Prime Minister and Minister for Finance, Mr. Lawrence Wong delivered Singapore’s Budget 2026 Statement on 12th February 2026:
Budget 2026 focuses on adopting AI and advanced technologies to drive growth, enhance workforce skills, and invest in future generations for sustainable development. It includes measures to boost AI adoption, digital transformation, and internationalisation for businesses, while providing targeted support to individuals and families to address cost-of-living challenges and strengthen family life. The Budget aims to ensure Singapore’s resilience, technological leadership, and workforce readiness, while fostering a strong and inclusive society.
The key changes from the Budget are outlined below.
Tax Changes For Businesses
Corporate Income Tax (“CIT”) Rebate and Cash grant
- The CIT rebate of 40% of tax payable will be granted for the Year of Assessment (“YA”) 2026.
- Companies that have employed at least one local employee in calendar year 2025 will receive a minimum benefit of $1,500 in the form of CIT Rebate cash grant.
- Companies that have met the local employee condition will automatically receive the CIT Rebate Cash Grant by 2Q 2026 onwards.
- The total maximum benefits of CIT Rebate and CIT Rebate Cash Grant that a company can receive is $30,000.
- A company is considered “has met the local employee condition” if it has made CPF contribution to at least one local employee, excluding shareholders who are also directors of the company, in calendar year 2025.
Double Tax Deduction for Internationalisation (“DTDi”) scheme
To further support businesses in their internationalisation efforts, the expenditure cap for claims without prior approval will be increased from S$150,000 to S$400,000 per YA.
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.
Businesses can continue to apply to Enterprise Singapore or Singapore Tourism Board for expenses exceeding S$400,000 per YA or expenses incurred on overseas trade office and e-commerce campaigns.
The changes will apply to expenses incurred from YA 2027 onwards.
Discover more: Learn the difference between deductible vs non-deductible expenses
Enhancements to the Enterprise Innovation Scheme (“EIS”)
To support businesses in adopting AI and transforming key sectors of the economy, the EIS will be enhanced for YA 2027 and YA 2028.
Currently, businesses can claim 400% tax deductions/allowances on qualifying expenditure incurred on the following five activities:
- Qualifying Research and Development activities undertaken in Singapore;
- Registration of Intellectual Property (“IP”);
- Acquisition and licensing of IP rights;
- Training courses that are eligible for Skills Future Singapore funding and aligned with the Skills Framework; and
- Innovation projects carried out with polytechnics, the Institute of Technical Education, or other qualified partners (collectively known as partner institutions).
The qualifying expenditure cap under each of activities (1) to (4) is $400,000 for each YA. The qualifying expenditure cap under activity (5) is $50,000 for each YA. Businesses have the option to convert up to $100,000 of total qualifying expenditure into a 20% non-taxable cash payout, in lieu of tax deductions/allowances.
The EIS will be enhanced for YA 2027 and YA 2028:
- Expanded list of partner institutions to include the Sectoral AI Centre of Excellence for Manufacturing; and
- Introduction of a new qualifying activity for AI expenditure, allowing businesses to claim 400% tax deductions or allowances on up to S$50,000 of qualifying AI expenditure for each YA.
The cash payout option will not apply to this new AI qualifying activity.
Extension of withholding tax exemptions for the financial sector
To maintain the competitiveness of our financial sector, the withholding tax exemptions for the following payments made to non-resident persons (excluding permanent establishments in Singapore) are extended to 31 December 2031:
a) Section 12(6) payments by specified entities for their trade or business (*);
b) Payments on structured products offered by Singapore financial institutions;
c) Payments on over-the-counter financial derivatives by qualifying financial institutions;
d) Payments made under cross-currency swap transactions by Singapore swap counterparties to issuers of Singapore dollar debt securities;
e) Interest payments on margin deposits made under all derivatives contracts by approved exchanges, approved clearing houses, and their respective members;
f) Specified payments made under securities lending or repurchase agreements by specified institutions; and
g) Payments made under interest rate or currency swap transactions by Monetary Authority of Singapore.
(*) Specified entities are also not required to withhold tax on all Section 12(6) payments to permanent establishments in Singapore.
Finance and Treasury Centre (“FTC”) incentive
To encourage companies to conduct treasury management activities in Singapore, the FTC incentive will be extended to 31 December 2031.
Under the FTC incentive, approved FTCs are eligible for a concessionary tax rate of 8% or 10% on qualifying income, as well as withholding tax exemption on interest payment on loans used for qualifying activities or services.
The scope of the withholding tax exemption for approved FTCs will be broadened to include “interest-like” borrowing costs that are subject to withholding tax, where the loans are used for qualifying activities or services
The expanded exemption will apply to payments made on or after 13 February 2026.
Further Reading: Learn Why Hiring a Tax Agent Is a Smart Move
Global Trader Programme (“GTP”)
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.
To reinforce Singapore’s position as a leading global trading hub, the following enhancements will be made to the GTP:
- Extension of the scheme to 31 December 2031; and
- Expansion of qualifying commodities to include Environmental Attribute Certificates, with effect from 13 February 2026.
Not-for-Profit Organisation Tax Incentive (“NPOTI”)
To ensure Singapore remains an attractive location for non-profit
organisations, the NPOTI, which provides tax exemption on the income derived by an approved Not-for-Profit Organisation, will be extended to 31 December 2032.
CPF cash top-ups made by platform operators under Voluntary Contributions to Medisave Account (“VC-MA”) scheme
To encourage platform operators to make CPF cash top-ups on behalf of their platform workers who are eligible for the Matched Medisave scheme, such platform operators will be allowed to claim a tax deduction for CPF cash top-ups made under the VC-MA scheme.
The change will apply from YA 2027 for CPF cash top-ups made from 1 January 2026.
Investment Allowance for Emissions Reduction (“IA-ER”) scheme
The IA-ER scheme will lapse after 31 December 2026.
Double Tax Deduction (“DTD”) for qualifying upfront costs of rated retail bonds
The DTD scheme for rated retail bonds will lapse after 31 December 2026.
Other schemes, including the Qualifying Debt Securities scheme and the Global-Asia Bond Grant scheme, remain available to bond issuers.
Qualifying donations to Institutions of a Public Character (“IPCs”) and eligible institutions
To continue encouraging philanthropy, the 250% tax deduction for qualifying local donations made to IPCs and eligible institutions will be extended to 31 December 2029.
Corporate Volunteer Scheme (“CVS”)
To further encourage corporate volunteering, the 250% tax deduction under the CVS will be extended to qualifying expenditure incurred from 1 January 2027 to 31 December 2029.
Others:
Preferential Additional Registration Fee (“PARF”) rebate
As electric and hybrid vehicles are less pollutive and become increasingly prevalent, the PARF will be streamlined in the following manner: PARF rebate will be reduced by 45 percentage points across all age tiers; and PARF rebate cap will be reduced from S$60,000 to S$30,000.
The revised PARF rebate schedule:
Age of vehicle at deregistration | PARF rebate* from February 2026 |
Age ≤ 5 years | 30% of ARF |
5 years < Age ≤ 6 years | 25% of ARF |
6 years < Age ≤ 7 years | 20% of ARF |
7 years < Age ≤ 8 years | 15% of ARF |
8 years < Age ≤ 9 years | 10% of ARF |
9 years < Age ≤ 10 years | 5% of ARF |
Age > 10 years | N.A. |
[* capped at S$30,000]
The revised PARF rebate schedule and cap will apply to cars registered with Certificates of Entitlement (“COEs”) obtained from the second COE bidding exercise in February 2026.
For vehicles that do not require COE bidding (e.g. taxis), the revised PARF rebate schedule and cap will apply to those registered on or after 13 February 2026.
These changes do not apply to vehicles that are not eligible for PARF rebates, such as goods-cum-passenger vehicles, classic cars, and laid-up vehicles.
Support for lower-wage workers:
– Local qualifying salary (LQS)
- Raised from S$1,600 to S$1,800 for full-time local employees.
- Companies that hire foreign workers must pay their local full-time employees at least the LQS.
- The increase will take effect on July 2026.
– Progressive Wage Credit Scheme (PWCS)
- Co-funding support raised from 20% to 30%
- Minimum wage increase to qualify for PWCS support raised from S$100 to S$200 from 2027
Change to foreign worker policies:
– Employment Pass*
- Minimum qualifying salary raised from S$5,600 to S$6,000
- Raised from S$6,200 to S$6,600 for financial services sector
– S Pass*
- Minimum qualifying salary raised from S$3,300 to S$3,600
- Raised from S$3,800 to S$4,000 for financial services sector
– Work Permit Levies*
- Raised by $100 to S$150 for marine and process sectors respectively from 2028
*These changes will apply to new EP applications from 1 January 2027, and renewal applications from 1 January 2028.
Increase in Senior Workers’ CPF Contribution Rates
Effective from 1 January 2027, CPF contribution rates will increase to 35.5% for employees aged above 55 to 60 and 26% for those aged above 60 to 65.
The increase in contribution rates will be fully allocated to the CPF Retirement Account, or the CPF Ordinary Account for employees who have set aside the Full Retirement Sum.
Employers will automatically receive a 1-year CPF Transition Offset covering 50% of the increase in employer CPF contributions.
Increase in excise duties for tobacco products
Tobacco duties will be raised by 20% across all tobacco products with effect from 12 February 2026.
- From S$491/kgm to 49.1 cents/stick of cigarette to S$589/kgm or 58.9 cents/ stick of cigarette for cigars, cheroots, cigarillos and cigarettes, and other manufactured tobacco
- From S$378/kgm to S$454/kgm for beedies, ang hoon and other smokeless tobacco
- From S$446/kgm to S$535/kgm for unmanufactured and cut tobacco and other tobacco refuse
Budget 2026 positions Singapore to navigate a profoundly changed, fragmented world by transitioning toward a productivity-driven, AI-led economy. Overall, it seeks to balance immediate cost-of-living relief with a long-term, collaborative effort to secure a stronger, fairer future for Singapore.
Strategic Business Advisory: Navigating Budget 2026 with JDT
Budget 2026 marks a definitive shift toward a productivity-driven, AI-led economy. For business owners, “compliance” is no longer enough—success now requires proactive Business Advisory to protect margins and leverage new incentives.
Whether you are looking to incorporate in Singapore or scale an existing entity, JDT provides the strategic oversight needed to:
• Maximize Innovation ROI: We help you structure your R&D and technology investments to fully utilize the enhanced Enterprise Innovation Scheme (EIS) and the new 400% AI tax deductions.
• Optimize Global Expansion: Scale confidently by leveraging the increased $400,000 expenditure cap for the Double Tax Deduction for Internationalisation (DTDi).
• Future-Proof Manpower Costs: We model the impact of the 2026/2027 Employment Pass salary hikes and CPF contribution increases by the help of our accounting support, to ensure your hiring strategy remains sustainable.
• Tax Efficiency & Liquidity: Our corporate tax services align your taxation filing with the 40% CIT Rebate and cash grant schedules to boost your immediate cash flow.
Don’t just react to the Budget—lead through it.speak to a JDT advisor to ensure your business is correctly structured, fully compliant, and positioned for long-term growth.
