Singapore enters a post-SG60 phase in her nation building journey at the cusp of changes in world order. The Budget seeks to secure the future through focus areas such as advancing economic strategy, harnessing Artificial Intelligence as a strategic advantage, building a resilient and skilled workforce, providing support and assurance to families, protecting security and sustainability.
Tax related changes woven into the above include the enhancement of the following:
- Double Tax Deduction for Internationalization scheme to complement the advancement of economic strategy relating to globalization;
- Enterprise Innovation Scheme to provide support in qualifying spending in Artificial Intelligence and so forth.
Details of the key tax-related changes are set out below.
Key Changes for Businesses
General
Corporate Income Tax (CIT) Rebate and Cash Grant for YA 2026
The CIT Rebate and Cash Grant have been extended to YA 2026, albeit a reduction of the CIT Rebate to 40% (from 50%); and the Cash Grant to $1,500 (from $2,000) subject to meeting the “local employee condition”.
Companies which have employed / made CPF contributions to at least one local (i.e. Singapore Citizen or Permanent Resident) employee in calendar year 2025 are considered to have met the “local employee condition”. Shareholders who are also directors of the company are excluded from the definition of “local employees”.
The total maximum benefit from the CIT Rebate and Cash Grant (i.e. the cap) has also been reduced to $30,000 (from $40,000).
Note: As part of the measures to support firms amid the Mid-East conflict, it was announced on 7 April 2026 that the 40% corporate income tax rebate will be increased to 50%. The Cash Grant will be increased to $2,000 and the total maximum benefit from the CIT Rebate and Cash Grant will be raised to $40,000.
Enhancement of Double Tax Deduction for Internationalization (DTDi) scheme
Under the current DTDi scheme, businesses are allowed a 200% tax deduction on eligible expenses incurred on 16 qualifying market expansion and investment development activities.
The 200% tax deduction on the first $150,000 of eligible expenses for the following 9 activities per YA may be claimed without prior approval:
- Approved local trade publications;
- Design of packaging for overseas markets;
- Local trade fairs;
- Overseas advertising and promotional campaigns;
- Overseas investment study trips;
- Overseas market development trips;
- Overseas trade fairs;
- Product/service certification; and
- Virtual trade fairs
Enhancements
To further support businesses in their internationalization efforts, the expenditure cap for claims that may be filed without prior approval will be raised from $150,000 to $400,000 per YA.
The scope of eligible expenses and activities requiring no prior approval have also been expanded to cover all eligible expenses incurred on overseas market development trips and overseas investment study trips as well as 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 have to apply to Enterprise Singapore or Singapore Tourism Board for expenses exceeding $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.
More details will be provided by 2Q 2026 (Enterprise Singapore).
Enhancement of Enterprise Innovation Scheme (EIS)
Existing
Under the EIS, qualifying businesses can claim 400% tax deductions/allowances on qualifying expenditure incurred on the 5 qualifying 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 SkillsFuture 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).
For activity 1 to 4, the qualifying expenditure capped for each activity is $400,000 for each YA.
For activity 5, the qualifying expenditure is capped at $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 the tax deductions/allowances.
Enhancements
The EIS will be enhanced for YA 2027 and YA 2028 to support businesses adopting AI through:
- The expansion of the list of partner institutions to include the Sectoral AI Centre of Excellence for Manufacturing.
- The introduction of an additional qualifying activity for qualifying AI expenditures.
Business can claim 400% tax deductions/allowances, capped at $50,000 of qualifying AI expenditures incurred for each YA. However, the option of converting qualifying expenditure into a cash payout will not be available for this new qualifying activity.
More details will be provided by mid-2026 (Inland Revenue Authority of Singapore).
Extension of Withholding Tax (WHT) exemptions for the financial sector
Interest payments made to non-resident persons are generally subject to WHT (domestic rate being 15%).
A range of WHT exemptions is available to financial institutions (FIs) for payments made under specific types of financial transactions.
WHT exemptions for the following payments made by FIs to non-resident persons (excluding permanent establishments in Singapore) which are scheduled to lapse after 31 December 2026, will be extended to 31 December 2031:
- All Section 12(6) payments made by specified entities for the purpose of their trade or business. Specified entities are also not required to withhold tax on all Section 12(6) payments made to permanent establishments in Singapore;
- Payments on structured products offered by FIs in Singapore;
- Payments on over-the-counter financial derivatives made by qualifying FIs;
- Payments made under cross currency swap transactions by Singapore swap counterparties to issuers of Singapore dollar debt securities;
- Interest payments on margin deposits made under all derivatives contracts by approved exchanges, approved clearing houses, members of approved exchanges and members of approved clearing houses;
- Specified payments made under securities lending or repurchase agreements by specified institutions; and
- Payments made under interest rate or currency swap transactions by Monetary Authority of Singapore.
More details will be provided by 2Q 2026 (Monetary Authority of Singapore).
Extension and enhancements to the Finance and Treasury Centre (FTC) incentive
Approved FTCs are eligible for:
- Concessionary tax rate of 8% or 10% on qualifying income
- WHT exemption on interest payments on loans used for qualifying activities or services
The incentive which is scheduled to lapse after 31 December 2026 will be extended to 31 December 2031.
The scope of the WHT exemption will also be expanded to include interest-like borrowing costs for loans used for qualifying activities or services. This applies to payments made on or after 13 February 2026.
Details are on the Economic Development Board website.
Extension and enhancement of the Global Trader Programme (GTP)
Approved GTP companies are eligible for concessionary tax rate of 5%, 10% or 15% on income from qualifying transactions in qualifying commodities.
The incentive which is scheduled to lapse after 31 December 2026 will be extended to 31 December 2031.
The list of qualifying commodities will be expanded to include Environmental Attribute Certificates from 13 February 2026.
More details will be provided by 2Q 2026 (Enterprise Singapore).
Extension of the Not-for-Profit Organization Tax Incentive (NPOTI)
The NPOTI provides tax exemption on the income derived by an approved NPO.
The incentive (scheduled to lapse after 31 December 2027) will be extended to 31 December 2032.
Extension of the 250% tax deduction for qualifying donations
Donors are eligible for a 250% tax deduction for qualifying donations made to Institutions of a Public Character (“IPCs”) and eligible institutions.
The tax deduction (scheduled to lapse after 31 December 2026) will be extended to qualifying local donations made from 1 January 2027 to 31 December 2029.
Extension of the Corporate Volunteer Scheme (CVS)
All businesses carrying on a trade or business in Singapore can claim 250% tax deductions on qualifying expenditure (such as wages) incurred in respect of:
- Sending their qualifying employees to volunteer at or to provide services to IPCs; or
- Seconding their qualifying employees to IPCs.
From 1 January 2024, the qualifying expenditure is subject to an annual cap of $250,000 per business per YA and $100,000 per IPC per Calendar Year.
The tax deduction (scheduled to lapse after 31 December 2026) will be extended to qualifying expenditure incurred from 1 January 2027 to 31 December 2029.
Allow tax deduction for CPF top ups made by platform operators
Whilst employers can claim tax deduction for CPF cash to-ups made on behalf of employees under the Voluntary Contributions to MediSave Account scheme (VC-MA), platform operators currently cannot do the same for CPF cash top-ups made on behalf of platform workers.
To encourage platform operators to make CPF cash top-ups on behalf of their platform workers (who are eligible for the Matched MediSave Scheme), platform operators will be allowed to claim tax deduction for CPF cash top-ups made on behalf of their platform workers under the VC-MA.
Tax deductions will be available from YA 2027 for CPF cash top-ups made from 1 January 2026.
Lapse of the Investment Allowance for Emissions Reduction (IA-ER) Scheme
Investment allowance can be granted to companies for capital expenditure incurred for approved projects that improve energy efficiency or reduce greenhouse gas emissions under the IA-ER scheme.
The scheme will lapse after 31 December 2026.
Lapse of Double Tax Deduction for qualifying upfront costs attributable to rated retail bonds
A 200% tax deduction on qualifying upfront costs incurred on or after 19 May 2021 that are attributable to rated retail bonds issued from 19 May 2021 to 31 December 2026 (both dates inclusive) can be claimed by bond issuers that are carrying on a trade or business in Singapore under the Seasoning Framework and Exempt Bond Issuer Framework.
The scheme will lapse after 31 December 2026.
