In February, Lawrence Wong, Singapore’s prime minister and minister for finance, announced a comprehensive package of tax measures in Budget 2026 to support businesses amid a more competitive global environment.
The measures address rising costs and global tax developments, promote technology adoption and innovation, and strengthen a resilient enterprise ecosystem. Together with targeted incentives and cashflow relief, these initiatives enhance Singapore’s attractiveness as a global business hub and support both near‑term resilience and long‑term growth.
Cashflow relief
The headline measure – a 40% corporate income tax (CIT) rebate for year of assessment (YA) 2026 – delivers substantial cashflow to firms navigating wage pressures and rising operational costs. Active companies employing at least one local employee in calendar year 2025 will receive a minimum benefit of S$1,500 through a CIT rebate cash grant. The sum of the 40% CIT rebate and the CIT rebate cash grant is capped at S$30,000.
This targeted support provides SMEs, which form the backbone of Singapore’s economy, with much‑needed cashflow relief, helping them stabilise operations and preserve capacity for growth investments.
International outlook
To support businesses’ internationalisation efforts, the expenditure cap for 200% tax deduction claims under the double tax deduction for internationalisation (DTDi) scheme, made without prior approval, will be increased from S$150,000 to S$400,000 per YA. The scope of such claims will also be expanded to cover all eligible expenses incurred for overseas market development trips, overseas investment study trips, feasibility and due‑diligence studies, master licensing and franchising, market surveys, overseas business development, and the production of corporate brochures for overseas distribution.
Claims exceeding S$400,000 per YA, as well as expenses for overseas trade offices and e‑commerce campaigns, will continue to require approval from Enterprise Singapore or the Singapore Tourism Board. These changes will apply to expenses incurred from YA 2027, with further details to be provided by Enterprise Singapore by Q2 2026.
Budget 2026 reinforces Singapore’s AI leadership
The Global Trader Programme scheme has been extended to 31 December 2031, maintaining concessionary tax rates of 5%-15% for approved global trading companies and expanding the list of qualifying commodities. This strengthens Singapore’s position as a global trading hub.
Singapore reaffirms its treasury hub status by extending the Finance and Treasury Centre (FTC) incentive package to 31 December 2031. The scheme’s 8%-10% concessionary tax rates on qualifying income remain attractive, while broader withholding tax exemptions now cover ‘interest-like’ borrowing costs for payments made from 13 February 2026.
AI leadership
Budget 2026 reinforces Singapore’s AI leadership by enhancing the existing Enterprise Innovation Scheme (EIS) for YA2027 and YA2028, expanding the list of partner institutions to include the Sectoral AI Centre of Excellence for Manufacturing, and introducing a new qualifying activity for AI‑related expenditures. Businesses will be able to claim tax deductions or allowances of 400% on up to S$50,000 of qualifying AI expenditure per YA, although conversion to a cash payout will not be available for this activity.
Currently, employers can claim tax deductions for voluntary Central Provident Fund (CPF) cash top-ups under the Voluntary Contributions to MediSave Account scheme (VC-MA) made on behalf of regular employees, but platform operators cannot do so for gig workers. Budget 2026 addresses this gap by allowing platform operators to claim tax deductions under the VC-MA for CPF top‑ups made on behalf of platform workers who are eligible for the Matched MediSave Scheme. This change will apply from YA 2027 for contributions made from 1 January 2026, strengthening CPF coverage in the gig economy.
These changes ease tax hurdles for complex investments
Donors have been enjoying a 250% tax deduction for qualifying donations made to Institutions of a Public Character (IPCs) and eligible institutions, an incentive due to lapse after 31 December 2026. Budget 2026 extends this enhanced deduction for local donations made from 1 January 2027 until 31 December 2029, thus encouraging continued philanthropy.
Certain older incentives, such as the Investment Allowance for Emissions Reduction scheme, are allowed to lapse, with resources redirecting to programmes such as FTC and EIS. These changes ease tax hurdles for complex investments, keeping Singapore Asia’s top destination for listings and funds.
Forward thinking
This forward-thinking approach – delivering tax relief today while building resilience tomorrow – strategically integrates immediate cash rebates with extended key incentives like FTC (to 2031) and 250% donation deductions (to 2029), plus powerful enhanced deductions across DTDi, EIS and FTC.
This Budget positions Singapore to thrive through volatility, blending fiscal prudence with bold ambition for businesses and stakeholders alike.
