In February 2024, Singapore’s Deputy Prime Minister and Finance Minister Lawrence Wong gave a speech introducing the Singapore Budget 2024. This year’s budget, or Wong’s “Valentine’s Day present” to Singaporeans, aims to bolster Singapore’s economic competitiveness while reducing the impact of growing expenses.
Wong began his second budget speech as Finance Minister by summarising Singapore’s three-year battle with COVID-19. With the demand for travel, food and beverage, and retail restarting, Singapore is now out of the woods following a difficult 2022 marked by record-high inflation, social distancing measures, and border restrictions. The colour has returned to DORSCON green, and using public transport no longer requires mask use.
Singapore faces fresh difficulties despite recovering from the worst of the pandemic. According to Wong, the global economy would be “mixed and uneven,” with problems in many regions of the world.
Beyond that, several additional grants, plans, and tax breaks for employers and employees will be included in the Singapore Budget 2024. Singaporean enterprises will benefit from these additional safeguards during this uncertain time.
Extension of Existing Grants and Financing for Businesses
- The Enterprise Financing Scheme will be extended for an additional year, ending on March 31, 2024, as part of Budget 2024. The programme is intended to support Singaporean companies’ growth and innovation. It contains an increased maximum amount for capital and trade loans, a seventy percent government risk-share for trade loans, and capital loan support for domestic construction projects.
- The Energy Efficient Grant will remain available for an additional year until March 31, 2024. By supporting energy efficiency investments, the grant helps the retail and food and beverage industries lessen the effects of rising electricity costs.
More Financing for Businesses
Singapore’s small size means that the government has traditionally supported local businesses going global. The Singapore Global Enterprises Initiative will receive S$1 billion in funding from the government for Budget 2024.
The programme supports new businesses by helping them innovate, go global, and form alliances with other businesses. Sleek, which has offices in Australia, Singapore, Hong Kong, and the UK, assists companies in expanding internationally.
Increase Taxes for Multi-National Enterprises
By 2025, multinational corporations will be obligated to pay a minimum effective tax rate of 15 percent worldwide. A domestic top-up tax is included in the new tax rate. The modifications will affect MNEs doing business in Singapore as well as foreign subsidiaries of Singapore’s parent businesses. These adjustments comply with the global framework for international tax problems, known as BEPS 2.0.
Know About New Enterprise Innovation Scheme
The new Enterprise Innovation Scheme, which increases tax credits for Singaporean enterprises engaged in innovation, is part of Budget 2024. The programme assists small and medium-sized businesses in strengthening their financial situation to withstand future difficulties.
- As of right now, businesses can deduct up to 250 percent of eligible expenses from their taxes for innovation-related activities. These tax deductions will be increased to 400 percent for five innovation activities under Budget 2024.These actions:
- Research and development carried out in Singapore
- Intellectual property (IP) registration, including design, trademark, and patent registration
- Purchasing and granting licences for intellectual property
- Innovation at Institutes of Technical Education (ITEs) and Polytechnics
- Instruction through programmes that are in line with the Skills Framework and authorised by Skills Future Singapore
- The programme will cap qualifying expenses at S$400,000 for each innovative activity, with the exception of those done in collaboration with ITEs and polytechnics. There will be a S$50,000 cap on certain activities.
- Under the scheme, enterprises will have the option to choose a non-taxable cash payout at a cash conversion ratio of 20 percent or up to S$100,000 of eligible expenditure in place of tax deductions or allowances. Even though smaller businesses pay little or no taxes, the dividend will assist them in covering the expenditures of their innovation-related operations, according to Wong.
What are the Changes for Employers?
- Increasing the CPF salary Ceiling
Budget 2024 will provide Singaporean households with much-needed financial support in light of growing expenses. Because of this, in 2026 the CPF Monthly Salary Ceiling will increase from S$6,000 to S$8,000.
In order to give companies and employees time to adjust, the hikes will be implemented gradually over a period of four years. These adjustments will assist Singaporeans in creating a sizable retirement fund.
- Increasing the fund for the Progressive Wage Credit Scheme (PWCS)
In order to offer employers with transitional support, the PWCS was introduced in the 2022 budget. Its purpose is to co-fund mandated wage increases for low-paid workers. It will add S$2.4 billion to the PWCS fund to support the pay hike.
In this year’s budget, the Singaporean government would co-fund up to 75% of salary hikes for workers making up to S$2,500 per month. It will contribute forty-five percent to salary increases for workers making up to S$3,000 per month.
Wong reiterated in his budget speech how crucial it is to protect Singapore’s future by boosting its economy, educating its workforce, and improving the lives of its people. The budgetary measures for this year are also a component of the Forward Singapore project, a comprehensive plan that builds on Singaporeans’ insights to shape the nation’s future development.
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