Deloitte Singapore’s Budget 2025 key recommendations focus on enhancing business resilience, adapting to global tax reforms, advancing research and development (R&D) and promoting sustainability.
As Singapore prepares to commemorate its 60 years of independence, Budget 2025 is a significant opportunity for the country to shape a more vibrant business ecosystem. To this end, there is a need to refine its fiscal policies to address global and domestic challenges, the firm notes.
For one, Singapore’s fiscal policy should evolve to support businesses in an increasingly complex global economy. Policies that provide clarity and flexibility could help companies stay resilient and responsive to change, Deloitte says.
An example is easing restrictions on the disposal of shares in property-holding companies — this could provide businesses with greater flexibility to restructure their assets. Current rules, such as requiring proof of no property development for an extended period, could slow down strategic decisions and limit the ability of businesses to pivot quickly in response to market conditions.
Simplifying these requirements can enable companies to streamline operations, redeploy capital more efficiently and manage resources effectively during periods of economic uncertainty.
“Singapore should continue to fine-tune its tax policies to bolster resilience amid economic uncertainties. Key recommendations include clarifying and amending tax rules, such as the deductibility of costs for carbon offsets and conditions for tax allowances for mergers and acquisitions (M&A), which have been viewed as limiting for businesses,” says Deloitte Singapore business tax leader Rohan Solapurkar.
See also: More support for R&D and digital economy on EY’s Budget 2025 wish list
A review of the exemption conditions under Section 13W of the Singapore Income Tax Act 1947 (ITA) is also proposed. The current requirement that investee companies must refrain from property development for 60 months before the disposal of shares can be overly restrictive, particularly when the immovable property serves as an operational asset rather than one that is being held for trading or resale, says Solapurkar.
“Updating these conditions would be helpful in providing tax certainty to businesses while ensuring compliance with global standards. Additionally, Section 14N of the ITA, which provides tax deductions for renovation or refurbishment works, could be enhanced by increasing the cap from $300,000 to $450,000. This adjustment would reflect rising costs and better support businesses in maintaining their premises,” he adds.
Adapting to Pillar Two rules
Meanwhile, as global tax policies continue to evolve, Singapore’s balanced approach to implementing the Organisation for Economic Co-operation and Development (OECD) Pillar Two Global Minimum Tax Rules will serve as a model for maintaining fiscal responsibility without compromising economic attractiveness.
To further support businesses in navigating the Minimum Tax framework, Deloitte proposes introducing interest-free instalment options for the payments of Domestic Top-up Tax (DTT) and Multinational Top-up Tax (MTT).
The DTT ensures that Singapore-based entities meet the global minimum effective tax rate of 15%, allowing Singapore to retain taxing rights on local profits. The MTT, on the other hand, addresses additional taxes owed when multinational enterprises (MNEs) fall short of the minimum tax threshold in other jurisdictions that they operate in which have yet to introduce a Qualified Domestic Minimum Top-up Taxes framework.
“Providing installment options for these payments would help MNEs manage their cash flow during the transition,” says Deloitte Singapore international tax leader Liew Li Mei.
The Refundable Investment Credit (RIC) scheme — introduced in Budget 2024 — is a forward-looking initiative designed to support high-value economic activities that align with Singapore’s strategic priorities. To enhance its impact, Deloitte recommends expanding the RIC to include offshore and regional decarbonisation projects that are initiated from Singapore, in recognition of the interconnected nature of sustainability challenges and cross-border opportunities.
This enhancement will strengthen Singapore’s ambitions to be a key player in global efforts to transit to a low-carbon future and serve as an acknowledgement that regional environmental efforts also contribute towards Singapore’s sustainability goals, says Deloitte Singapore global investment and innovation incentives leader Yvaine Gan.
“Further enhancements, such as broadening qualifying cost categories to include cost-sharing agreements, intangible assets and depreciation of existing assets, would provide businesses with greater flexibility to scale impactful projects.
To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section
“Increasing the support rate to up to 70% and allowing the RIC to be offset against other taxes payable in addition to corporate income tax, such as property tax and carbon tax would enhance its appeal. In addition, the RIC could be augmented by adding a volume-based component, where credits are linked to production volumes. This would help to ensure that the RIC is adaptable to diverse business models and position Singapore as a global hub for innovation and sustainability,” Gan adds.
Amid rapid technological advancements and evolving global dynamics, Budget 2025 should focus on enhancing R&D incentives, supporting digital transformation and fostering a robust ecosystem for emerging technologies.
By doing so, Singapore can continue to remain at the forefront of innovation, drive sustainable economic growth and maintain its competitive edge on the global stage, the firm adds.
GST, sustainability and personal tax
With the increase in Goods and Services Tax (GST) rates in 2023 and 2024 and ongoing cost of living pressures, Deloitte recommends assessing the impact of the GST increase, expanding the e-invoicing mandate and adjusting the GST registration threshold to foster an inclusive, digitally enabled tax ecosystem.
To further support businesses in adapting to a dynamic economic environment, Deloitte also recommends adjusting the GST registration threshold from $1 million to $750,000 and addressing inflationary pressures through enhanced compliance measures.
Sustainability will be an important pillar of Budget 2025. Deloitte’s recommendations for this area include extending the Energy Efficiency Grant and enhancing support for Scope 1 and Scope 2 reporting.
For personal tax policies, Deloitte’s recommendations include introducing reliefs for caregivers of infants, children and the elderly, broadening the scope of insurance relief, and recalibrating earned income relief to support lower to middle income households. The firm believes that such measures amid inflationary pressures would highlight Singapore’s inclusive approach to navigating current economic and societal challenges.
Deloitte also suggests changes to further enhance Singapore’s appeal to high-skilled talent and investors, while upskilling local professionals and supporting sustainable workforce growth. The firm’s proposals — such as expanding the scope of Dependant’s Pass employment eligibility, refining the work pass criteria to reduce administrative hurdles and enhancing the flexibility of short-term work-arrangements to attract skilled professionals while fostering integration — may help ensure Singapore remains a top choice for global talent to live, work and thrive.
