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Singapore Budget 2024: What Businesses Need to Know

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Singapore Budget 2024: What Businesses Need to Know

April 8, 2024

In the wake of a challenging year marked by global uncertainties and economic strains, Singapore’s Budget 2024 emerges as a beacon of hope and resilience. Delivered by Deputy Prime Minister and Minister for Finance, Mr. Lawrence Wong, this budget not only addresses the pressing concerns of rising costs and stagnant income growth but also sets a forward-looking agenda for a better Singapore under the banner of Forward Singapore.

As we delve into the intricacies of Budget 2024, it becomes evident that it is more than just a financial plan; it is a roadmap for fostering innovation, nurturing inclusivity, and building a fairer society for all Singaporeans. Join us as we explore the key highlights and implications of Budget 2024 and discover how it shapes the future of our nation. Here’s a detailed overview of the key initiatives for businesses across Singapore.

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Supporting Businesses Amidst Rising Costs

The Budget introduces the ‘Enterprise Support Package,’ allocating SG$1.3 billion to provide financial relief to businesses grappling with escalating expenses like wages, rent, and utilities. This will benefit a wide range of businesses across various sectors, in alleviating the financial burden, ensuring their resilience in the face of economic challenges.

  1. 50% corporate income tax rebate: Companies are set to receive a 50% Corporate Income Tax (CIT) rebate, capped at SG$40,000 for 2024, to help reduce business costs. As for companies that are not profitable, and have at least one local employee (excluding shareholder who is the director and where CPF contribution has been made in 2023) will receive $2,000 CIT cash grant by the third quarter of 2024.

  2. Extension of the SkillsFuture Enterprise Credit (SFEC): To encourage employers to train and upskill their workers, the government has extended the SkillsFuture Enterprise Credit (SFEC) to June 2025. Businesses that invest in employee training and development can leverage the extended support for SkillsFuture Enterprise Credit to offset costs associated with upskilling their workforce. This can lead to a more skilled and adaptable workforce, enhancing the long-term competitiveness and sustainability of these businesses.

    Singapore Budget 2024 for Businesses

  3. Enhancing Skills and Qualifications for Senior Employees

    SG$4,000 SkillsFuture Enterprise Credit (SFEC) Top-Up: Senior Employees are provided with opportunities to enhance their skills and qualifications through the SG$4,000 SFEC top-up. This initiative supports their professional development and career advancement, ensuring they remain competitive in the workforce.

    Adjustments to CPF Contributions: The Budget introduces adjustments to CPF contributions, further supporting older workers in their skill development journey. By easing financial burdens, businesses can invest in upskilling initiatives for their senior employees without incurring additional costs. These measures will help in the skillful integration of senior employees into the evolving job market. In addition, this helps to alleviate the financial burdens on businesses that supports this integration.

    Lawrence Wong, Singapore's Deputy Prime Minister and Minister for Finance announcing Budget 2024

  4. Extending Support for Workforce Transformation

    Extension of SkillsFuture Enterprise Credit: The extension of the SkillsFuture Enterprise Credit to June 2025 offers eligible employers more time to utilize the credit. This extension enhances flexibility in implementing supportable enterprise and workforce transformation programs, allowing companies to maximize the benefits of the SFEC.

    Maximizing Benefits for Businesses: The SFEC covers up to 90% of direct expenses related to workforce development initiatives. This comprehensive coverage enables businesses to invest effectively in the development of their workforce, driving productivity and competitiveness.

    Companies invest in advanced manufacturing and enhanced partnerships.

  5. Fostering Sustainable Economic Growth

    Cultivating a Highly Skilled Workforce: With strategic investments in skills development, Singapore aims to cultivate a highly skilled and adaptable workforce. This initiative not only empowers individuals to thrive in the job market but also strengthens Singapore’s position as a dynamic and innovative hub for business and talent development.

    Driving Global Competitiveness: By prioritizing workforce empowerment, Singapore reinforces its commitment to driving sustainable economic growth and competitiveness in the global market. This strategic investment in human capital is essential for maintaining Singapore’s leadership in the ever-evolving business landscape.

    Singapore Budget 2024

Enhancements on Enterprise Financing Scheme (EFS)

The Enterprise Financing Scheme (EFS) is set to undergo significant enhancements to better support enterprises in meeting their financing needs.

  1. Increasing Support for SMEs

    Permanent Increase in Maximum Loan Quantum: Small and medium-sized enterprises (SMEs) will benefit from a permanent increase in the maximum loan quantum for the EFS – SME Working Capital Loan, rising from SG$300,000 to SG$500,000. This enhancement provides SMEs with greater access to capital to support their business operations and growth initiatives.

    Addressing Trade Financing Needs: To address trade financing requirements, the enhanced maximum loan quantum of SG$10 million under the EFS – Trade Loan will be maintained until 31 March 2025. This measure ensures that businesses have adequate support to facilitate international trade and expansion efforts.

    Enterprise Financing Scheme (EFS) | Enterprise Singapore

  2. Extending Support for Construction Firms: The EFS – Project Loan, aimed at assisting domestic construction firms amidst challenging market conditions, will be extended until 31 March 2025. With a maximum loan quantum of SG$15 million for construction projects, this extension provides crucial financial support to sustain operations and undertake new projects.

Empowering Singapore’s Competitive Edge

  • Investment in Research and Innovation: Building on its successful launch in 2020, the Research, Innovation, and Enterprise 2025 (RIE2025) plan receives a significant boost with an additional SG$3 billion investment. This injection of funds accelerates research and development efforts in critical sectors, enhancing Singapore’s global leadership in innovation.

    RIE2025 Research Innovation and Enterprise 2025 Plan

  • Introduction of the Refundable Investment Credit Scheme: Budget 2024 introduces the Refundable Investment Credit (RIC) scheme to incentivize high-value economic activities. Companies engaged in research, development, and innovation, with a focus on decarbonization, can leverage grants awarded by the Singapore Economic Development Board (EDB) and Enterprise Singapore (EnterpriseSG).

  • Boosting Productivity and Innovation:

    SG$2 billion Top-up to the National Productivity Fund: To enhance productivity and support ongoing education and training, an additional SG$2 billion is allocated to the National Productivity Fund (NPF). This fund plays a crucial role in helping businesses adapt to market demands, ensuring Singapore’s global competitiveness.

    SG$2 billion Top-up to the Financial Sector Development Fund: Solidifying Singapore’s position as a global financial hub, Budget 2024 allocates an additional SG$2 billion to the Financial Sector Development Fund (FSDF). Managed by the Monetary Authority of Singapore (MAS), this fund supports initiatives across various financial sectors, including fintech.

    Local employee needs to understand tax incentives.

  • Expansion of the Partnerships for Capability Transformation (PACT) Scheme: Enhancements to the PACT scheme broaden its scope beyond supplier development, fostering capability training, internationalization, and corporate venturing. This initiative empowers companies to tap into global supply chains, venture into overseas markets, and lead in their sectors.

Investing in the Future:

Singapore’s commitment to becoming a leader in artificial intelligence (AI) is evident in the Budget’s allocation of over SG$1 billion towards AI technology, talent, and industry growth. Furthermore, plans to upgrade the Nationwide Broadband Network underscore the government’s efforts to facilitate innovation and technological advancement, positioning Singapore as a hub for cutting-edge technologies.

  • National AI Strategy 2.0 Investment: Singapore commits over SG$1 billion to support the National AI Strategy 2.0, focusing on AI technology, talent, and industry growth. This investment aims to secure advanced microchips essential for AI development and deployment.
  • Establishing AI Centers of Excellence: In a bid to foster industry collaboration and innovation, Singapore plans to partner with leading local and global companies to establish AI centers of excellence, driving forward the nation’s AI capabilities.

Vibrant economy aligning with AI innovation.

  • Upgrading the Nationwide Broadband Network: Additional resources are allocated to catalyze investments in upgrading the Nationwide Broadband Network, aiming to support advanced technologies like AI. The upgrade will enable broadband speeds of up to 10 Gigabits per second, facilitating seamless connectivity for businesses and individuals.

  • Positioning Singapore as a Hub for Cutting-Edge Technologies: Through strategic investments in AI and broadband infrastructure, Singapore solidifies its position as a hub for technological advancements, driving innovation and economic growth in the digital age.

    Singapore city with people_tech innovation hub

Promoting Sustainable Business Practices:

In line with global sustainability efforts, the Budget introduces updates to schemes like the Enterprise Financing Scheme – Green and the Energy Efficiency Grant. By broadening support for green solutions and extending eligibility to additional sectors, Singapore aims to accelerate the transition towards a more sustainable business landscape, fostering environmental responsibility among businesses.

  • Expanding the Enterprise Financing Scheme – Green: Effective April 1, 2024, the Enterprise Financing Scheme – Green (EFS-Green) undergoes expansion to support a wider array of SMEs in adopting green solutions. Initially targeting project developers, system integrators, and technology enablers, the scheme now extends its support to green solution adopters. This expansion aligns with Singapore’s broader goal of becoming ‘sustainability ready’ and offers enhanced support extended by two more years.

  • Extending the Energy Efficiency Grant: First introduced in 2022 for select sectors, the Energy Efficiency Grant now includes additional industries such as manufacturing, construction, maritime, and data centers. The grant features a two-tiered support mechanism, providing up to SG$30,000 for approved energy-efficient equipment purchases and advanced support for substantial investments in higher energy efficiency. Eligibility extends to Singapore-registered companies meeting specific criteria, ensuring broad participation in promoting sustainability.

    Enterprise Financing Scheme - Green gives competitive advantages for mid career workers.

Corporate Tax Aligning with Global Standards

Singapore is committed to addressing tax avoidance through corporate tax reforms aligned with global initiatives like the Base Erosion and Profit Shifting (BEPS) 2.0 framework. Measures such as the Income Inclusion Rule (IIR) and Domestic Top-up Tax (DTT) aim to ensure a fair and transparent tax regime, promoting domestic tax revenue retention and compliance with international standards.

  • Implementation of Income Inclusion Rule (IIR): Starting with financial years on or after 1 January 2025, the Income Inclusion Rule (IIR) will be applied, ensuring that multinational enterprise (MNE) groups headquartered in Singapore pay a minimum effective tax rate of 15% on their overseas profits.

  • Introduction of Domestic Top-up Tax (DTT): Simultaneously, a Domestic Top-up Tax (DTT) will be introduced, mandating that MNE groups also meet a minimum 15% effective tax rate on their profits earned in Singapore.

Larger companies in manufacturing sector need more support in emerging technologies.

  • Targeted Measures for MNE Groups: These measures, targeting MNE groups with annual revenues exceeding SG$1.1 billion, aim to retain tax revenue domestically and adhere to the standards set by BEPS 2.0’s Pillar 2.

  • Review of Undertaxed Profits Rule: The framework’s undertaxed profits rule will be reviewed for future implementation to ensure comprehensive tax reforms in line with global standards.

  • Global Implementation and Singapore’s Commitment: Singapore’s commitment to implement corporate tax changes under Pillar 2 of BEPS 2.0 was first announced in Budget 2023. Since then, several jurisdictions have made moves to implement tax changes related to Pillar 2. These include markets such as the European Union, the United Kingdom, Switzerland, Japan, and South Korea, which are implementing Pillar 2 rules from this year, while Hong Kong and Malaysia have announced plans to do so from 2025.

Singapore enterprises are promised for new productive capacity and sustainability journey.

What Changes Can We Expect from Singapore Budget 2024?

Singapore Budget 2024 brings forth a comprehensive array of changes aimed at fostering economic resilience, empowering the workforce, and promoting sustainability. With initiatives targeting various sectors, businesses can anticipate a supportive environment conducive to growth and innovation. From corporate tax reforms to enhancements in enterprise financing and workforce development, these changes signal Singapore’s commitment to staying ahead in an ever-evolving global landscape. By embracing these transformations, businesses can position themselves to thrive in the post-pandemic era while contributing to Singapore’s continued prosperity and success.

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