Our recommendations to the Ministry of Finance for Singapore Budget 2026 and beyond

Singapore should focus on attracting decision makers, especially at a time when individuals in countries like the UK are actively seeking alternative locations due to the recent changes in tax legislation. Rather than relying on corporate tax incentives to attract businesses, Singapore can instead strengthen its competitiveness by making the country attractive for decision makers who can bring a business into and maintain in Singapore. This can be done through attractive reduced personal tax rates or exemption of certain benefits in kind from tax. 

Reintroducing a scheme similar to the former Not Ordinarily Resident (NOR) Scheme would be a practical step forward. The NOR framework was an effective tool for bringing regional roles into Singapore by offering time‑apportioned taxation for individuals who travelled extensively. Singapore can remove the requirement to be non-resident for three complete years - and allow all employees, including Singaporeans with regional roles in Singapore to benefit from a time apportionment if they meet the qualifying conditions. 

By growing the number of companies and entrepreneurs in Singapore, there will be increased business activity in the country, widening Singapore's tax base without raising tax rates or introducing new taxes. The effect is then multiplied, as both the additional business and additional people (with more income) will increase spending on goods and services in Singapore. The incentivisation of individuals side-steps the ambit of the global minimum tax.

While offering preferential treatment to foreign executives may require careful political management, comparable markets such as Thailand have implemented similar approaches successfully, demonstrating that targeted incentives can yield substantial economic benefits when designed well.

Singapore should enhance guidance and provide more incentives around employee equity schemes, such as employee share option plans (ESOPs) and employee share ownership schemes (ESOWs), to better support growth companies and startups in attracting and retaining key talent.

Currently, there is uncertainty around what it means for shares to be “subject to any restriction on the sale of the shares”. Even where no formal sales restriction exists, such shares are often illiquid, yet employees may still face immediate tax on them. Clearer guidance, supported by practical examples, would help address this issue.

In addition, Singapore should consider targeted tax incentives for equity‑based remuneration for key management and specialist employees in growth companies. This could be limited to a certain value, i.e. tax-free ESOPs up to SGD 100k or limited to certain people, e.g. up to 5 employees earning more than SGD 150k.

Anchoring key people in Singapore encourages businesses to locate and grow their operations here, leading to more business activities and more revenue in Singapore, which ultimately means more tax revenue. While there may be concerns that such incentives primarily benefit high‑income individuals, the wider benefits to innovation, employment, and business growth would outweigh these concerns.

Employees and a growing body of consultants in the crypto space are often remunerated in tokens issued by their employers/clients or in other standard forms such as Bitcoin. 

Singapore can consider providing clarity around whether a right to acquire digital tokens equate to a right to acquire shares under Section 10(6) of the Income Tax Act, and whether these rules should equally apply to consultants.

The question would then be what the tax point should be. Quite often, there are no formal restrictions over the sale of these tokens, which means they would be taxed by reference to the market value at the time of receipt or entitlement. However, although there are no formal restrictions over the sale, such a disposal could be viewed dimly, as a violation of trust, by the employer/client. The issue is that, in such a volatile market as the crypto market currently is the delay could mean the tokens are worthless by the time they can actually be converted to fiat currency. This means that the employee/consultant has made no profit and yet has paid tax. 

To ensure fairness, Singapore could tax such digital tokens only at the point of disposal, including conversion into another cryptocurrency. This approach would better reflect actual economic gain, support equity in the tax system, and provide clarity for employers, employees, and consultants operating in the digital asset space.

Personal reliefs currently reduce taxable income at an individual's marginal tax rate. This means that they benefit higher-income earners more as they are paying tax at the higher marginal tax rate. Therefore, personal relief such as voluntary CPF or SRS contribitions - although intended to encourage all taxpayers to save for retirement - creates significant tax savings for high earners but may not encourage those with lower income to also save sufficiently for their retirement.

Singapore could consider amending the current SGD 80,000 cap on personal reliefs, to one based on the individual's taxable income. For example, for individuals earning over SGD 300,000, their SGD 80,000 cap could be reduced by SGD X (e.g. SGD 1) for every SGD Y (e.g. SGD 2) over and above SGD 300,000. Therefore, individuals earning over SGD 460,000 would not be entitled to any personal reliefs.

Personal reliefs can however reduce the impact of the progressiveness of the tax system. Singapore could look at other countries such as the UK which tapers down the personal allowance (equivalent of our personal relief) once the individual's taxable income hits a certain threshold which would aide the progressiveness of the tax system, but there is a risk of introducing a "tax trap" where the marginal rate of tax for a certain group of individuals is artificially high due to the phasing out of reliefs. 

Singapore should explore ways to encourage individuals to save for their retirement.

The current tax reliefs for CPF and SRS contributions primarily benefit higher-income earners as they are in a higher tax bracket and therefore obtain a greater tax relief. To encourage contributions to these retirement schemes, Singapore could consider offering a minimum level of tax relief for contributions to an individual's CPF or SRS accounts. This will ensure that lower-income individuals are also encouraged to contribute to their long-term retirement funds.

Another idea would be borrowed off other countries with well-establised employer pension schemes. Singapore's Section 5 ITA pension scheme allows employers to set up supplementary pension arrangements but is currently underutilised. Enhancing or modernising this scheme will encourage employers to set up workplace pension plans, which will complement CPD and SRS system, enhance our fund management landscape, and also support employee retention.

Another large potential cost in retirement is medical costs and the current Medisave cap of SGD 60,000 could be inadequate in some situations. Therefore, Singapore could consider looking at ways to encourage individuals to self-fund or cover their own medical costs through medical insurance. This could be done by introducing better insurance relief as the current insurance relief only covers life insurance.

Singapore should consider easing the burden of the deemed exercise rule, which is often overlooked and can create unexpected tax obligations for many employers and employees. As the rule is not widely understood and often applies when no cash or benefit has been received, employees may face a “dry tax” charge and have to pay tax upfront on income they may never realise. Although refunds are available if the benefit never materialises, the upfront cost can still create unnecessary stress and cash‑flow challenges. Employers also struggle to manage this rule, especially during tax clearance for non‑Singaporean employees.

Most countries tax employee share options only when the actual taxable event occurs, and Singapore already offers a limited “tracking option” scheme that follows this international approach. However, this option is not widely accessible. As the deemed exercise rules only applies to non-Singaporeans, companies must still track taxable events for Singaporeans even after they leave employment.

To improve clarity and reduce surprises, Singapore could consider removing the deemed exercise rule and instead require employers to track the option and report it at the actual tax point. In addition, individuals could be allowed to provide a letter of guarantee covering the tax on the deemed income, with payment becoming due only when the actual tax point arises. These changes would align Singapore with global norms, give employees and employers greater clarity and minimises the risk of surprises.