FY2024 Singapore Budget Highlights

Singapore’s FY2024 Budget Highlights

March 05, 2024

Written by Sonia Goh

Budget 2024 was generous in extending a helping hand to individuals and businesses amidst the uncertain global economic outlook.  It also outlined the country’s ambitious plans to stay competitive, resilient, united and inclusive.

Through the Enhanced Assurance Package of S$1.9 billion and the GST Voucher Fund, lower and middle-income Singaporean households will receive immediate help to alleviate cost of living concerns viz CDC vouchers, U-save rebates and S&CC rebates for HDB households.  Further, tax resident individuals are granted a 50% personal income tax rebate for YA 2024, capped at S$200 amongst other measures rolled out to help individuals.

In recognition of the fact that Singapore’s only resource is its human capital, the Budget focused on upskilling and reskilling of our workforce with the New SkillsFuture Level-Up Programme for workers above 40 years old including a S$4,000 SkillsFuture Credit top-up and training allowance in support of the continuous growth and development of our people.  In the same vein, more aid will be given to ITE graduates with their upskilling efforts through the ITE Progression Award. 

Businesses are supported through the Enterprise Support Package encompassing a 50% corporate income tax rebate for YA 2024, capped at S$40,000, and a cash payout of S$2,000 for those with at least one local employee in 2023, SkillsFuture Enterprise Credit and enhanced Enterprise Financing Scheme.

Further, to achieve economic resilience, build capabilities and talent in areas of growth, more than S$11 billion will be injected into Artificial Intelligence, Clean Energy, Finance and Research and Development.  It is hoped that businesses will embrace and harness the new technologies or innovations in the future.

In all, Budget 2024 is forward-looking.  It reflects the government’s commitment to invest in industries that could potentially drive future economic growth and nudges its people towards lifelong learning so as to continue to refresh their skills to stay relevant, employable and to achieve their career goals and aspirations.  The measures taken in the Budget will pave the way for a brighter shared future as a society.

  

BUSINESSES

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

A CIT rebate of 50% of tax payable will be granted for YA 2024. Companies that have employed at least one local employee1 in 2023 will receive a minimum benefit of S$2,000 in the form of cash payout (“CIT Rebate Cash Grant”). The maximum total benefits of CIT Rebate and CIT Rebate Cash Grant is S$40,000.

1 This refers to an employee who is a Singapore Citizen or Permanent Resident, excluding shareholders who are also directors of the Company, in the calendar year 2023.

 

Enhance the tax deduction for Renovation or Refurbishment (“R&R”) expenditure

With effect from YA 2025: –

  • Qualifying expenditure will include designer or professional fees.
  • The relevant three-year period for computing the R&R expenditure cap will be fixed, with the first three-year period being from YA 2025 to YA 2027. All businesses will transition to this fixed relevant three-year period.
  • Option to claim R&R deductions in one YA, subject to the prevailing expenditure cap.

The Inland Revenue Authority of Singapore (“IRAS”) will provide further details by 30 September 2024.

 

Income Inclusion Rule (“IIR”) and Domestic Top-up Tax (“DTT”) under Base Erosion and Profit Shifting (“BEPS”) Pillar Two Rules

Singapore will implement the IIR and DTT, which will impose a minimum effective tax rate of 15% on businesses’ profit from financial years starting on or after 1 January 2025. This will apply to multinational enterprise (“MNE”) groups with annual group revenue of EUR 750 million or more in at least two of the four preceding financial years (“in-scope MNE”).

The IIR will apply to in-scope MNE groups that are parented in Singapore, in respect of the profits of their group entities that are operating outside Singapore.

The DTT will apply to in-scope MNE groups in respect of the profits of their group entities that are operating in Singapore.

 

Introduce the Refundable Investment Credit (“RIC”)

Singapore will introduce RIC to encourage global companies to make substantial investments here.  RIC will support up to 50% of qualifying expenditure2 incurred in respect of a qualifying project3 during the qualifying period of 10 years. This will be awarded by the Economic Development Board (“EDB”) and Enterprise Singapore (“EnterpriseSG”). 

The credits will be offset against corporate income tax payable. Any unutilised tax credits will be refunded to the Company as cash within four years from when the Company satisfies the conditions for receiving the credits.

EDB and EnterpriseSG will provide further details by 30 September 2024.

2 Qualifying categories include capital expenditure (e.g. building, civil and structural works, plant and machinery, software), manpower costs, training costs, professional fees, intangible asset cost, fees for work outsourced in Singapore, materials and consumables, freight and logistics cost.

3 Substantive economic activities include investing in new productive capacity, expanding or establishing the scope of activities in digital services, professional services and supply chain management; expanding or establishing headquarter activities, or Centres of Excellence; setting up or expansion of activities by commodity trading firm; carrying out research and developments, implementing solutions with decarbonisation objectives.

 

Extend and revise the tax incentive schemes for funds managed by Singapore-based fund managers (referred to as “Qualifying Funds”)

Fund tax incentive schemes under Sections 13D, 13O and 13U (“the Schemes”), which are scheduled to lapse after 31 December 2024, will be extended till 31 December 2029, with the following key changes to take effect from 1 January 2025: –

  • Section 13O scheme which is currently only available to Singapore resident companies will be enhanced to include Limited Partnership registered in Singapore.
  • The economic criteria (e.g. fund size and business spending) for qualifying funds under the Schemes will be revised.

Monetary Authority of Singapore will provide further details by 30 September 2024.

 

Introduce an alternative basis of tax where the qualifying income of shipping entities

From YA 2024, an alternative basis of tax where the qualifying income of qualifying shipping entities is taxed by reference to the net tonnage of their ships will be available to the following Maritime Sector Inventive (MSI) sub-schemes: –

  • MSI – Shipping Enterprise (Singapore Registry of Ship)
  • MSI – Approved International Shipping Enterprise
  • MSI – Maritime Leasing (Ship)

The existing tax treatment under the relevant MSI sub-schemes will continue to apply to MSI entities that are not under the alternative net tonnage basis of tax.

Maritime and Port Authority of Singapore will provide further details by 30 September 2024.

 

Introduce an additional concessionary tax rate (“CTR”) tier for various incentives

With effect from 17 February 2024, additional CTR tiers will be introduced for the following incentives:

Type of incentive

New CTR tier

Finance and Treasury Centre Incentive

10%

Aircraft Leasing Scheme

10%

Development and Expansion Incentive

15%

Intellectual Property Development Incentive

15%

Global Trader Programme

15%

EDB will provide further details by 30 June 2024.

 

Enhancement to the Enterprise Financing Scheme (“EFS”)

The enhancements are as follows:

Type of loan

Enhancements

SME Working Capital Loan

Loan quantum is increased from S$300,000 to S$500,000

Trade Loan of S$10 million

Extended to 31 March 2025

Project Loan for domestic construction projects

Extended to 31 March 2025 with maximum loan quantum of S$15 million

 

 

Enhancement to Energy Efficiency Grant (“EEG”)

The EEG will be extended to include Manufacturing, Construction, Maritime, and Data centres and their users. To be eligible for EEG, the company must be registered and operating in Singapore with:-

  • At least 30% local shareholding;
  • At least one local employee; and
  • Group annual sales turnover of no more than S$500 million.

The base tier provides support for pre-approved EE equipment up to a cap of S$30,000.  The advance tier provides support up to S$350,000 for non-approved EE equipment that ensures energy savings of above 350t lifetime carbon abatement.

 

Enhancement to Progressive Wage Credit Scheme (“PWCS”)

The PWCS co-funding support will be raised for wage increases given in the qualifying year 2024 from 30% to 50% for gross monthly wages of up to S$2,500 and 15% to 30% for gross monthly wages more than S$2,500 and up to S$3,000. The gross monthly wage ceiling will be increased from S$2,500 to S$3,000 in qualifying years 2025 and 2026.

From 2024 onwards, PWCS support will not be applicable to employees whose average monthly wage exceeds S$4,000 post-wage increase.

 

SkillsFuture Enterprise Credit (“SFEC”)

Eligible companies who have received the one-off SFEC to aid its out-of-pocket expenses for supportable schemes will be able to use the credit and submit the claims up to 30 June 2025, a year beyond the original set date, 30 June 2024.

 

INDIVIDUALS

Personal Income Tax (“PIT”) rebate

A PIT rebate of 50% of tax payable will be granted to all tax resident individuals for YA 2024, capped at S$200 per taxpayer.

 

Income threshold for Dependant-related reliefs

With effect from YA 2025, the annual income threshold of the dependant-related reliefs will be increased from S$4,000 to S$8,000.

Applicable reliefs are spouse relief, parent relief, qualifying child relief, working mother’s child relief, CPF cash top-up relief to the CPF account of spouse or siblings, Grandparent caregiver relief.

 

Withdrawal of course fee relief

The course fee relief of up to S$5,500 will lapse with effect from YA 2026.

 

CPF contribution rates for senior workers and CPF Transition Offset (“CTO”)

From 1 January 2025, CPF contribution rates for employees aged 55 to 65 will be increased by 1.5 percentage points.

Age Band

CPF Contribution Rates from 1 January 2025

 

Total

Employer

Employee

55 and below

No change

Above 55 to 60

32.5%

(+1.5%-pt)

15.5%

(+0.5%-pt)

17.0%

(+1%-pt)

Above 60 to 65

23.5%

(+1.5%-pt)

12.0%

(+0.5%-pt)

11.5%

(+1%-pt)

Above 65 to 70

No change (target contribution rates were reached in 2024)

Above 70

No change

 

The increase in contribution rates will be allocated to the CPF Special Account (“SA”) or Retirement Account (“RA”) to help senior employees to save more for retirement.

To alleviate the rise in business costs due to this increase, a CTO equivalent to half of the 2025 increase in employer CPF contributions rates for senior workers aged 55 to 65 will be provided to employers for one year.

 

Enhancements to the Matched Retirement Savings Scheme (“MRSS”)

From 1 January 2025, the age eligibility for the MRSS4 will be expanded and the annual capping for the matching grant will be enhanced.

Changes

Current

From 1 January 2025

Increase in matching grant cap

S$600 per year

S$2,000 per year, with a S$20,000 cap over an eligible member’s lifetime

Removal of age cap

55 to 70 years old

55 years old and above

4 Launched in 2021, the Government matches every dollar of cash top-ups made to the Retirement Account of eligible CPF members aged 55 to 70, up to an annual cap of S$600.

 

CPF Relief for Contributions eligible for MRSS

A contributor will no longer be entitled to claim CPF Cash Top-Up Relief on cash top ups that attract the MRSS matching grant with effect from YA 2026. However, a contributor may continue to enjoy tax relief of up to S$16,0005  a year for eligible CPF cash top ups that do not attract the MRSS matching grant.

5 Up to S$8,000 per year for cash top-ups made to his own Special Account, Retirement Account or MediSave Account and up to S$8,000 per year for cash top-ups to such accounts of the contributor’s loved ones.

 

Enhanced Retirement Sum (“ERS”)

From 1 January 2025, the Government will raise the ERS6 from 3 times the Basic Retirement Sum (“BRS”) to 4 times.

This will allow CPF members to voluntarily commit more savings to their Retirement Account (“RA”), by transferring from their Ordinary Account (“OA”) savings or by making cash top-ups to receive higher CPF monthly payouts in their retirement.

Year

BRS

Revised ERS from 1 January 2025 (ERS at four times the BRS)

2025

S$106,500

S$426,000

2026

S$110,200

S$440,800

2027

S$114,100

S$456,400

6 The ERS is the maximum amount of savings that members aged 55 and above can place in their CPF Retirement Account (“RA”) to earn RA interest rates and receive CPF monthly payouts. Currently, the ERS is set at three times the Basic Retirement Sum.

 

Closure of the CPF Special Account (“SA”) for members aged 55 and above

With effect 2025, the SA for members aged 55 and above will be closed.  SA savings will be transferred to the RA, up to the Full Retirement Sum which will continue to earn the long-term interest rate. Any remaining SA savings will be transferred to the Ordinary Account (“OA”), where they remain withdrawable and will earn the short-term interest rate.

 

MISCELLANEOUS

Introduce an Overseas Humanitarian Assistance Tax Deduction Scheme (“OHAS”)

The OHAS scheme will provide individual and corporate donors with 100% tax deduction for qualifying overseas cash donations made through a designated charity and towards a fundraiser for emergency humanitarian assistance with a valid Fund-Raising for Foreign Charitable Purposes permit from the Commissioner of Charities.

Tax deductions under OHAS will be capped at 40% of donor’s statutory income. For donors who also receive tax deductions under the Philanthropy Tax Incentive Scheme for Family Offices (“PTIS”), tax deductions under both OHAS and PTIS will be jointly capped at 40% of the donor’s statutory income.

Any unutilised tax deductions cannot be carried forward to offset donor’s income for subsequent YA or transferred under the Group Relief System for any YA.

The OHAS will be piloted for four years from 1 January 2025 to 31 December 2028.

IRAS will provide further details by 30 June 2024.

 

Withdrawal of income tax concession on royalty income accorded to Authors, Composers, and Choreographers

The concession of taxing only 10% of gross royalties will be withdrawn in phases with effect from YA 2027.

For YA 2027 and YA 2028, eligible taxpayers may continue to claim the tax concession and report their taxable royalty income based on the lower of:

  • the net amount of royalties (i.e. gross amount of royalties, less allowable deductions and capital allowances), and
  • the following specified rate applied on the gross amount of royalties:

YA

Concessionary Tax Treatment

2027

40% of gross royalty

2028

70% of gross royalty

From YA 2029, withholding tax will be applicable on the net amount of royalties.

 

STAMP DUTY AND PROPERTY TAX

Revision to Additional Buyer’s Stamp Duty (“ABSD”) remission clawback rates for housing developers

With effect from 16 February 2024, projects with at least 90% of units sold at the five-year sale timeline will be subjected to a lower ABSD remission clawback rate (of between 1% point to 10% points depending on the proportion of units sold at the five-year mark), if the commencement and completion of works criteria are also fulfilled. This applies for projects where the residential land was acquired on or after 6 July 2018.

 

Extension of ABSD concession to single Singapore Citizen (“SC”) seniors

With effect from 16 February 2024, the ABSD concession will be extended to single SC seniors aged 55 and above for purchases of a second residential property (“RP”) (in replacement of the first RP), subject to meeting all the qualifying conditions.

 

Revision of annual value (“AV”) bands for owner-occupier residential property tax (“PT”) rates

With effect from 1 January 2025, the AV bands of the owner-occupier residential PT rates will be adjusted as follows: –

Marginal PT Rate

Portion of AV

Portion of AV

From 1 Jan 2024 to 31 Dec 2024

From 1 Jan 2025 (i.e. from 2025 PT bills)

0%

S$0 – S$8,000

S$0 – S$12,000

4%

>S$8,000 – S$30,000

>S$12,000 – S$40,000

6%

>S$30,000 – S$40,000

>S$40,000 – S$50,000

10%

>S$40,000 – S$55,000

>S$50,000 – S$75,000

14%

>S$55,000 – S$70,000

>S$75,000 – S$85,000

20%

>S$70,000 – S$85,000

>S$85,000 – S$100,000

26%

>S$85,000 – S$100,000

>S$100,000 – S$140,000

32%

>S$100,000

>S$140,000

CONTACT US

https://ledgengroup.com/contact-us/
enquiry@ledgengroup.com

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