Overview: A Budget for Resilience and Growth
Delivered on 18 February 2026 by Prime Minister and Minister for Finance Lawrence Wong, Singapore Budget 2026 arrives at a moment of both opportunity and uncertainty. After stronger-than-expected GDP growth of 5% in 2025, the economy is projected to moderate to 2%–4% in 2026 amid geopolitical fragmentation, shifting capital flows, and rapid technological disruption.
The Budget strikes a dual focus: short-term cost relief for businesses navigating operating pressures, and long-term structural investment in AI adoption, internationalization, and workforce transformation. For SMEs and growing companies in particular, Budget 2026 introduces meaningful enhancements to tax incentives, grant schemes, and innovation support.
This article breaks down the key measures that affect businesses, with practical guidance on how to take advantage of them.
Corporate Income Tax Rebate for YA 2026
The headline relief measure is a 40% Corporate Income Tax (CIT) rebate for the Year of Assessment 2026, continuing the pattern of rebates granted in YA 2024 and YA 2025. Every active company that employed at least one local employee (CPF-paying) in calendar year 2025 will also receive a minimum cash grant of S$1,500, processed automatically from Q2 of 2026.
The total benefit per company is capped at S$30,000 (or S$28,500 for companies that received the S$1,500 cash grant). This means the rebate is most impactful for companies with tax payable up to approximately S$75,000.
| Component | Details |
|---|---|
| CIT Rebate Rate | 40% of tax payable for YA 2026 |
| Rebate Cap | S$30,000 per company (S$28,500 if cash grant received) |
| Cash Grant | S$1,500 for active companies with at least 1 local employee in 2025 |
| Cash Grant Processing | Automatic from Q2 CY2026 |
| Employee Condition | Excludes shareholder-directors |
It is worth noting that the overall rebate has been scaled back from 50% in YA 2025 to 40% in YA 2026, signalling a gradual reduction in broad-based relief as the government shifts focus toward targeted structural support.
What you should do: No action is required for the cash grant — it will be disbursed automatically. For the CIT rebate, it will be applied when you file your corporate income tax return. Ensure your company's employment records are up to date with CPF Board.
Enhanced Internationalization Support
Budget 2026 significantly strengthens support for companies expanding overseas, recognising that internationalization is central to Singapore's next phase of economic growth.
Market Readiness Assistance (MRA) Grant
The MRA grant, which helps defray costs of overseas expansion such as market promotion, business development, and overseas setup, has been enhanced:
| Feature | Before Budget 2026 | After Budget 2026 |
|---|---|---|
| Support level (SMEs) | Up to 50% | Up to 70% |
| Support level (non-SMEs) | Up to 50% | Up to 50% |
| Cap per company per market | S$100,000 | S$100,000 (unchanged) |
| Enhanced period | Until 31 Mar 2026 | 1 Apr 2026 to 31 Mar 2029 |
| Scope | New market entry only | New markets + deepening existing markets (from 2H 2026) |
The expansion of scope to cover deepening activities in existing overseas markets is a significant change. Previously, the MRA only supported initial market entry. From the second half of 2026, companies can use the grant to strengthen their presence in markets they have already entered.
Double Tax Deduction for Internationalization (DTDi)
The DTDi scheme, which provides an automatic 200% tax deduction on qualifying internationalization expenditure, has been substantially enhanced:
The automatic deduction cap will more than double from S$150,000 to S$400,000 per Year of Assessment, effective from YA 2027. The list of qualifying activities has also been expanded to include:
- Investment feasibility and due diligence studies
- Related overseas business trips
- Overseas business development activities
- Master licensing and franchising activities
- Production of corporate brochures for overseas distribution
Expenditure exceeding the S$400,000 automatic cap, as well as expenses for overseas trade offices and e-commerce campaigns, will still require approval from Enterprise Singapore or the Singapore Tourism Board.
Enterprise Financing Scheme
The maximum loan quantum for trade loans and fixed asset loans under the Enterprise Financing Scheme has been increased, giving companies more flexibility to finance capital-intensive overseas ventures.
What you should do: If you are planning overseas expansion, review your internationalization budget against the enhanced MRA and DTDi schemes. The higher DTDi cap alone could save your company up to S$68,000 in tax annually (S$400,000 × additional 100% deduction × 17% CIT rate). Speak with your tax advisor to plan the timing of qualifying expenditure.
Enterprise Innovation Scheme: AI Expenditure Now Qualifies
The Enterprise Innovation Scheme (EIS), which provides businesses with 400% tax deductions on qualifying innovation expenditure, has been expanded to include AI-related expenditure as a new qualifying activity for YA 2027 and YA 2028.
| EIS Feature | Details |
|---|---|
| Tax deduction rate | 400% on qualifying expenditure |
| AI expenditure cap | S$50,000 per Year of Assessment |
| Applicable years | YA 2027 and YA 2028 only |
| Cash payout option | Not available for AI expenditure |
| Existing qualifying activities | R&D, IP registration, IP acquisition/licensing, training, innovation projects |
This means a company spending S$50,000 on qualifying AI tools or services could claim a tax deduction of S$200,000 (400% × S$50,000), resulting in tax savings of up to S$34,000 (at the 17% CIT rate).
The list of EIS partner institutions has also been expanded to include the Sectoral AI Centre of Excellence for Manufacturing, broadening the scope of qualifying innovation projects.
Important: The AI expenditure enhancement is time-limited to YA 2027 and YA 2028. Further details on what qualifies as AI expenditure will be announced by IRAS by mid-2026. The cash payout option (available for other EIS activities for eligible SMEs) does not apply to AI expenditure — the benefit is only available as a tax deduction.
What you should do: Start planning your AI adoption initiatives now. If you are considering AI-enabled accounting software, process automation, or data analytics tools, timing the expenditure to fall within YA 2027 or YA 2028 will maximize your tax benefit. Keep detailed records of AI-related spending.
AI Adoption Support for SMEs
Beyond tax incentives, Budget 2026 introduces several programmes to help businesses adopt AI practically:
Champions of AI Programme: A new initiative to support firms with the ambition to comprehensively transform their business using AI. Support will be tailored to each company and includes enterprise transformation guidance and workforce training.
Productivity Solutions Grant (PSG) Expansion: The PSG, which helps companies adopt digital solutions, will be expanded to support a wider range of digital and AI-enabled solutions. This means more off-the-shelf AI tools will become eligible for grant support, making AI accessible to businesses of all sizes.
National AI Council: A new council chaired by PM Wong will provide strategic direction for Singapore's AI agenda, with national AI missions focused on advanced manufacturing, connectivity, finance, and healthcare.
AI Park at One-North: A dedicated AI cluster will be established to bring together AI founders, practitioners, researchers, and innovators.
For the accountancy profession specifically, Budget 2026 highlighted that AI can automate large parts of data consolidation, preparation, and bookkeeping — allowing accountants to focus on higher-value advisory, forensic work, and complex analysis. Accountancy and legal services are among the first professions targeted for AI upskilling support.
Startup SG Equity: S$1 Billion Enhancement
The Startup SG Equity scheme, which provides government co-investment capital to catalyse private funding for promising startups, has been enhanced with an additional S$1 billion. Critically, the scope has been expanded from early-stage funding to include growth-stage companies.
This addresses a well-known funding gap in Singapore's startup ecosystem. Many companies that successfully raise seed and Series A funding struggle to secure the larger, longer-term capital needed to scale — particularly in deep tech sectors where the path to profitability is longer.
A new workgroup led by Minister Chee Hong Tat will develop strategies to position Singapore as a leading centre for growth capital, and a second S$1.5 billion tranche of the Anchor Fund has been launched to attract high-quality listings to the SGX.
Pillar Two: Global Minimum Tax Clarity
For multinational enterprises (MNEs), Budget 2026 provides important clarity on Singapore's implementation of the OECD Pillar Two framework, which introduces a global minimum effective tax rate of 15% for large MNE groups with annual revenue of EUR 750 million or more.
The key development is the enactment of the Side-by-Side safe harbour rule, effective from 1 January 2026. Under this rule, US-headquartered MNEs will be exempt from paying Minimum Top-up Tax in jurisdictions that have adopted it — including Singapore.
| Pillar Two Measure | Details |
|---|---|
| Global minimum ETR | 15% for MNEs with revenue ≥ EUR 750M |
| Domestic Top-up Tax (DTT) | Applies in Singapore |
| Side-by-Side safe harbour | US MNEs exempt from Minimum Top-up Tax from 1 Jan 2026 |
| BEPS filing requirements | Still apply even if no top-up tax payable |
This should provide comfort to US MNEs evaluating investment or expansion plans in Singapore. However, Domestic Top-up Tax will still apply, and BEPS filing requirements remain in place regardless of whether any Minimum Top-up Tax is payable.
Other Notable Business Measures
Several other measures announced in Budget 2026 are relevant for businesses:
Tax Deduction for Donations: The 250% tax deduction for qualifying donations to Institutions of a Public Character (IPCs) has been extended for another three years to 31 December 2029.
Finance and Treasury Centre (FTC) Incentive: Extended to 31 December 2031, with expanded withholding tax exemptions covering interest-like borrowing costs for qualifying activities.
Global Trader Programme (GTP): Extended to 31 December 2031, with qualifying commodities expanded to include Environmental Attribute Certificates.
Corporate Volunteer Scheme: Tax deduction extended to qualifying expenditure incurred until 31 December 2029.
Not-for-Profit Organisation Tax Incentive: Extended to 31 December 2032.
Lapsing Schemes: The Investment Allowance for Emissions Reduction (IA-ER) scheme will lapse after 31 December 2026. The double tax deduction for qualifying upfront costs attributable to rated retail bonds will also lapse after 31 December 2026.
Enterprise Workforce Transformation Package
The S$400 million Enterprise Workforce Transformation Package, announced in Budget 2025 and rolling out from 2026, continues to be a cornerstone of the government's workforce strategy. Budget 2026 builds on this with:
- Strengthened AI literacy across all Institutes of Higher Learning (IHLs)
- Six months of free access to premium AI tools for Singaporeans who take up selected AI training courses
- Redesigned SkillsFuture website with clearer AI learning pathways
- Priority AI upskilling for accountancy and legal professions
For business owners, this means your employees will have more accessible pathways to build AI capabilities — reducing the training burden on individual companies.
Summary: Key Dates and Action Items
| Measure | Effective Date | Action Required |
|---|---|---|
| 40% CIT Rebate | YA 2026 | Applied automatically at tax filing |
| S$1,500 Cash Grant | Q2 CY2026 | Automatic — ensure CPF records are current |
| Enhanced MRA Grant (70%) | 1 Apr 2026 – 31 Mar 2029 | Apply through Enterprise Singapore |
| DTDi Cap Increase (S$400K) | YA 2027 | Plan qualifying expenditure timing |
| EIS AI Expenditure (400%) | YA 2027 – YA 2028 | Track AI spending; await IRAS guidance mid-2026 |
| PSG Expansion | 2026 onwards | Check updated PSG solution list |
| Side-by-Side Safe Harbour | 1 Jan 2026 | Review Pillar Two filing obligations |
How Nas Chartered Accountants Can Help
Navigating Budget changes and optimizing your tax position requires careful planning. At Nas Chartered Accountants, our Tax Advisory team can help you:
- Maximize your CIT rebate — Ensure your tax filing captures the full 40% rebate
- Plan internationalization tax strategy — Structure qualifying expenditure to maximize DTDi deductions under the new S$400,000 cap
- Leverage EIS for AI adoption — Identify qualifying AI expenditure and claim the 400% deduction
- Assess grant eligibility — Determine which enhanced grants (MRA, PSG) your business qualifies for
- Pillar Two compliance — For MNEs, navigate Domestic Top-up Tax and BEPS filing requirements
Our Growth package (from S$2,400/year) includes tax advisory and planning services. For complex tax matters, we offer dedicated Tax Advisory engagements.
Want to understand how Budget 2026 affects your business? Book a free consultation with our team to review your tax position and identify opportunities.