Introduction
The Budget Statement for Singapore’s Budget 2026 was delivered on 12 February 2026. As Singapore enters a post-SG60 era, it faces a global climate of great change, led by increased geopolitical tensions and growing instability in the global economy. Against the backdrop of heightened uncertainties, Budget 2026 seeks to refresh Singapore’s strategies to secure its future in a changed world, laying the foundations for how Singapore will traverse its next phase of development.
Some of the key tax measures announced in Budget 2026 are as follows:
- Tax measures for corporations
- Introduction of a corporate income tax rebate
- Enhancement of schemes to support companies to internationalise
- Enhancement of Market Readiness Assistance grant
- Enhancement of Double Tax Deduction for Internationalisation scheme
- Enhancement of Enterprise Financing Scheme (“EFS“)
- Extension of withholding tax exemptions for the financial sector
- Extension and enhancement of the Finance and Treasury Centre (“FTC“) incentive
- Extension and enhancement of the Global Trader Programme (“GTP“)
- Extension of the Not-for-Profit Organisation Tax Incentive (“NPOTI“)
- Tax deductions for Central Provident Fund (“CPF“) cash top-ups by platform operators
- Allowing the double tax deduction for qualifying upfront costs attributable to rated retail bonds to lapse
- Strengthening the enterprise ecosystem
- S$1 billion to enhancement of Startup SG Equity
- Launch of second S$1.5 billion tranche of the Anchor Fund
- S$1.5 billion top-up to Financial Sector Development Fund
- Tax measures accelerating artificial intelligence (“AI”) adoption by corporations
- Launch of new programme to support firms with AI adoption
- Extension of Enterprise Innovation Scheme (“EIS“) to provide tax deductions for AI expenditure
- Strengthening existing support schemes to include wider range of AI solutions
- Measures on workforce policy
- Raising the Local Qualifying Salary
- Enhancing Progressive Wage Credit Scheme support
- Raising the Employment Pass and S Pass minimum qualifying salary
- Adjustment of Work Permit levies
- Tax measures on corporate social responsibility
- Extension of grants and support for sustainability initiatives for corporations
- Setting out the carbon tax trajectory
- Supporting sustainability in the aviation sector
- Supporting sustainability in the maritime sector
- Extension of tax deductions for qualifying donations and volunteering
- Allowing the Investment Allowance for Emissions Reduction (“IA-ER“) scheme to lapse
- Other tax changes
- Adjustment to vehicle taxes
- Increase in tobacco excise duty
This Update sets out the key tax measures, changes, enhancements and extensions in Budget 2026.
- Tax Measures for Corporations
Corporate Income Tax Rebate
To help Singapore businesses alleviate cost pressures and operating challenges, Budget 2026 includes a 40% Corporate Income Tax rebate in the Year of Assessment (“YA“) 2026.
- Criteria: The rebate applies to every active company that employed at least one local employee in 2025.
- Quantum: Eligible companies will receive a minimum benefit is S$1,500, while the total benefit for each company will be capped at S$30,000.
This measure is intended to provide short-term relief as Singapore continues to pursue restructuring and transformation efforts.
Grants for Internationalisation
Budget 2026 includes measures to enhance the support levels for grant schemes that support companies to internationalise. From 1 April 2026 to 31 March 2029, grant support levels under the Business Adaptation Grant (until 6 October 2027) and the Global Innovation Alliance schemes will be enhanced accordingly:
- For local Small and Medium Enterprises (“SMEs“), support will be enhanced up to 70% of eligible costs.
- For local non-SMEs, support will be enhanced up to 50% of eligible costs.
Market Readiness Assistance Grant
The Market Readiness Assistance grant helps companies expand into new markets overseas by defraying the costs of overseas market promotion, business development and set-up. It provides up to 50% of eligible costs for local SMEs, with support capped at S$100,000 per company per new market.
The grant will be enhanced as follows:
- From 1 April 2026 until 31 March 2029, local SMEs will receive support of up to 70% of eligible costs. The higher support level is applicable until 31 March 2029.
- From 1 April 2026, the enhanced grant cap of S$100,000, originally scheduled to lapse after 31 March 2026, will be extended. Local SMEs will continue to receive grant support of up to S$100,000 per company per new market.
- The grant previously only covered companies new to the target overseas market. From 2H 2026, the grant will be enhanced to also support companies deepening their presence in existing overseas markets.
Enterprise Singapore will provide more details by 2H 2026.
Double Tax Deduction for Internationalisation
The Double Tax Deduction for Internationalisation scheme provides companies planning to expand overseas with a 200% tax deduction for eligible expenses for qualifying market expansion and investment development activities. The deduction was capped at S$150,000 of eligible expenses for nine prescribed activities per YA without prior approval (“Automatic Approval“). Prior approval was required for expenses exceeding S$150,000 or expenses incurred on the other seven qualifying activities.
Under Budget 2026, the cap for Automatic Approvals will be raised to S$400,000 with effect from YA 2027. The scope of claims which do not require prior approval will also be expanded to cover all eligible expenses incurred on overseas market development trips and overseas investment study trips, and the following qualifying activities:
- Investment feasibility/due diligence studies;
- Master licensing and franchising;
- Market surveys/feasibility studies;
- Overseas business development; and
- Production of corporate brochures for overseas distribution.
For expenses exceeding S$400,000 per YA or expenses incurred on overseas trade office and e-commerce campaigns, businesses can continue to apply to Enterprise Singapore or the Singapore Tourism Board for approval.
Enterprise Financing Scheme
The EFS is a loan scheme that allows Singapore enterprises to access financing more readily across seven prescribed areas, including the following facilities:
- EFS – Trade loans: Supports the trade financing needs of Singapore enterprises. The maximum loan quantum is currently S$10 million per borrower and S$20 million per borrower group, subject to an overall loan exposure limit of S$50 million per borrower across all EFS facilities.
- EFS – SME Fixed asset loans: Finances investments by Singapore enterprises in fixed assets. The maximum loan quantum is currently S$30 million per borrower and borrower group, subject to an overall loan exposure limit of S$50 million per borrower across all EFS facilities.
Under Budget 2026, the EFS will be enhanced by increasing the maximum loan quantum for trade loans and fixed asset loans. The enhancements will take effect from 1 April 2026.
Withholding Tax Exemptions for the Financial Sector
A range of withholding tax exemptions is available to financial institutions for payments made under specific types of financial transactions. The withholding tax exemptions for prescribed payments made to non-resident persons (excluding permanent establishments in Singapore) were scheduled to lapse after 31 December 2026 but will now be extended till 31 December 2031.
FTC Incentive
Under the FTC incentive, approved FTCs are eligible for a concessionary tax rate of 8% or 10% on qualifying income. Approved FTCs are also eligible for withholding tax exemption on interest payments on loans used for qualifying activities or services.
The FTC incentive, which was scheduled to lapse after 31 December 2026, will be extended till 31 December 2031. In addition, the scope of the withholding tax exemption for approved FTCs will be expanded to include interest-like borrowing costs that are subject to withholding tax, for loans used for qualifying activities or services. The expanded scope of exemption applies to payments made on or after 13 February 2026.
The Economic Development Board will provide further details by 13 February 2026.
Global Trader Programme
Under the GTP, approved global trading companies are eligible for a concessionary tax rate of 5%, 10%, or 15% on income from qualifying transactions in qualifying commodities.
The scheme, which was scheduled to lapse after 31 December 2026, will now be extended until 31 December 2031. The list of qualifying commodities will also be expanded to include Environmental Attribute Certificates from 13 February 2026.
Enterprise Singapore will provide more details by the second quarter of 2026.
Not-for-Profit Organisation Tax Incentive
The NPOTI provides tax exemption on the income derived by an approved not-for-profit organisation. Originally scheduled to lapse after 31 December 2027, it will be extended till 31 December 2032.
Tax Deductions for CPF Cash Top-Ups by Platform Operators
To encourage platform operators to make CPF cash top-ups on behalf of their platform workers, platform operators will be allowed to claim tax deduction for CPF cash top-ups made on behalf of their platform workers under the Voluntary Contributions to MediSave Account scheme. The change will apply from YA 2027 for CPF cash top-ups made from 1 January 2026.
Double Deduction for Rated Retail Bonds
Bond issuers conducting a trade or business in Singapore may claim a 200% tax deduction on qualifying upfront costs incurred on or after 19 May 2021, where such costs are attributable to rated retail bonds issued between 19 May 2021 and 31 December 2026 under the Seasoning Framework and the Exempt Bond Issuer Framework. This incentive will cease to apply after 31 December 2026.
This scheme will be allowed to lapse after 31 December 2026 to ensure the continued relevance of Singapore’s tax incentives.
- Strengthening the Enterprise Ecosystem
Startup SG Equity
The Startup SG Equity scheme targets investment in Singapore-based technology startups, in which the Government will co-invest into eligible startups and invest in selected venture capital firms that will in turn invest into eligible startups. The investment cap for each startup is S$12 million.
Budget 2026 provides for S$1 billion to enhance the Startup SG Equity scheme, and to expand its scope to cover growth-stage companies.
Anchor Fund
The Anchor Fund was set up in 2022 to attract and anchor high-quality public listings, starting with a first tranche of S$1.5 billion. The fund supports promising high-growth enterprises and market leaders in their public fundraising in Singapore’s public equity market, and provides pre-IPO financing to catalyse the growth of target enterprises.
Following signs of renewed listing activity on the Singapore Exchange, Budget 2026 includes a second S$1.5 billion tranche of the Anchor Fund.
Financial Sector Development Fund
The Financial Sector Development Fund provides grants to firms and individuals in the financial services sector. It aims to promote Singapore as a financial centre, and to develop Singapore’s financial services sector.
Budget 2026 provides for a S$1.5 billion top-up to the Financial Sector Development Fund. This seeks to build on momentum from current efforts to strengthen Singapore’s equities market, including the Equity Market Development Programme. For more information on the programme, see our earlier Legal Update on Strengthening Singapore’s Equities Market – Completion of Market Review and Unveiling of New Measures.
- Accelerating AI Adoption
To develop Singapore as a trusted hub for AI, Budget 2026 includes the launch a new set of national AI Missions, as well as the establishment of a new National AI Council. At a corporate level, Singapore is also seeking to accelerate AI adoption by corporations. This includes the following measures.
Champions of AI Programme
Singapore will launch a new Champions of AI programme to support firms looking to use AI to comprehensively transform their businesses. The programme will provide support that is tailored to each company and will include initiatives such as enterprise transformation and workforce training.
Enterprise Innovation Scheme
Under the current EIS framework, businesses may claim a 400% tax deduction or allowance on qualifying expenditure for five categories of qualifying activities. The first four categories: (i) research and development undertaken in Singapore; (ii) intellectual property registration; (iii) acquisition and licensing of intellectual property rights; and (iv) selected SkillsFuture‑eligible training – are subject to an expenditure cap of S$400,000 per YA for each of the activities. The fifth category, namely innovation projects carried out with polytechnics, the Institute of Technical Education, or other qualified partners, has an expenditure cap of S$50,000 for each YA.
From YA 2027 to YA 2028, the EIS will be enhanced to encourage AI adoption. The list of partner institutions will be expanded to include the Sectoral AI Centre of Excellence for Manufacturing.
In addition, a new qualifying activity will be introduced for AI‑related expenditure, subject to an expenditure cap of S$50,000 per YA. However, unlike other EIS activities, the option to convert up to S$100,000 of total qualifying expenditure into a 20% non-taxable cash payout in lieu of tax deductions/allowances will not apply to expenditure under this new AI category.
The Inland Revenue Authority of Singapore will provide more details by mid‑2026.
Existing Support Schemes
To further support the adoption of AI, Budget 2026 provides that existing support schemes will be strengthened. This includes the Productivity Solutions Grant, which helps Singapore companies improve their productivity and automate existing processes through IT solutions and equipment. The Government will expand the Productivity Solutions Grant to support a wider range of digital and AI-enabled solutions.
- Measures on Workforce Policy
Local Qualifying Salary
The Local Qualifying Salary, which sets the minimum salary that full-time local employees must be paid in firms that hire foreign workers, will be raised for full-time local employees from S$1,600 to S$1,800 in 2026. These measures will take effect from 1 July 2026.
Progressive Wage Credit Scheme
The Progressive Wage Credit Scheme provides support for employers to: (i) adjust to mandatory wage increases for lower-wage workers; and (ii) voluntarily raise wages of lower-wage workers.
To help businesses defray the cost of the increase in minimum salary, the Progressive Wage Credit Scheme will be enhanced as follows:
- The Progressive Wage Credit Scheme will be extended for a further two years, from 2026 to 2028.
- For wage increases given in the qualifying year 2026, co-funding support will be raised from 20% to 30%.
- There will be 30% co-funding support for wage increases given in the qualifying year 2027.
- There will be 20% co-funding support for wage increases in the qualifying year 2028.
- For qualifying years 2027 and 2028, the minimum qualifying wage increase will be raised from S$100 to S$200.
Employment Pass and S Pass
Apart from the local workforce, Budget 2026 also updates Singapore’s foreign workforce policies to reflect evolving economic conditions.
- Employment Pass: The Employment Pass minimum qualifying salary for new applicants will be raised from S$5,600 to S$6,000. The Financial Services sector will continue to have a higher minimum qualifying salary, which will be raised from S$6,200 to S$6,600.
- S Pass: The S Pass minimum qualifying salary for new applicants will be raised from S$3,300 to S$3,600. The Financial Services sector will continue to have a higher minimum qualifying salary, which will be raised from S$3,800 to S$4,000.
These changes will apply to new applications from 1 January 2027, and renewal applications from 1 January 2028.
Work Permit Levies
Budget 2026 announced adjustments to Work Permit levies. These changes will take effect from 2028 to give businesses time to adjust.
- Marine sector: Levies for basic-skilled workers will be raised from S$500 to S$600.
- Process sector: Levies for basic-skilled workers from Malaysia, North Asian Sources and People’s Republic of China will be raised from S$450 to S$600. For basic-skilled workers from Non-Traditional Sources, the monthly levy rate will also be raised by from S$650 to S$800.
- Manufacturing and Services sectors: The current tiered levy structure will be simplified. Tier 1 and Tier 2 of the Dependency Ratio Ceiling tiers will be merged. For the Services sector, the monthly levy rate for the merged tier will be set at S$400 for higher-skilled workers and S$600 for basic-skilled workers. For the Manufacturing sector, the monthly levy rate for the merged tier will be set at S$300 for higher-skilled workers and S$470 for basic-skilled workers.
- Corporate Social Responsibility
Sustainability Grants
To support businesses in sustainability efforts, Budget 2026 will help firms invest in energy-efficient and sustainable solutions as follows:
- Extending the Energy Efficiency Grant, which supports the adoption of pre-approved energy efficient equipment; and
- Extending support for green loans under the Enterprise Financing Scheme.
Carbon Tax
Singapore had earlier announced its carbon tax trajectory for this decade, raising it to S$45 per tonne for this year and next, with plans to reach S$50 to S$80 per tonne by 2030.
Budget 2026 states that Singapore is assessing its carbon tax trajectory in light of international developments, and that if global climate momentum continues to weaken, it may position itself towards the lower end of the S$50 to S$80 per tonne range by 2030.
Aviation
Singapore will support demand for sustainable aviation fuel, with a target of 1% sustainable fuel use for flights departing Singapore in 2026.
Maritime
Singapore is partnering industry to develop a low-carbon ammonia bunkering solution on Jurong Island, seeking to be among the first countries in the world to supply ammonia commercially as a fuel for international shipping.
Charitable Tax Deductions and Volunteerism
Singapore currently provides 250% tax deductions for qualifying donations to Institutions of a Public Character (“IPC“) and eligible institutions. Under Budget 2026, this scheme, scheduled to lapse after 31 December 2026, will be extended until 31 December 2029.
The Corporate Volunteer Scheme currently provides 250% tax deductions on qualifying expenditure incurred by businesses carrying on a trade or business in Singapore incurred when qualifying employees volunteer or are seconded to IPCs (subject to an annual cap of S$250,000 per business per YA and S$100,000 per IPC per Calendar Year). Under Budget 2026, this scheme will also be extended until 31 December 2029.
Investment Allowance for Emissions Reduction Scheme
Under the IA‑ER scheme, companies may receive investment allowances on capital expenditure incurred for approved projects that improve energy efficiency or reduce greenhouse gas emissions. The scheme is scheduled to lapse after 31 December 2026.
This scheme will be allowed to lapse after 31 December 2026 to ensure the continued relevance of Singapore’s tax schemes.
- Other Tax Changes
Vehicle Taxes
To encourage the timely renewal of vehicles, a Preferential Additional Registration Fee (“PARF“) rebate is provided for cars deregistered by their 10th year, with the rebate decreasing for each year after their 5th year. As electric vehicles become more common, the need to encourage early deregistration through the PARF rebate is reduced. Therefore, under Budget 2026:
- The PARF rebate will be reduced by 45 percentage points across the board; and
- The PARF rebate cap will be lowered from S$60,000 to S$30,000.
Tobacco Excise Duty
A 20% increase in tobacco excise duty will be implemented across all tobacco products with effect from 12 February 2026.
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