Budget 2025: Corporate tax rebate, enhanced wage support to cut costs for businesses

Businesses will receive a 50 per cent corporate tax rebate and more wage support to help them manage higher costs of rent and labour, said Prime Minister Lawrence Wong.

The tax rebate will be applicable for the Year of Assessment 2025 and help companies with their cash flow needs as they continue to adjust to structurally higher costs, he added in his Budget statement on 18 February.

While inflation, which refers to the pace of change in prices, has eased after rising sharply in 2022, prices remain at elevated levels compared with previous years. Meanwhile, wages have also risen.

PM Wong, who is also Finance Minister, said: “Higher prices also affect our businesses, many of whom are grappling with the higher cost of rent and labour.”

Recognising that corporate tax applies only to companies that make a profit, the PM said: “I will provide every active company that employed at least one local employee last year a minimum benefit of S$2,000.”

The total benefit from the rebate and the cash grant that each company can get will be capped at S$40,000. Eligible companies will automatically receive the benefits from the second quarter of calendar year 2025 onwards.
 

A company will be considered to have met the local employee condition if it has made Central Provident Fund contributions to at least one employee who is a citizen or permanent resident.

As for the enhanced wage support, PM Wong reiterated the Government’s commitment to share with companies the responsibility of uplifting the salaries of lower-wage workers. That is why the Progressive Wage Credit Scheme will be enhanced by raising the Government’s co-funding levels of wage increases from 30 per cent in 2025 to 40 per cent, and from 15 per cent in 2026 to 20 per cent.

The scheme, introduced in 2022, aims to help employers adjust to the progressive wage increases from 2022 to 2026, as well as to encourage employers to raise salaries of lower-wage workers.

“The measures we have taken in recent years, and will take in this Budget, will help to mitigate the impact of rising costs,” PM Wong said.

“In the longer term, the best way to adjust to higher prices is to grow the economy and increase productivity, so that all Singaporeans can enjoy higher real incomes and better standards of living.”
 

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.