Singapore’s 2024 National Budget, delivered by Deputy Prime Minister and Minister for Finance Lawrence Wong, sets the stage for a promising year ahead. The budget strongly emphasises supporting businesses and driving economic growth. The government has unveiled a comprehensive plan to bolster the economy, empower the workforce, and create a more inclusive society.
The importance of the national budget in supporting businesses cannot be overstated because it serves as a roadmap for the country’s economic direction. For existing business owners and managers, as well as those considering incorporating a new company in Singapore, understanding the implications of the budget is crucial in making informed decisions and seizing opportunities that arise.
Enterprise Support Package
The Singapore Budget 2024 allocated SGD 1.3 billion through the Enterprise Support Package to help businesses manage rising costs and drive transformation. This is to ensure that they remain competitive and resilient in the face of economic challenges.
50% Corporate Income Tax (CIT) Rebate
One of the key components of the Enterprise Support Package is the 50% Corporate Income Tax (CIT) Rebate for the Year of Assessment (YoA) 2024. This rebate, capped at SGD 40,000, is a significant financial relief for businesses, especially small and medium-sized enterprises (SMEs), that often face cash flow constraints. The reduced tax burden allows companies to allocate more resources towards growth initiatives, such as innovation and workforce development.
The package also includes a minimum cash benefit of SGD 2,000 for companies that employed at least one local employee in 2023. This measure acknowledges the importance of retaining local talent and maintaining employment levels and ensures that even businesses that may not be profitable in the current year can still receive support.
Enhancements to the Enterprise Financing Scheme
The Enterprise Financing scheme aids Singapore enterprises in accessing financing for growth and expansion, and it has been enhanced under the Singapore Budget 2024. The maximum working capital loan quantum has been permanently increased to SGD 500,000. The goal here is to provide businesses with greater flexibility in managing their operational expenses and cash flow needs.
In addition, the enhanced maximum trade loan quantum and the Government’s risk-sharing of project loans for domestic construction projects have been extended until 31 March 2025. This extension is to help the construction sector access financing options and mitigate risks associated with projects, given the challenges faced by the sector.
Extension of SkillsFuture Enterprise Credit (SEC)
The SkillsFuture Enterprise Credit offers additional support for employers to cover out-of-pocket expenses incurred during workforce and business transformation. It has been extended until 30 June 2025. Businesses can then continue investing in the skills development of their employees so they stay competitive and adaptable.
SEC helps offset the costs related to training programs, workshops, and other initiatives that improve the capabilities of company employees. This is particularly valuable for SMEs as they may have limited resources to dedicate to training and development.
Attracting Quality Investments
Singapore has long been recognised as a prime destination for foreign investments for many known reasons. The 2024 National Budget reinforces the government’s commitment to attracting high-quality investments that will further economic growth and create job opportunities.
Introduction of Refundable Investment Credit (RIC)
An initiative that was introduced in the budget is the Refundale Investment Credit. It supports high-value and substantive economic activities, such as manufacturing, innovation, research and development (R&D), and green transition efforts. The RIC was designed to attract global companies to establish or expand their presence in Singapore through a tax credit with a refundable cash feature.
Businesses in cutting-edge technologies, advanced manufacturing, and sustainable solutions are the target recipients of the scheme. It is by offering a competitive incentive package that Singapore aims to position itself as a hub for these high-growth sectors, further contributing to the nation’s long-term economic resilience and competitiveness.
And for those businesses considering setting up their operations in Singapore, the RIC is compelling enough to choose the city-state as their investment destination. The scheme does provide a significant financial benefit, by reducing the effective tax rate for qualifying investments and freeing up capital for further growth and expansion.
Top-up to the National Productivity Fund (NPF)
The Singapore Budget 2024 also allocates a top-up of SGD 2 billion to the National Productivity Fund. This fund supports all initiatives focusing on productivity growth and workforce capability enhancement. The government wants to make the country an even more attractive location for businesses looking for a skilled and efficient talent pool.
The increase in funding will be used to support programs that promote automation, digitalisation, and the adoption of new technologies across various sectors. Investing in these areas means that Singapore will become a more productive and competitive business environment, further implying that more high-quality investments will be brought in.
Building on Singapore’s Strengths
Singapore has also consistently demonstrated its adaptability and ability to thrive in the face of global challenges. The 2024 budget builds on the existing strengths and focuses on key areas like financial services, research and innovation, artificial intelligence (AI), and digital infrastructure. All these to solidify its position as a global leader and create new opportunities for businesses and entrepreneurs.
Top-up to the Financial Sector Development Fund (FSDF)
The financial services industry is a pillar of the economy. The 2024 National Budget reinforces the government’s commitment to further developing the sector through a top-up of SGD 2 billion. The fund will provide resources to support growth in core areas like banking, capital markets, asset management, and insurance and build capabilities in emerging areas like FinTech, green finance, and transition finance.
Singapore wants to focus on these innovative segments to stay at the forefront of the rapidly evolving financial landscape. It also wants to capture new opportunities arising from the global shift towards sustainable and technology-driven solutions.
Because of the increase in funding, businesses in the financial services sector get to enjoy exciting opportunities for growth and expansion.
Additional Investment in Research, Innovation, and Enterprise 2025 (RIE2025)
Research and innovation are important drivers of Singapore’s economic success, so the 2024 National Budget doubles down on this commitment. An additional SGD 3 billion will be invested in the RIE2025 plan to sustain investments in research, innovation, and enterprise at around 1% of GDP.
The additional funding will focus on strategic domains (advanced manufacturing, sustainability, digital economy, and healthcare). Singapore can not only develop new capabilities but also foster collaboration between academia and industry when it decided to channel resources into these areas, too. The city-state can also create a vibrant ecosystem for innovation and entrepreneurship.
Investing in Artificial Intelligence (AI)
AI enables digital transformation and it has the potential to revolutionise industries across the board. The Singapore Budget 2024 allocates over SGD 1 billion to be invested in AI compute, talent, and industry development over the next five years.
This investment will focus on securing access to advanced chips that are crucial for AI development and deployment. The government will also collaborate with leading companies to set up AI Centres of Excellence in Singapore and spur industry collaboration and innovation.
Developing Local Enterprises
The role of local enterprises is vital in creating jobs, fostering innovation, and driving economic growth. The 2024 National Budget also emphasised supporting and nurturing them so they can build capabilities and compete in the global market.
Partnerships between SMEs and Larger Companies
Another initiative introduced in the budget is the enhanced support for partnerships between larger large local enterprises (LLEs) and small and medium-sized enterprises (SMEs), made possible by forming the Partnerships for Capability Transformation (PACT) scheme. PACT will be improved to enable SMEs to learn from the expertise and best practices of more established firms.
Under the enhanced PACT scheme, the government will provide support for collaborations in capability training, internationalisation, and corporate venturing. With this, the growth and development of local enterprises will be accelerated; they will acquire new skills, expand into new markets, and explore innovative business models.
Extension of Enhanced Support for Green Loans
In line with Singapore’s commitment to sustainable development, the 2024 National Budget extends this support under the Enterprise Financing Scheme. This initiative aims to motivate local enterprises to adopt eco-friendly practices and invest in green technologies, so that gearing towards a green economy or building a more sustainable future is a collective effort.
The funding helps local businesses overcome the initial costs when they are transitioning to more sustainable operations. The extended support for green loans also sends a message that environmental stewardship is important.
Enhancement of the Energy Efficiency Grant (EEG)
The 2024 Budget also includes improvements to the Energy Efficiency Grant. Its coverage is extended to more sectors, and it offers extra support for companies with ambitious emission reduction plans. EEG was originally available to the Food Services, Food Manufacturing, and Retail sectors, but now, it will also be accessible to businesses in Manufacturing, Construction, Maritime, Data Centres, and their users.
The expansion of this grant is to encourage businesses to reduce their energy consumption, lower their operating costs, or in general, contribute to Singapore’s efforts to mitigate climate change. The government is trying to empower local enterprises to become more competitive and at the same time sustainable.
Creating More Paths Towards Equality and Mobility
The 2024 National Budget of Singapore also reaffirms the government’s commitment to cultivate a more inclusive and equitable society, where everyone can reach their full potential and make sure that no one gets left behind as the nation pursues growth and prosperity.
Enhancements to Workfare Income Supplement scheme (WIS)
The WIS scheme provides support for lower-wage workers and helps them improve their living standards. Further enhancements made to this scheme aim to extend to a wider group of beneficiaries.
The qualifying income cap will be raised from SGD 2,500 to SGD 3,000. The SGD 500 increase helps those in the lower-income brackets grapple with the rising costs of living. The maximum annual payout for lower-wage senior workers will also be increased so they have the financial capacity to meet their needs and maintain a decent standard of living. The government knows the challenges faced by older workers. Hence, the increase in payouts.
Changes to the Progressive Wage Credit Scheme (PWCS)
The Singapore Budget 2024 also improved the PWCS, a scheme that supports businesses in their efforts to raise the wages of lower-wage workers. It has been successful in encouraging businesses to provide progressive wage increases and improve the living standards of their lower-wage employees.
Under the enhanced PWCS, the co-funding levels for wage increases in 2024 will be raised. It is now possible for businesses to implement progressive wage increments. The enhancement was initiated due to the challenges faced by businesses in the current economic climate and the need to provide targeted assistance to support wage growth for lower-wage workers.
The wage ceiling for the PWCS will be increased from SGD 2,500 to 3,000 in 2025, aligning with the increase in the WIS scheme.
Introduction of ITE Progression Award
The Institute of Technical Education (ITE) Profession Award is a new initiative for ITE graduates aged 30 and below in their pursuit of diploma qualifications. Under this, eligible ITE graduates who enrol in diploma programmes will receive a SGD 5,000 top-up to their Post-Secondary Education Account (PSEA). In simple terms, it is a financial support to cover the costs of their further education.
And after they successfully completed their diploma programmes, ITE graduates will receive an additional SGD 10,000 top-up to their CPF Ordinary Account. The top-up will serve as a reward for their dedication and hard work in acquiring new skills and qualifications.
The introduction of the ITE Progression Awards highlights the importance of businesses supporting the continuous learning and development of their employees, particularly those from the ITE background.
Conclusion
Singapore’s 2024 National Budget offers a range of supportive measures for businesses that foster growth, innovation, and inclusivity. As you consider company incorporation in Singapore, leverage the budget’s initiatives and engage Corporate Services Singapore to effortlessly navigate the process and maximise the opportunities presented.
