Singapore Budget 2026: Announcements for businesses
Budget overview
For individuals
40% Corporate Income Tax Rebate in Year of Assessment 2026
Corporate Income Tax (CIT) Rebate Cash Grant and CIT Rebate for Year of Assessment (YA) 2026.
Impact
- To be eligible for the cash grant, the company must be active and have employed at least one CPF paying local employee in calendar 2025.
- All eligible companies will enjoy a cash grant of SGD 1,500.
- The employee condition excludes shareholder-directors
- In addition, all taxpaying companies will get a rebate of 40% of their tax payable, capped at SGD 30,000, or SGD 28,500 if they received (or are eligible to receive) the grant.
- The SGD 1,500 will be processed automatically from Q2 of Calendar Year (CY) 2026.
Insights
- To help businesses deal with cost pressure, the rebate and grant that were granted in YA 2024 and YA 2025 have been extended to YA 2026.
- That said, it should be noted that the overall amount of rebate has been reduced, indicating a scaling back of the level of support compared to earlier years.
- There is imparity between tax paying companies and loss makers, who may be more in need.
Enhancement to the Double Tax Deduction for Internationalisation (DTDi) scheme
Businesses are currently allowed an automatic tax deduction of 200% of eligible expenditure up to a spending limit of SGD 150,000 per YA. This must be incurred on 16 qualifying market expansion and investment development activities. From YA 2027, this automatic limit will be raised to SGD 400,000, and more qualifying activities will be added.
Impact
- It will allow a greater pool of funds to be directed to overseas expansion with little administrative hassle.
- The additional qualifying activities include feasibility and due diligence studies, related overseas trips, overseas business development, master licensing and franchising activities, and production of corporate brochures for overseas distribution.
- Double deduction for expenditure in excess of the limit and expenses incurred on overseas trade office and e-commerce campaigns will still require approval from Enterprise Singapore or the Singapore Tourism Board.
Insights
- The enhancements to the scheme reinforce the government’s commitment to encouraging Singapore companies to expand internationally and stay competitive in an unpredictable global economy.
Enhancement to the Enterprise Innovation Scheme (EIS)
400% deduction is extended to include AI-related activities. Qualifying expenditure is capped at SGD 50,000 a year for YA 2027 and YA 2028.
Impact
- To encourage businesses to adopt AI, AI-related expenditure has been added as one of the qualifying activities for YA 2027 and YA 2028.
- Businesses can claim tax deductions/allowances of 400% on up to SGD 50,000 of qualifying AI expenditures incurred for each YA.
- This is in addition to the existing 5 qualifying activities (i.e. research and development, registration of intellectual property (IP), acquisition and licensing of IP rights, training, and innovation projects carried out with partner institutions).
- The list of partner institutions has been expanded to include the Sectoral AI Centre of Excellence for Manufacturing.
- The option to elect for cash payout will not be available for this new qualifying activity.
- Further details will be announced by the IRAS by mid-2026.
Insights
- This supports the government’s Smart Nation vision.
- The enhancement aims at encouraging businesses to adopt AI to enhance business productivity for all sectors.
- This signals a clear policy shift towards encouraging practical adoption of AI technologies.
- This also allows a wider range of businesses, particularly those focused on operational efficiency and automation.
- The low cap of SGD 50,000 suggests that the incentive is intended to support early‑stage and pilot initiatives rather than large‑scale AI transformation projects.
- This enhancement applies only for YA 2027 and YA 2028, so there will be a need to plan the timing of expenditure.
Extension of 250% tax deduction for approved donations
Donors are eligible for 250% tax deductions for qualifying donations to Institutions of a Public Character (IPCs) and eligible institutions. This scheme has been extended for another three years to 31 December 2029.
Impact
- Businesses and individuals can continue to benefit from tax deductions for qualifying donations.
- This effectively reduces the after-tax cost of giving.
Insights
- This extension should encourage sustained or increased contributions to IPCs and eligible institutions, while reinforcing the government’s continued commitment to encouraging private and corporate philanthropy.
- By maintaining the enhanced deduction, the government provides sustained support to the charity sector and offers greater certainty to donors in planning their philanthropic contributions over the medium term.
Extension and enhancement of the Finance and Treasury Centre incentive and Global Trader Programme
The Finance and Treasury Centre (FTC) incentive and Global Trader Programme (GTP) will be extended to 31 December 2031.
Impact
- The extension of the FTC and GTP incentives to 31 December 2031 provides greater policy certainty for multinational groups undertaking treasury and trading activities in Singapore, supporting long-term strategic planning and reinforcing Singapore’s competitiveness as a regional hub.
- The existing WHT exemption for approved FTCs will be expanded to cover interest-like borrowing costs that are otherwise subject to WHT, where the underlying loans are used for qualifying activities or services. This reduces financing costs for approved treasury centres.
- The list of qualifying commodities under the GTP has been expanded to include Environmental Attribute Certificates, which broadens the scope of incentivised trading activities in line with Singapore’s sustainability objective.
Insights
- The extension of the FTC signals continued policy commitment to treasury activities. Prospective FTC may reassess Singapore as a regional funding and liquidity management hub, particularly where cross-border financing flows are significant.
- Companies with existing GTP incentive awards should review the scope of their approval to determine whether trading in Environmental Attribute Certificates is covered, or whether an amendment to the award terms may be necessary. Trading groups may wish to evaluate the inclusion of environmental commodities within their portfolios, leveraging both commercial growth and incentive benefits.
The application of Side-by-Side safe harbour rule will be enacted and will be effective from 1 January 2026
The OECD released details of the Side-by-Side safe harbour rule in January 2026. Under this rule, US–headquartered multi national enterprises (MNEs) will be exempt from paying Minimum Top Up Tax in jurisdictions that have adopted it.
Impact
- The Side-by-Side safe harbour rule will be effective from 1 January 2026, if enacted.
- US MNEs in Singapore will therefore not be required to pay any Minimum Top Up Tax.
Insights
- This should provide comfort to US MNEs that they will not be subject to minimum top up tax in Singapore.
- The rule should reduce perceived costs for US MNEs when evaluating investment or expansion plans in Singapore.
- What needs to be determined are the BEPS filing requirements in Singapore, as even though no Minimum Top Up Tax will be payable, Domestic Top-up Tax will still apply.
Extensions of existing incentive schemes
- The withholding tax exemptions available to financial institutions for payments made to non-resident persons (excluding permanent establishments in Singapore) were due to lapse after 31 December 2026. They will be extended to 31 December 2031.
- The Not-for-Profit Organisation Tax Incentive (NPOTI) was due to lapse after 31 December 2027. It has been extended till 31 December 2032.
- The Corporate Volunteer Scheme (CVS) was due to lapse for expenditure incurred after 31 December 2026. The tax deduction under the scheme has been extended to qualifying expenditure incurred until 31 December 2029.
Incentive schemes to lapse
- The Investment-Allowance for Emissions Reduction (IA-ER) scheme will be allowed to lapse after 31 December 2026.
- The double tax deduction for qualifying upfront costs attributable to rated retail bonds will lapse after 31 December 2026. However, other similar schemes such as the Qualifying Debt Securities (QDS) and Global-Asia bond Grant schemes will remain in place.
Partner - Corporate Tax
Partner - Employer Solutions and Private...
Director - Transfer Pricing Leader
Director - Indirect Tax Leader
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