Budget 2025: Corporate income tax rebate to ease business costs, but impact limited for some

• Corporate income tax rebate of 50 per cent, plus a S$2,000 cash grant for eligible employers, capped at S$40,000 in total benefits
• Progressive Wage Credit Scheme co-funding to increase to 40 per cent in 2025 and 20 per cent from 2026
• Household support: S$800 in CDC Vouchers, up to S$760 in U-Save rebates, and S$500 in LifeSG credits for each Singaporean child aged 12 and below

A REPEAT of the corporate income tax (CIT) rebate will help businesses reduce costs in the short term, but its impact is less significant for unprofitable companies – even as they may be the ones in greater need of financial support, business leaders said.

Finance Minister Lawrence Wong on Tuesday (Feb 18) announced a CIT rebate of 50 per cent on tax payable for the year of assessment 2025 in his Budget speech.

In addition, companies that are active and had at least one local employee in 2024 will receive a minimum S$2,000 cash grant.

The total benefits – comprising the CIT rebate and cash grant – will be capped at S$40,000, with eligible companies automatically receiving them from the second quarter of 2025.

A similar rebate, with the same cap and cash grant, was introduced in Budget 2024.

Based on that experience, Ang Yuit, president of the Association of Small and Medium Enterprises, told The Business Times that companies generally fall into three groups in terms of how they benefit from the rebate and grant.

The first group consists of profitable firms, which can “defray their costs by quite a bit” through the CIT rebate, on top of the S$2,000 cash grant.

The second group includes micro-enterprises such as hawkers. Even if they are unprofitable and do not benefit from the CIT rebate, the S$2,000 grant would be a significant sum – provided they qualify.

However, the third group – unprofitable businesses with at least three to five employees – would find the S$2,000 grant “less significant” and see the least benefit, Ang noted.

He added that increasing the cash grant to around S$10,000 would have a greater impact on companies in this category.

Still, businesses and industry observers welcomed the rebate and grant.

Yeo Eng Kuang, co-founder of The 1925 Brewing Co, said the brewery – which has seven employees and is profitable – would benefit from the announcement.

“For us, this ‘lifeline’ is not supposed to help you pay the rent or anything like that, but it will definitely help us,” he said.

Enhancements to PWCS

In his Budget statement – his first as prime minister – PM Wong also announced enhancements to the Progressive Wage Credit Scheme (PWCS), following employer feedback.

The scheme, which co-funds wage increases for lower-wage workers, will see the government raise its co-funding levels to 40 per cent from 30 per cent in 2025, and to 20 per cent from 15 per cent in 2026.

While these enhancements would be welcomed by firms, one way to further improve the scheme would be to issue payouts quarterly instead of annually, Ang said.

Shortening the payout intervals would help businesses manage cash flow, even if the overall co-funding level remains unchanged, he added.

Support for households

To help Singaporeans cope with high costs, PM Wong also announced additional household support measures.

Every Singaporean household will receive S$800 in Community Development Council (CDC) Vouchers, with the first S$500 tranche disbursed in May and the remaining S$300 in January 2026.

Besides providing direct support to Singaporeans, the CDC Vouchers also boost consumer-facing businesses by stimulating domestic spending, said Hao Shuo, CEO of the Singapore National Employers Federation.

Eligible households in Housing and Development Board flats will receive up to S$760 in U-Save rebates – double the regular amount – to help with utilities expenses.

Families will also get S$500 in LifeSG credits for each Singaporean child aged 12 and below.

Singaporeans aged 13 to 20 this year, meanwhile, will receive a S$500 top-up to their Edusave Accounts or Post-Secondary Education Accounts.

Households facing greater financial stress will receive additional aid, with Community Care (ComCare) Assistance schemes set to provide higher payouts for lower-income households’ basic living expenses.

Community organisations will also receive more support under the ComCare Interim Assistance programme to help those in need.

Meanwhile, the Singapore Allowance – an ex gratia payment for some pensioners – will be raised from S$350 to S$390 per month to support those with smaller pensions.