Experts propose tax reforms in 2025 budget to enhance business adaptability

Proposed measures include restrictions on the sale of shares in property-holding companies.

As Singapore faces global and domestic challenges, tax policies will be pivotal in ensuring economic stability. Recognising this, Deloitte has proposed measures for the 2025 Budget aimed at balancing support for businesses and households.

According to Deloitte, Singapore’s fiscal policy should evolve to support businesses better amid a challenging global economy. For example, the government can consider easing restrictions on the sale of shares in property-holding companies, which could offer businesses greater asset restructuring flexibility,

"Current rules, such as requiring proof of no property development for an extended period, could slow down strategic decisions and limit the ability of businesses to pivot quickly in response to market conditions," Deloitte Singapore said.

"Simplifying these requirements can enable companies to streamline operations, redeploy capital more efficiently, and manage resources effectively during periods of economic uncertainty," it added.

Rohan Solapurkar, business tax leader, Deloitte Singapore, also recommended clarifying tax rules on carbon offsets, M&A allowances, and Section 13W exemptions to provide businesses with greater flexibility.

Increasing caps under Sections 14N and medical expense deductions, along with addressing foreign tax credit challenges to enhance tax certainty and compliance, will also be helpful, said the expert.

As the OECD’s Pillar Two Global Minimum Tax Rules come into force, Liew Li Mei, international tax leader, Deloitte Singapore, proposed interest-free instalment options for Domestic Top-up Tax (DTT) and Multinational Top-up Tax (MTT).

The DTT aligns Singapore-based entities with the 15% global minimum tax, while the MTT addresses gaps for MNEs in jurisdictions without a QDMTT framework.

The year 2025 also marks the launch of Singapore’s Refundable Investment Credit (RIC) scheme. Yvaine Gan, global investment and innovation incentives leader at Deloitte Singapore,  proposed extending the scheme to offshore and regional decarbonisation projects initiated from Singapore, given the cross-border nature of sustainability challenges.

"This enhancement will strengthen Singapore’s ambitions to be a key player in global efforts to transit to a low-carbon future and serve as an acknowledgement that regional environmental efforts also contribute towards Singapore’s sustainability goals," Gan added.

Gan also suggested broadening the scheme to cover cost-sharing agreements, intangible assets, and existing asset depreciation. She also proposed raising the support rate to 70%, allowing offsets against taxes like property and carbon taxes, and adding volume-based credits tied to production volumes for greater adaptability.

Budget 2025 priorities, according to Deloitte, should also focus on advancing R&D incentives to foster emerging technologies, adapting GST policies by reducing thresholds to $750,000, and expanding digital compliance with e-invoicing.