The firm gives its take on the 2024 budget from the Asian city-state’s government, examining areas including those relevant to a banking and finance audience.

Earlier this month, the Singapore government unveiled its annual budget; the package addresses a number of areas, including those potentially affecting wealth managers’/private bankers’ clients, such as business owners. 

The following commentary on the budget is from Dario Acconci (pictured below), head of corporate – Asia, at Hawksford a corporate, private client and fund services provider that recently opened a new office in Dubai. 

The editors are pleased to share these views; the usual editorial disclaimers apply. To respond, email tom.burroughes@wealthbriefing.com

Singapore’s budget 2024 earlier this month (16 February) addressed a number of critical areas, such as tackling rising costs, enhancing competitive advantages, and prioritising sustainability. 

Several measures were aimed at supporting businesses with rising costs. A newly-announced “Enterprise Support Package,” for instance, will offer financial relief to businesses experiencing hikes in wage bills, rental, and utility expenses. 

With a commitment of S$1.3 billion ($967 million), this package provides support through a 50 per cent corporate income tax rebate; the SkillsFuture Enterprise Credit scheme being extended to June 2025, and enhancements to the Enterprise Financing Scheme. 

Meanwhile, a number of initiatives were designed to help companies support senior employees and their skill sets – a S$4,000 top-up of SkillsFuture credit aimed at empowering mid-career workers to upgrade their skills and advance in their careers and, with changes to the CPF Transition Offset, businesses will see an adjustment in their contributions to the Central Provident Fund (CPF) for employees aged 55 to 65.

Competitive advantages
Significantly, the Singapore Budget 2024 also allocates resources to reinforce the sectors in which Singapore holds competitive advantages.

This comprises more investment (S$3 billion) in its ‘Research, Innovation and Enterprise 2025’ scheme, originally launched in 2020 to support research and investment efforts focused on key areas of national interest, as well as a new Refundable Investment Credit scheme for companies involved in high-value and substantive economic activities.

There is also a S$2 billion top-up to the National Productivity Fund to support businesses in boosting productivity and facilitating ongoing education and training for employees, as well as a S$2 billion top-up to the Financial Sector Development Fund aimed at capitalising on opportunities to solidify Singapore's leadership position in financial services.

As a key player in Artificial Intelligence (AI), Singapore also has plans to scale new heights of excellence and encourage private sector investment as per the National AI Strategy 2.0. The Budget outlines more than S$1 billion investment to support the National AI Strategy 2.0 and an intention to partner with leading local and global companies to establish AI centres of excellence. 

There is also a commitment to upgrade the Nationwide Broadband Network to 10 Gigabits. Concurrently, additional resources are being channelled to catalyse investments in the Nationwide Broadband Network's upgrade, aiming to support advanced technologies such as AI as they grow increasingly integral to business and everyday life.  

These resources will enable access to broadband speeds of up to 10 Gigabits per second in the latter half of this decade – a tenfold increase over current home broadband speeds. This enhancement ensures that the connectivity infrastructure can accommodate the future requirements of advanced technologies. 

Advancing sustainability initiatives
To stay competitive, integrating sustainability into core strategies is vital, and several measures in the Singapore Budget 2024 are available to assist in this transition.

•    Updates to the Enterprise Financing Scheme – Green (EFS-Green): For example, effective from 1 April 2024, the scope of the EFS – Green will be broadened to assist an increasing number of SMEs to adopt green solutions. 

Previously, EFS-Green offered green financing opportunities to project developers, system integrators, and technology and solution enablers. It is designed to support those who develop enabling technologies aimed at reducing waste, conserving resources, and cutting greenhouse gas emissions in sectors such as clean energy and green infrastructure. 

However, this expansion to support green solution adopters will also help Singapore to achieve its wider goal of becoming ‘sustainability ready.’ The scheme's enhanced support has also been extended by two more years. 

•    Energy Efficiency Grant to include more sectors: First introduced in 2022 for sectors such as food services, food manufacturing, and retail, the Energy Efficiency Grant will be enhanced to include additional industries such as manufacturing, construction, maritime, and data centres and their users.  

The scheme now features a two-tiered support mechanism: a base tier providing up to S$30,000 for approved energy-efficient equipment purchases, and an advanced tier aimed at supporting more substantial investments towards achieving higher energy efficiency. 
 
Corporate tax reforms
In addition to the new supportive measures announced, Singapore is also pushing ahead reforms to tackle tax avoidance. It was announced in the budget that Singapore’s corporate income tax regime will move ahead with two components from the second pillar of the Base Erosion and Profit Shifting (BEPS) 2.0 framework. 

Starting with financial years on or after 1 January 2025, the Income Inclusion Rule (IIR) will be applied, ensuring that multinational enterprise (MNE) groups headquartered in Singapore pay a minimum effective tax rate of 15 per cent on their overseas profits.  

Simultaneously, a Domestic Top-up Tax (DTT) will be introduced, mandating that MNE groups also meet a minimum 15 per cent effective tax rate on their profits earned in Singapore. These measures, targeting MNE groups with annual revenues exceeding S$1.1 billion, aim to retain tax revenue domestically and adhere to the standards set by BEPS 2.0's Pillar 2. 

The framework's undertaxed profits rule will be reviewed for future implementation. 

Singapore’s commitment to implement corporate tax changes under Pillar 2 of BEPS 2.0 was first announced in Budget 2023. Since then, several jurisdictions have made moves to implement tax changes related to Pillar 2. These include markets such as the European Union, the UK, Switzerland, Japan, and South Korea, which are implementing Pillar 2 rules from this year, while Hong Kong and Malaysia have announced plans to do so from 2025. 
 
Looking ahead
Overall, the Singapore Budget 2024 presents a forward-looking approach designed to bolster the economy, support workforce development, and ensure that the country remains a competitive global player in the coming years. It offers a glimpse into the nation’s commitment to nurturing an innovative, skilled, and sustainable business ecosystem.