and navigating global tax developments, this year’s Budget is central to shaping Singapore’s competitive edge. Ajay Kumar Sanganeria, Partner and Head of Tax at ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø in Singapore, answers four key questions on how the Budget impacts businesses and what more can be done to drive success in an evolving economic landscape.

Budget 2025 has introduced multiple measures aimed at easing cost pressures for businesses, such as a 50 percent Corporate Income Tax (CIT) rebate, capped at S$40,000 per company, which includes a S$2,000 cash grant for eligible businesses. 

The enhancements to progressive wage support, including increased CPF contributions for senior workers and co-funding for lower-income employees, have demonstrated a well-balanced approach to help offset cost increases for businesses. 

Additionally, long-term initiatives like the Enterprise Compute Initiative have promoted productivity and innovation, equipping businesses to remain competitive. The Future Energy Fund’s top-up has underscored a push for sustainable infrastructure investment. 

While short-term relief measures have been valuable, these structural policies have provided the essential foundation for businesses to address rising operational costs and focus on long-term growth. 

The extension of the enhanced cap for the Market Readiness Assistance Grant and sunset clause for the Double Tax Deduction for Internationalisation supports businesses planning global expansions. 

Another area to unlock opportunities for businesses is the Johor-Singapore Special Economic Zone (JS-SEZ).â€� This would require targeted support for businesses which can optimise costs while leveraging Singapore’s infrastructure and connectivity. 

Singapore should also continue to develop economic collaboration projects with ASEAN neighbours to support companies� regional expansion. The Government could increase support through grants and financing options to help businesses better integrate into regional value chains, enhance their competitiveness and strengthen cross-border partnerships in high-growth areas such as the digital and green economies.

Additionally, addressing talent shortages is equally critical in supporting businesses' global ambitions. The SkillsFuture initiative has fostered a culture of lifelong learning in Singapore, benefiting both individuals and businesses. However, upskilling efforts under SkillsFuture may not immediately resolve the talent gaps in key areas like sustainability and artificial intelligence. These sectors demand more agile and responsive approaches to talent and training, going beyond traditional qualifications. 

Ahead of the Budget, ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø in Singapore and the Singapore Institute of Directors (SID) had proposed implementing micro-credentialling to meet these needs. This approach would have enabled businesses to provide employees with short, targeted courses that address immediate skills gaps and align with longer term business strategy. Equipping the workforce with relevant skills can enhance businesses' ability to seize emerging opportunities, strengthening Singapore’s position as a hub for innovation and technology. 

By aligning talent development strategies with broader growth initiatives, Singapore businesses can be equipped better to expand across international markets while maintaining a competitive edge. 

Budget 2025 reaffirms Singapore’s commitment to achieving net zero by 2050, with significant investments directed toward climate-resilient infrastructure. This long-term approach strengthens the foundation for national sustainability and supports businesses in navigating environmental challenges. However, beyond these structural investments, there appears to be limited direct support for businesses to accelerate decarbonisation or address evolving ESG reporting standards, such as Scope 2 emissions calculations or alignment with ISSB sustainability-related risk disclosures.

To complement its national sustainability efforts, the Government could consider establishing a dedicated ESG reporting hub, as proposed by ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø and the Singapore Institute of Directors. Such a platform would centralise resources and guidance, helping businesses efficiently adapt to complex disclosure requirements. Additionally, with the carbon tax increasing to S$45 per tonne this year, clarity on utilisation of carbon tax collection to support lower-carbon operations would provide businesses with much-needed clarity to plan their sustainability investments.

The global minimum tax continues to maintain strong momentum, with participation from over 140 countries. While the United States withdrawal and hesitance from other major economies have introduced some uncertainties, the cohesive commitment of the majority of jurisdictions indicates that the global minimum tax framework is here to stay.

Singapore has been proactive, implementing the global minimum tax at the start of this year. Recognising the implications for multinational corporations facing higher tax obligations, the Singapore Government has introduced measures to retain its appeal as a premier business hub. For instance, the Refundable Investment Credit scheme, announced in Budget 2024 and coupled with this year’s S$3 billion top-up to the National Productivity Fund signals further support to enhance Singapore’s investment appeal.

Although specific details are pending, the Government is expected to use this fund as part of its dynamic investment toolkit. Potential areas of focus include targeted OECD-compliant incentives, support for innovation, sustainability and high-value activities. This approach would continue to reinforce Singapore's long-term competitiveness. 

Amid intensifying global competition, as other nations bolster their incentive regimes to attract foreign investment, Singapore's agility in refining and enhancing its policies remains key. By strategically adapting tax incentives with the evolving global tax landscape, Singapore can strengthen its position as a strong business and financial hub.