Budget 2026 – Overview of Tax Changes

On 12 Feb 2026, Prime Minister Lawrence Wong delivered the Budget 2026 Statement in Parliament.

In this Budget, he shared six areas of focus on how the Government will work with Singaporeans to:

  1. Advance our refreshed economic strategy,
  2. Harness artificial intelligence as a strategic advantage,
  3. Build a resilient and skilled workforce,
  4. Give families more support and greater assurance,
  5. Protect our security and sustainability and 
  6. Renew and strengthen our Singapore spirit

For companies and businesses:

While our economy did well last year, some businesses continue to face cost pressures and operating challenges, Singapore Budget 2026 introduces several initiatives aimed at supporting Small and Medium Enterprises (SMEs) and help them stay competitive:

Singapore Budget 2026: Key Benefits for SMEs

 

1. Corporate Income Tax Rebate of 40% capped at $30,000

To alleviate cost pressures, a 40% Corporate Income Tax rebate will be granted to all taxpaying companies, whether tax resident or not, for YA 2026. Active companies that employed at least one local worker in 2025 will receive a minimum benefit of $1,500 in the form of a CIT Rebate Cash Grant, with a cap of $30,000 per company.

In order to maximize the $30,000 corporate tax rebate granted by the government, a company will need to have a chargeable income of $543,676 (if you work backward using ($30,000 / 0.4 / 0.17 = $441,176) and add back $102,500 of exemption for the first $200,000 of chargeable income will give you $543,676) for a company that qualify for the partial tax exemption scheme and $566,176 ($441,176 + $125,000) chargeable income for a company that qualify for the start-up tax exemption scheme. 

With a chargeable income after exemption of $441,176, your company shall be paying $75,000 of corporate tax ( $441,176 x 17% = $75,000). With a $30,000 income tax rebate capped at $30,000, the net corporate tax payable by a company will be $45,000, which will give a company an effective tax rate of 8.3% for an existing active company of more than 3 FYs and 7.95% for a new active company of less than 3 FYs.

2. Enhance support for local companies to expand overseas

To enhance the support for local companies to expand overseas, the government will provide the following:

  • Higher grant support level of up to 70% for SMEs and up to 50% for non-SMEs
  • Enhance Market Readiness Assistance (MRA) grant for enterprises to deepen presence overseas
  • Enhance Enterprise Financing Scheme to increase the maximum loan quantum for Trade and SME Fixed Assets loans.

Higher grant support for SMEs venturing overseas

1. The Double Tax Deduction for Internationalisation (DTDi) scheme will be enhanced as follows from YA2027:

  • Expenditure cap for claims may be filed without prior approval from Singapore Tourism Board or Enterprise Singapore to be raised from $150,000 to $400,000 per YA.
  • Scope of claims that do not require prior approval will also be expanded to cover all eligible expenses incurred on overseas market development trips and overseas investment trips and 5 more qualifying activities are:
    1. Investment feasibility / due diligence studies
    2. Master licensing and franchising
    3. Market surveys / feasibility studies
    4. Overseas business development
    5. Production of corporate brochures for overseas distribution

Market Readiness Assistance (MRA) Grant

From 1 April 2026, MRA will be enhanced as follows:

  • Enhanced support level for local SMEs of up to 70% of eligible costs, from 50% currently.
  • Extension of the enhanced $100,000 cap per company.

From 2H 2026, MRA will be enhanced as follows:

  • Removal of “new to target overseas market” criterion to provide more support for companies to deepen their presence in existing overseas markets.

Enterprise Financing Scheme (“EFS”) – SME Fixed Assets Loan and Trade Loan

The EFS – SME Fixed Assets Loan facility finances Singapore enterprises’ investments in domestic and overseas fixed assets.

The EFS – Trade Loan facility supports Singapore enterprises’ trade financing needs, which include the financing of short term import, export, and guarantee needs. The maximum loan quantum under the EFS – SME Fixed Assets Loan and EFS – Trade Loan facilities will be permanently enhanced to $50 million per borrower group (shared across all EFS facilities).

Global Innovation Alliance (“GIA”) Scheme

This scheme seeks to support Singapore-based startups to expand overseas through participating in market access programmes and connecting with in-market experts, with a focus on technology and innovation

Grant support levels for GIA schemes will be enhanced to 70% of eligible costs for local SMEs, and up to 50% of eligible costs for local non-SMEs.

Grant support levels for BizAdapt will be enhanced, to up to 70% of eligible costs for local SMEs, and up to 50% of eligible costs for local non-SMEs.

 

3. Strengthening our Enterprise Ecosystem

To strengthen our enterprise ecosystem, Enterprise funding is a key part of this ecosystem. Many firms continue to face challenges at the growth stage to access funding. To catalyse growth capital in Singapore, the Singapore government will do more to provide initial capital to catalyse and crowd in private funding for promising startups such as:

  • $1.5 billion for Anchor Fund to support public listings of high-growth companies in Singapore
  • $1.5 billion to expand Equity Market Development Programme
  • Expand Startup SG Equity scheme to catalyse investments in early- and growth-stage deep tech startups

4. Driving Transformation

The government will establish a new National AI Council, chaired by PM Lawrence Wong to launch a new set of national AI missions and drive AI-led transformation in key sectors of Singapore and push the boundaries for what is possible, for Singapore and for the world. The focus is in 4 sectors:

  1. Advanced manufacturing
  2. Connectivity
  3. Finance
  4. Healthcare

5. Accelerating AI Adoption

For AI to truly transform our economy, companies must also adopt it comprehensively. Many firms say they are using AI. But end-to-end transformation with AI is very demanding. It requires organising data, rebuilding systems, redesigning processes and jobs, and retraining workers. Even the major global companies are grappling with this. But those that succeed will gain a decisive competitive advantage.

The government will strengthen support for all enterprises especially the SMEs so they will adopt AI and benefit from it in practical ways through the following:

  • Launch Champions of AI program to drive AI-enabled business transformation
  • Expand Enterprise Innovation Scheme to include qualifying AI expenditures as a qualifying activity for YA 2027 and 2028, capped at $50,000 per YA.
  • Expand Productivity Solutions Grant to include a wider range of digital and AI-enabled solutions

To build a vibrant AI-enabled economy, the government will establish a larger AI park at One-North. This will be a new cluster to catelyse ideas, forge collaborations, and translate AI initiatives into practical solutions for businesses and public services.

6. Empowering workers

  • Expand TechSkills Accelerator to help workers build practical AI capabilities
  • Help Singaporeans to find relevant AI courses through redesigned SkillsFuture website
  • Provide six months of free access to premium versions of AI tools when taking selected AI courses

Several ministries — MDDI, MOE, MOM, and MTI — are involved in these cross-cutting efforts.

7. Uplifting Lower-wage workers

  • Raise Local Qualifying Salary to $1,800 from Jul 2026
  • Extend and enhance Progressive Wage Credit Scheme
  • Enhance basic tier of Workfare Skills Support

8. Strengthening Assurance for Mid-Career workers and seniors

  • Expand coverage of SkillsFuture Level-Up Programme to more industry-relevant courses
  • Extend Senior Employment Credit to 2027

9. Updating Foreign Worker Policies

  • Raise minimum qualifying salary to $6,000 for Employment Pass and $3,600 for S Pass from 2027
  • Adjust Work Permit levies from 2028

10. Building a “We First” Society

  • Extend 250% tax deductions for qualifying local donations to 2029
  • Extend Corporate Volunteer Scheme to 2029
  • Launch $50 million SG Partnerships Fund to catalyse ground-up initiatives

Conclusion

Singapore Budget 2026 is a budget that support Singaporeans today, prepare our society for tomorrow, and enable us to navigate this changed world with confidence. These initiatives ensure that businesses remain competitive, resilient, and prepared for future growth.

For more details, visit the official Singapore Budget 2026 website.

If you are interested to look for a new tax agent, please contact us or whatsapp or fill in the form below for a free consultation.

Please fill in the Contact Form below for a free consultation

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.