Delivered on 12 February 2026 by Prime Minister and Minister for Finance Lawrence Wong, Singapore’s Budget 2026[1], themed “Securing Our Future Together in a Changed World”, charts a balanced and forward-looking course for businesses amid geopolitical uncertainty, rapid AI disruption, demographic shifts, and global tax reforms. With total government spending projected at S$154.7 billion, the Budget focuses on six strategic pillars: refreshing economic strategy, harnessing AI, building workforce resilience, uplifting Singaporeans, protecting security and sustainability, and strengthening national spirit.
For businesses, the measures combine short-term cost relief with long-term support for innovation, internationalisation, and talent strategies. Key announcements include a corporate tax rebate, gran internationalisation deductions, AI-specific incentives, foreign workforce adjustments, CPF contribution changes, and extensions of major tax incentives until 2031. These aim to ease immediate pressures while positioning Singapore as a competitive, AI-ready global hub.
- Corporate Income Tax (CIT) Rebate and Cash Grant for YA 2026
To help companies manage rising operating costs, the government introduced a 40% CIT rebate on tax payable for Year of Assessment (YA) 2026. Active companies that employed at least one local employee (Singapore Citizen or Permanent Resident, excluding shareholder-directors) and made CPF contributions in Calendar Year 2025 will automatically receive a minimum cash grant of S$1,500. The combined benefit of the rebate and cash grant is capped at S$30,000 per company.
Eligible companies will automatically receive these benefits on and from the second quarter of Calendar Year 2026. While this provides welcome breathing room, analysts note that the overall amount of rebate has been reduced, indicating a scaling back of the level of support compared to earlier years.
- Enhanced grant schemes for SMEs
Singapore’s Budget 2026 introduces a significant recalibration of Enterprise Singapore’s grant ecosystem, with a clear emphasis on simplification, higher funding support, and strategic alignment with the evolving needs of SMEs. The most notable structural reform is the introduction of the Enterprise Growth and Expansion (EDGE) Grant, which consolidates previously distinct schemes such as the Market Readiness Assistance (MRA), Productivity Solutions Grant (PSG), and Enterprise Development Grant (EDG) into a single, unified funding framework. This marks a shift away from fragmented, scheme-based applications towards a more streamlined, activity-based approach, reducing administrative burden and enabling businesses to access support more efficiently. For SMEs in particular, this consolidation is expected to lower compliance costs while providing more flexibility in structuring transformation and growth initiatives.
Alongside this structural change, Budget 2026 enhances funding intensity across key schemes, with SMEs now eligible for support of up to 70% for various qualifying activities. The MRA scheme, in particular, has been expanded not only in terms of funding support but also in scope. While it traditionally focused on assisting businesses entering new overseas markets, it now extends to supporting the deepening of presence in existing markets. This reflects a more mature policy approach that recognises that internationalisation is not limited to market entry but also involves sustained investment in market expansion and consolidation. The extension of higher funding support until 2029 further provides SMEs with medium-term certainty in planning their cross-border growth strategies.
The PSG and EDG, although set to be subsumed under the EDGE Grant, continue to represent critical pillars of enterprise support in the interim. The PSG remains central to encouraging digitalisation and operational efficiency through the adoption of pre-approved IT solutions and equipment, while the EDG continues to support more complex, customised projects relating to business transformation, innovation, and internationalisation. Their eventual integration into a single grant framework is likely to enhance coherence in funding decisions and allow for more holistic evaluation of business needs, rather than forcing companies to fit within rigid scheme categories.
In addition to these core schemes, the Business Adaptation Grant has been strengthened to address emerging global challenges, particularly those arising from supply chain disruptions, geopolitical tensions, and shifting trade dynamics. With SMEs eligible for up to 70% support, this grant underscores the increasing recognition of resilience and adaptability as key components of business sustainability. It enables companies to reconfigure supply chains, diversify sourcing strategies, and respond more effectively to external shocks, which are becoming a persistent feature of the global economic landscape.
Further, enhancements to initiatives such as the Global Innovation Alliance reflect a parallel push towards fostering cross-border collaboration and innovation. By increasing support levels for SMEs, the government is encouraging businesses not only to expand geographically but also to participate in international innovation ecosystems, thereby strengthening their technological capabilities and competitiveness. Taken together, the changes introduced in Budget 2026 signal a broader policy shift in Singapore’s enterprise support framework.
- Enhancement of 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 S$400,000, and more qualifying activities will be added.
Complementing this, the Market Readiness Assistance grant support levels increase to 70% for local SMEs and 50% for non-SMEs from April 2026 through March 2029. Notably, the government will remove the "new to target overseas market" requirement from late 2026, allowing companies to deepen existing market presence rather than being restricted to virgin territories
- AI-Driven Innovation Incentives under the Enterprise Innovation Scheme (EIS)
Recognising AI as a strategic imperative rather than an optional enhancement, Budget 2026 substantially strengthens the Enterprise Innovation Scheme (EIS) for Years of Assessment 2027 and 2028. Businesses can now claim 400% tax deductions on up to S$50,000 of qualifying AI expenditures annually, with the Sectoral AI Centre of Excellence for Manufacturing added to the list of partner institutions.
The institutional architecture for AI development receives equal attention through the establishment of a National AI Council, chaired by the Prime Minister, tasked with driving national AI strategy coordination. Additionally, the government announced plans to provide citizens with free access to premium AI tools and a customised support program for comprehensive AI-enabled business transformation, with operational details forthcoming during Committee of Supply debates.
- Workforce and Manpower Policy Reforms
Budget 2026 introduces significant legal changes to Singapore's foreign manpower framework. The Employment Pass (EP) minimum qualifying salary increases from S$5,600 to S$6,000 (S$6,600 from S$6,200 for financial services) for new applications from 1 January 2027, with renewals following from 1 January 2028. For candidates aged 45 and above, thresholds reach up to S$11,500 (S$12,700 in finance), reflecting age-tiered requirements
Similarly, S Pass salary thresholds rise from S$3,300 to S$3,600 (S$4,000 from S$3,800 for financial services) on identical timelines. The Local Qualifying Salary (LQS), the minimum wage firms must pay local workers to access foreign worker quotas increases from S$1,600 to S$1,800 monthly for full-time workers effective 1 July 2026, while part-time workers must receive at least S$10.50 per hour.
Foreign Worker Levy adjustments include a S$100 increase for Basic Skilled workers in the Marine Shipyard sector (to S$600) and S$150 increases in the Process sector, with Services and Manufacturing sector levy tiers simplifying from 2028.
- CPF and Retirement Security Legislation
Significant legislative changes affect retirement planning and employer obligations. From 1 January 2027, CPF contribution rates for senior workers increase by 1.5 percentage points for employees aged above 55 to 60, and 1.0 percentage point for those above 60 to 65, with all increases directed to Retirement Accounts up to the Full Retirement Sum. To cushion business costs, the government provides an automatic CPF Transition Offset equivalent to half the employer contribution increase for 2027.
Platform operators receive specific tax treatment under new regulations, with tax deductions allowed for CPF cash top-ups made on behalf of platform workers under the Voluntary Contributions to MediSave Account scheme, effective for the Year of Assessment 2027 for contributions made from 1 January 2026. This aligns platform operators' tax treatment with traditional employers and supports the Matched MediSave Scheme for gig economy workers.
The CPF Board will also introduce a new voluntary life-cycle investment scheme in the first half of 2028, offering simplified, low-cost, diversified commercial investment products as recommended by the CPF Advisory Panel.
- Legal and International Tax Framework
- Pillar Two Implementation
Singapore reaffirmed its commitment to implementing the Global Anti-Base Erosion (GloBE) Rules under Pillar Two of the OECD's international tax reform framework. The Multinational Enterprise Top-up Tax and Domestic Top-up Tax will raise the effective tax rate for in-scope multinational groups operating in Singapore to 15%, with higher corporate income tax collections expected from the financial year 2027 onwards.
The OECD released details of the Side-by-Side safe harbour rule in January 2026. Under this rule, US-headquartered multinational enterprises will be exempt from paying Minimum Top-Up Tax in jurisdictions that have adopted it, effective from 1 January 2026, if enacted.
- Financial Sector Withholding Tax Extensions
Targeted withholding tax (WHT) exemptions for the financial sector, previously scheduled to lapse on 31 December 2026, have been extended to 31 December 2031. These exemptions operate as carve-outs from general Singapore WHT rules and are grounded in subsidiary legislation . The Not-for-Profit Organisation Tax Incentive (NPOTI) receives extension to 31 December 2032, while the Corporate Volunteer Scheme (CVS) continues until 31 December 2029.
- Household Support and Social Measures
- Retirement Top-ups
Eligible Singaporeans aged 50 and above (born in 1976 or earlier) will receive one-time CPF top-ups of up to S$1,500 in December 2026, tiered by retirement savings levels and property annual values . Those with CPF retirement savings below S$60,000 and residing in properties with annual values up to S$21,000 receive the maximum S$1,500, while those with savings between S$60,000 and the Basic Retirement Sum (S$110,200) receive S$1,000 .
- Philanthropic Incentives
The budget extends the 250% tax deduction for qualifying donations to Institutions of Public Character until 31 December 2029, effectively reducing the after-tax cost of giving and encouraging corporate social responsibility
- 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.
Conclusion
Singapore Budget 2026 sets out a balanced agenda that addresses immediate business needs while laying the foundations for long‑term transformation. By combining targeted tax relief, enhanced support for innovation and globalisation, workforce uplift measures, and updated foreign manpower policies, the budget seeks to equip companies and workers for a more competitive and technology‑driven future. These measures reflect a forward-looking yet fiscally responsible approach that ensures Singapore remains competitive, inclusive, and resilient.