On 18 February 2025, the Prime Minister of Singapore, and the Minister for Finance delivered the annual Singapore Budget. Entitled “Onward today for a better tomorrow”, the key theme of this year’s budget is a focus on the provision of support to Singaporeans to defray the increases in the cost of living.
Key Budget Initiatives
In line with this future-focused approach, the key initiatives that Prime Minister Wong outlined during his Budget speech were:
- Growing Singapore into an established technology hub
- Assisting individuals with new employment opportunities via training programs
- Continued development of Singapore as an environmentally sustainable city
- Fostering a caring and inclusive society for Singaporeans
New SME Rebate And Cash Grant
For the SME sector, and as expected, Budget 2025 delivered a few changes to the status quo. However, the Budget 2025 papers did outline two rebates for Singapore companies for the Year of Assessment 2025 (YA 2025):
- Corporate Income Tax (CIT) Rebate
- CIT Rebate Cash Grant (Cash Grant)
The CIT Rebate will be equal to 50% of the total tax payable by the company for YA2025.
The CIT Cash Grant of $2,000 will also be paid to companies with at least one local employee in the 2024 calendar year.
Eligibility For The CIT Rebate And CIT Cash Grant
The CIT Rebate is available to all companies incorporated in Singapore, whether they are tax resident or not of Singapore, who have a tax liability of at least $4,000. The CIT Rebate is also available to registered business trusts and variable capital companies (VCC).
For the CIT Cash Grant, the company needs to be an active company and meet the local employee requirement. An employee will be regarded as local if the company has made CPF contributions for them during 2024.
An active company is a company registered as a taxpayer in Singapore (whether Singapore tax resident or not) which is active at the time that the CIT Cash Grant is paid. To be active, the company needs to be carrying on any trade or business, not under liquidation or receivership.
For example, pure investment holding companies will not be eligible to receive these payments.
The maximum combined CIT Rebate and CIT Cash Grant that a company can receive is $40,000.
Example: Applying The Rebate And CIT Cash Grant
ABC Pte Limited employed five local employees during the 2024 calendar year and made CPF contributions for them all.
For YA2025, ABC Pte Limited has a tax payable of $75,000.
ABC Pte Limited will receive a rebate for YA 2025 of $39,500 which is split between:
CIT Rebate: $37,500 ($75,000 x 50%)
CIT Cash Grant $2,000
How To Claim The CIT Rebate And CIT Cash Grant
Payments for the CIT Rebate and CIT Cash Grant will commence from the second quarter of YA 2025.
The Inland Revenue Authority of Singapore (IRAS) will automatically calculate the CIT
Rebate based on either:
- The filed Estimated Chargeable Income (ECI) return for YA 2025, with assessment finalised by June 2025; or
- If the company has filed both their ECI and company tax returns for YA 2025, IRAS will calculate the CIT Rebate based on the final tax return, with assessment finalised by August 2025.