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Singapore Budget 2024

Highlights of Singapore Budget 2024 – Corporate and Business Sector

Singapore’s Deputy Prime Minister and Minister for Finance, Mr. Lawrence Wong, unveiled the Singapore 2024 Budget Statement last Friday, February 16, 2024.   The budget tackles immediate hurdles while laying groundwork…

Singapore’s Deputy Prime Minister and Minister for Finance, Mr. Lawrence Wong, unveiled the Singapore 2024 Budget Statement last Friday, February 16, 2024.  

The budget tackles immediate hurdles while laying groundwork for sustained long-term growth. It primarily aims at bolstering Singaporeans and businesses. The key focuses include cost-of-living relief, workforce development and skills training. Similarly, it fosters artificial intelligence and sustainability initiatives for the future.  

Highlights of Singapore Budget 2024 for the Corporate and Business Sector  

Assistance for small and medium-sized businesses  

The new $1.3 billion Enterprise Support Package aims to alleviate the burden of increasing costs on local businesses, through the following:  

Corporate Income Tax (CIT) Rebate for the Year of Assessment  2024  

A CIT Rebate equivalent to 50% of the tax payable for YA 2024 will be provided for businesses which employ at least one local worker (local company rendition) in 2023 will receive a minimum benefit of $2,000 through a cash payout known as the “CIT Rebate Cash Grant.”  

Qualified companies fulfilling the local employee rendition will automatically receive the CIT Rebate Cash Grant by the third quarter of 2024. The CIT Rebate, net of any CIT Rebate Cash Grant received, will be seamlessly integrated into companies’ tax assessments following the submission of their Form C-S/ Form C-S (Lite)/ Form C for YA 2024.  

To illustrate: Company A, with two local employees hired in 2023, faces a YA 2024 CIT assessment of $40,000. By the third quarter of 2024, Company A will obtain a $2,000 CIT Rebate Cash Grant. Additionally, it will benefit from a further $18,000 [(50% * $40,000) – $2,000] in CIT Rebate in its YA 2024 CIT assessment.  

The maximum cumulative benefits from CIT Rebate and CIT Rebate Cash Grant that a company may receive are capped at $40,000. A company is deemed to have met the local employee condition if it has made CPF contributions for at least one local employee (i.e., Singapore Citizen or Permanent Resident). This excludes shareholders who also hold directorial roles within the company, during the calendar year 2023.  

SkillsFuture Enterprise Credit (SFEC) 

SFEC aims to stir up employers to participate in Enterprise and Workforce Transformation Initiatives Programme by providing additional support, beyond that offered by existing schemes, to eligible employers. 

Eligible employer can receive a one-off $10,000. The credit can cover up to 90% of out-of-pocket expenses on qualifying costs. These must be related to enterprise transformation programmes and work force transformation. 

For Budget 2024, the deadline for all employers to claim the credit, including those previously qualified, will be extended from 30 June 2024 to 30 June 2025. As per the Budget 2024 announcement, the enhancement to the maximum loan quantum for EFS – Trade Loan at S$10 million will be extended until 31 March 2025.  

Starting 1 April 2024, the government retains the Enhanced Risk Share of 70% for young enterprises and enterprises operating in challenging markets. 

Local Qualifying Salary  

The Local Qualifying Salary (LQS) sets the basis for calculating a company’s Work Permit and S Pass quota entitlement by determining the count of local employees considered. Currently, the local qualifying salary rate is S$1,400 per month and effective 01 July 2024, the salary will be raised to $1,600. 

The Progressive Wage Credit Scheme  

The Progressive Wage Credit Scheme (PWCS) aims to provide transitional wage support for employers to adjustment of mandatory wages increment for lower-wage workers. It is covered by the Progressive Wage and Local Qualifying Salary requirements. 

In 2024, PWCS Co-Funding Support will increase to 50% for the 1st tier and to 30% for the 2nd tier. After the wage increase, employee monthly wage which exceeds $4,000 will not be eligible for PWCS support. 

Personal Income Tax (PIT) Rebate for YA 2024  

A PIT Rebate equivalent to 50% of tax payable will be provided to all tax-resident individuals. It covers the Year of Assessment (YA) 2024 as an assistance for the rising costs of living. The maximum limit for this rebate per taxpayer will be set at $200. 

Starting January 2025, there will be an increase in Workfare Income Supplement scheme payouts up to $4,900 yearly and raise in qualifying income cap to $3,000. 

Refundable Investment Credit (RIC)  

The RIC aims to enhance Singapore’s investment appeal, fostering significant economic activities across key sectors and emerging growth areas. It is administered by the Singapore Economic Development Board (EDD) and Enterprise Singapore (EnterpriseSG). Additionally, RIC incentivizes substantial investments contributing to Singapore’s economic landscape.  

The RIC targets high-value economic implementation including:  

  • Establishing new productive capacities like manufacturing plants or low-carbon energy production.  
  • Expanding digital services, professional services, and supply chain management.  
  • Establishing or enhancing headquarter functions and Centers of Excellence.  
  • Initiating or expanding activities by commodity trading firms.  
  • Conducting research and development, and innovation endeavors.  
  • Implementing decarbonization solutions.  

Operational Mechanics: The RIC is awarded based on qualifying expenditures incurred by the company during a specified period for a qualifying project. Each award’s validity extends up to 10 years. These credits serve to offset Corporate Income Tax liabilities. Any unused credits will be refunded to the company within four years of meeting the credit’s conditions.  

Qualifying expenditure categories may include the following:  

  • Capital expenditure such as building, civil and structural works, machinery, and software.  
  • Manpower and training costs. 
  • Professional fees and expenses related to intangible assets 
  • Outsourced work fees within Singapore 
  • Materials, consumables, and logistics costs 

Companies can receive support of up to 50% on each qualifying expenditure category. Additionally, the total RIC quantum a company qualifies for is determined by EDB or EnterpriseSG.  

Income Inclusion Rule (IIR) and a Domestic Top-up Tax (DTT)  

under Pillar Two of the Base Erosion and Profit Shifting (“BEPS”) 2.0 initiative 

Singapore will implement the IIR and a DTT. It will impose a minimum effective tax rate of 15% on businesses’ profits from financial years starting on or after 1 January 2025. Multinational enterprise (MNE) groups with annual group revenues of 750 million euros or more in at least two of the four preceding financial years will be subject to this requirement.

This is in accordance with Pillar Two Global Anti-Base Erosion (“GloBE”) Model Rules. The IIR applies to MNE groups headquartered in Singapore, related to the profits generated by their entities outside Singapore. On the other hand, DTT applies to MNE groups as to the profits of their group entities within Singapore. 

The Partnerships for Capability Transformation scheme 

The Partnerships for Capability Transformation PACT scheme supports collaborations between companies and SMEs in supplier development and co-innovation. The enhancement of the scheme is to support partnerships in wider areas. Moreover, it includes capability training, internationalisation and corporate venturing. 

For more details about the Singapore Budget 2024, click this link

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