Singapore Budget 2026

Business and economic development

SME competitiveness

• Enabling SMEs to scale with confidence beyond Singapore: From an SME standpoint, this Budget prioritises long-term competitiveness over short-term cost relief, with a clear emphasis on internationalisation and digital transformation. Enhanced internationalisation support—up to 70% for SMEs under internationalisation grants, a higher Double Tax Deduction for Internationalisation scheme (DTDi) cap of SGD 400,000, and expanded Enterprise Financing Scheme loans—reduces financial and execution risk, strengthens access to funding, and makes overseas expansion a realistic next phase of growth rather than an aspiration.
• Raising the bar for smarter, more strategic digital adoption: Enhancements to the Productivity Solutions Grant (PSG) mark a shift away from one‑size‑fits‑all approaches. Greater flexibility to tailor digital and Gen AI investments by sector and maturity will be welcomed by SMEs, but it also raises expectations for success.
• Elevating strategic decision-making requirements: With greater flexibility, SMEs must now be more deliberate, strategic, and disciplined in selecting and implementing solutions that deliver real productivity gains. Businesses facing acute cost pressures from manpower shortages and rising wages will need to carefully evaluate where to allocate scarce resources towards higher-yielding activities.
• Building a seamless pipeline from startup to global scaleup: Enhanced Startup SG Equity scheme now supports both early-stage and growth-stage companies, and when combined with stronger internationalisation pathways, creates a clearer growth runway from startup to global scale‑up. Founders are incentivised to design products, business models, and technology with regional or global scalability in mind from day one. Moreover, startups that have received such funding signal quality to future investors. The result is a more sustainable, investible ecosystem over time.
• More SMEs with global ambition and stronger value proposition: Taken together, this Budget marks a shift from broad-based support to depth and scale. By strengthening internationalisation, enabling more tailored digital adoption, and creating a clearer startup‑to‑scale‑up continuum, it lowers execution risk while raising expectations. The likely outcome is more SMEs with global ambition and stronger value propositions, creating a more investible ecosystem over time.

Strengthening our enterprise ecosystem and capital markets

• A significant booster for Singapore’s equity market: Budget 2026 enhances Singapore's enterprise ecosystem by expanding support for the Equity Market Development Programme and strengthening the Anchor Fund, creating a seamless funding journey from seed to IPO. Founders and companies gain access to larger capital pools, while private equity (PE) and venture capital (VC) investors find the SGX a more appealing exit route. The measures announced, such as expanding Startup SG Equity for growth-stage firms and strengthening pre-IPO and public equity funding, directly address the later-stage funding gap. This holistic approach boosts market vibrancy and robustness, benefiting all stakeholders and fostering growth across the enterprise landscape.
• Equity Market Development Programme expansion: The announced measure significantly bolsters the programme by expanding upon the initial SGD 5 billion pledge with an additional SGD 1.5 billion allocation to the Financial Sector Development Fund. Fund managers, listed companies, and prospective IPO candidates stand to benefit from improved liquidity conditions and stronger domestic institutional demand. This directly benefits founders seeking scale-up financing, PE/VC backers planning exits through listings, and mature enterprises preparing for IPO, creating a more seamless capital pathway.
• Issuers should prepare for greater scrutiny and market readiness: While liquidity support is strengthening, companies seeking to list must ensure robust governance, financial reporting discipline and investor-relation capabilities. With renewed attention on market quality, issuers should be IPO-ready—including strong internal controls, governance and credible growth strategies—to capitalise on improving capital market conditions. With deeper capital pools available, businesses should also develop robust plans for both organic and inorganic expansion, including M&A roadmaps identifying strategic targets to accelerate scale and market access.
• Reinforcing Singapore’s position as a competitive financial hub: Beyond regulatory enhancement, deeper institutional liquidity will strengthen Singapore position as a fund-raising hub. This is critical as global exchanges compete aggressively for high-growth listings. The funding measures signal a strong commitment to provide the liquidity needed to enhance Singapore’s credibility as a capital-raising venue. The financial sector tax incentive schemes have also played a critical role in developing Singapore as an asset management and private equity market. These measures to promote the public market will help Singapore develop a more holistic ecosystem to support venture building. This creates a powerful dual-exit dynamic: a revitalised IPO market establishes clear valuation benchmarks, simplifying M&A pricing and negotiations, while a credible listing pathway serves as strong leverage in sale processes, driving competitive tension and better valuations.
• Promising outlook for Singapore capital markets: Looking ahead, the outlook for Singapore’s capital markets appears constructive, underpinned by clear and sustained government backing. The enhanced funding framework is expected to bolster investor confidence, improve liquidity conditions and attract renewed institutional interest. Over time, stronger market activity and visibility may also stimulate greater retail participation. The complete funding pipeline is expected to fuel a more sophisticated M&A landscape, where well-capitalised scale-ups become active consolidators. M&A activity may increasingly be used to acquire critical capabilities, particularly in strategic sectors like technology and AI as underscored in Budget 2026, creating a vibrant market for both bolt-on acquisitions and larger transformative mergers.

New horizons for CPF investment

• Pathway for higher returns: Adopting a recommendation of the CPF Advisory Panel, a new framework will debut in 2028. To be managed by a select group of fund managers, the proposed scheme will offer low-cost investment products under a life-cycle investment approach to help CPF members achieve better returns. It allows CPF members to strategically take on more risk in exchange for higher expected long-term returns through access to professional investment expertise.
• Bolster for Singapore's fund management industry: Aside from expanding the range of investment options for CPF members, this initiative unlocks significant capital for Singapore-based fund managers, deepening the fund management expertise, strengthening the fund management ecosystem thereby cementing Singapore’s status as a premier global asset and wealth management hub.  

Tax incentive for internationalisation

• Enabling businesses to pursue broader global expansion and deeper market penetration: To further encourage internationalisation of local businesses, the government will expand the scope of qualifying activities and increase the expenditure cap for DTDi Scheme.
• Supporting overseas expansion: From Year of Assessment (YA) 2027, the types of internationalisation activities that do not require prior approval will be expanded to include investment feasibility/due diligence studies, master licensing and franchising, market surveys/feasibility studies, overseas business development, and production of corporate brochures for overseas distribution. The scope of qualifying expenditure for overseas market development trips and overseas study trips is expanded to cover all eligible expenses. Finally, the expenditure cap for claims below which prior approval is not required will also be increased to SGD 400,000 per YA.
• Preparing for the claim: Notwithstanding no prior approval being required for claims, companies should maintain documentation of qualifying activities and the expenditure incurred to support the internationalisation activities. Companies should plan early, review, and update their record-keeping processes, and coordinate between business, finance and tax teams to ensure they can fully access the enhanced scheme.
• Strengthening diversification amid global uncertainty: In an environment marked by geopolitical uncertainty and supply chain fragmentation, businesses need to diversify into new markets. Strengthening a structural scheme like the DTDi underscores the government’s economic model that is committed to outward growth, connectivity and global integration, and sends a clear message that international growth remains central to Singapore’s long-term strategy.

Tax incentive for treasury centres

• Longer runway, broader scope of benefit: The Finance and Treasury Centre (FTC) incentive has been extended to 31 December 2031. It has also been expanded to cover interest-like borrowing costs¹ paid on or after 13 February 2026. This aligns the withholding tax (WHT) treatment with existing income tax treatment which recognises that non-interest borrowing costs are an integral part of and reflect the true economics of financing arrangements.
• Ensuring relevance of Singapore to multinational groups: The continued refinement of the FTC incentive signals the government’s commitment to enhance Singapore’s competitiveness as a regional finance and treasury hub. The WHT exemption framework has been extended to the payment of various borrowing costs to cover non-residents.
• Enhancement, not amendment of current positions: Within the list of the types of borrowing costs qualifying for withholding tax exemption are certain borrowing costs such as guarantee fee which may not be subject to WHT in the first place.

_{¹ Interest-like borrowing costs: Refer to the updated factsheet issued by EDB, on the FTC incentive.}

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Financial assistance and relief for businesses

Enhanced grant support for internationalism

• Higher support levels under Market Readiness Assistance (MRA) grant: From 1 April 2026 until 31 March 2029, local SMEs will once again be able to claim up to 70% of qualifying costs to expand overseas, such as market promotion, business development and set-up costs. This reinstates the support level up from 50%, to which it was reduced in 2024. The cap remains at SGD 100,000 per company per market.
• Expanded scope of the MRA grant: From the second half of 2026, the above support will also be available for local companies looking to expand their presence in markets where they are already active. The previous grant covered only new or target markets.
• Higher support levels under Business Adaptation Grant (BizAdapt) and Global Innovation Alliance (GIA) scheme: From 1 April 2026, support levels under these grants increase to 70% and 50% for local SME’s and non-SME's respectively, up from 50% and 30% previously. The BizAdapt grant currently only runs to 6 October 2027, so applicants would be wise to consider using it early. The enhanced GIA support levels apply until 31 March 2029.
• Increasing the take-up rate by Singapore exporters: The take-up rate of the various internationalisation grants may have fallen behind expectations, seemingly prompting a U-turn on the prior tightening measures. Increasing grant levels and expanding their scope, even if not increasing the cap, should encourage companies to revisit their eligibility and lead to more successful applicants.
• Knock-on benefits for local businesses: Many Singapore exporters rely on local providers of goods and services for their export business. Although such local providers cannot benefit from these grants, they can still support their exporting customers that can benefit from them. Eligible exporters could, for example, use the grant to support their local suppliers to provide them with origin certification for cumulation purposes, which will help such exporters become more competitive overseas and grow everyone’s pie.
  

Corporate tax rebate

• Continued support for businesses: Companies will receive a 40% corporate income tax (CIT) rebate, capped at SGD 30,000, for the Year of Assessment (YA) 2026. For active companies employing at least one local employee in calendar year 2025, they will receive a CIT rebate cash grant of SGD 1,500 with the total maximum benefits (i.e. CIT rebate and CIT rebate cash grant) capped at SGD 30,000.
  
  Compared to the YA 2025, the percentage of tax rebate has been reduced from 50% to 40%, while both the cap and minimum cash grant has been lowered to SGD 30,000 (from SGD 40,000 in YA 2025) and SGD 1,500 (from SGD 2,000 in YA 2025), respectively.
• Positive business reception: Despite these reductions, it is encouraging to see the CIT rebate maintained for a third consecutive year amidst rising business cost pressures. The continued support will be welcomed particularly by SMEs, a key pillar of Singapore’s economy, as it provides relief and enables businesses to deploy scarce resources on long-term growth drivers such as investments in automation and productivity.

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Environmental sustainability

Green transition

• A clear policy signal for continued and calibrated sustainability push: Budget 2026 sends a clear signal that Singapore's climate commitments are unwavering, but not unrealistic. The emphasis is on tangible solutions and innovation in areas of key national interests such as energy resilience and transport-sector decarbonisation, paced in line with global realities and calibrated for competitiveness. These messages provide clear policy certainty underpinning long-term decarbonisation investments, giving businesses the confidence to move forward despite global headwinds.
• Extension of transition support schemes: With Budget 2026, the Energy Efficiency Grant, which co-funds companies’ investments in energy efficient equipment and solutions, will be extended to 31 March 2027. In addition, support for financing under the Enterprise Financing Scheme – Green (EFS-Green) will be extended to 31 March 2031 with financing available up to SGD 50 million for eligible loan types/borrower group exposure. Businesses may also tap on the existing schemes such as the Refundable Investment Credit (RIC), which supports qualifying projects including those with decarbonisation objectives, to reduce the overall costs of investment.
• Decarbonisation as a strategic economic pillar: Meanwhile, the Budget reaffirmed the importance of decarbonisation as an area of strategic economic importance to Singapore as a global innovation, financing, and trading hub. For instance, R&D in decarbonisation technologies, seen as one of the key growth frontiers for our economy, will be funded as part of the recently announced SGD 37 billion Research, Innovation, and Enterprise (RIE) 2030 Plan. Furthermore, the Global Trader Programme (GTP) tax incentive in Budget 2026 now includes Environmental Attribute Certificates (EACs), extending beyond carbon credits to support Singapore's ambition as a carbon services and trading hub.
• Translating policy signals into action: Businesses should make use of the available schemes where possible to support their energy transition efforts. This may include tapping on the extended Energy Efficiency Grant to implement energy and process efficiency projects, considering the use of EACs as complementary tools where immediate abatement is challenging, and leveraging green and transition financing, such as the EFS‑Green, to fund decarbonisation investments.
• A resilient future in a climate-impaired world: Budget 2026 highlights the integral role of low-carbon growth in Singapore’s economic playbook. Businesses that proactively align with this trajectory and use the available tools to enable their transition will be best placed to capture new opportunities, access capital, and build resilience in an increasingly climate-impaired world.

Incentive for global traders

• Bolstering our position as a trading hub: The extension of the Global Trader Programme (GTP) tax incentive to 31 December 2031 and enhancement to cover Environmental Attribute Certificates reflect Singapore’s continued commitment to strengthening its role as a leading global trading hub, while at the same time grasping new opportunities in the evolving global sustainability-linked market.
• Qualifying commodities to include Environmental Attribute Certificates (EACs): From 13 February 2026, the list of commodities qualifying under the GTP will be expanded to include EACs. This broadens the scope of GTP beyond the traditional carbon credits, giving global trading companies greater flexibility to diversify their trading portfolios and attract new entrants.
• Advancing Singapore’s climate agenda: The enhanced incentive framework now covers a wider range of climate-related instruments and helps in progressing towards Singapore’s climate goals given the role that EACs can play in areas such as supporting Singapore’s cross-border renewable energy trade within ASEAN and encouraging decarbonisation of international aviation.

Lapsing of the Investment Allowance for Emissions Reduction

• Investment Allowance for Emissions Reduction to lapse: The Investment Allowance for Emissions Reduction (IA-ER) scheme will be allowed to lapse after 31 December 2026. The IA-ER was introduced to encourage companies to undertake capital investments in projects that improve energy efficiency or reduce greenhouse gas emissions.
• Evaluate course of action for planned or ongoing capital projects: Companies with planned or ongoing decarbonisation initiatives should assess whether the capital expenditure can qualify for IA-ER benefits and obtain approval to claim IA-ER before its expiry. They should also evaluate alternative schemes that may offer comparable or enhanced support post-2026.
• Consider impact on tax and cash flow: The change from a tax allowance incentive to a grant or refundable credit may lead to different tax and cash flow implications. Businesses may find grants and refundable credits more favourable than allowance-based tax incentives. As the implications are complex, businesses should carefully evaluate how these alternative incentives can affect their tax position, particularly where the capital expenditure is significant or the project has a long gestation period.

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Other taxes

Pillar Two implementation status

• Enhancing competitiveness in a BEPS Pillar 2 world: Competition for foreign direct investments remains high despite the adoption of global minimum tax in many countries. Prime Minister underlined this reality by expressing that Singapore will update and strengthen our economic promotion toolkit.
• The Side-by-Side Package from the OECD/G20 Inclusive Framework, expected to be implemented in Singapore, offers an avenue for employing substance-based incentives in economic promotion: While Singapore has always required incentive holders to make substantive investments, most of the incentives offer lower tax rates (i.e. income based), whereas qualifying tax incentives (QTI) are expenditure-based or production-based (e.g. units produced or reduction in negative externalities such as emissions) incentives. Singapore will therefore have to tweak its approach to incentives to benefit from the favourable QTI treatment.
• Feedback in incentive design: Businesses should engage economic agencies to discuss what features of QTI could be useful in attracting foreign businesses to relocate their operations or to expand their business presence in Singapore.
• Positioning Singapore for future growth: It remains to be seen how the competitive landscape will be altered with the implementation of the Side-by-Side Package globally. That said, a carefully designed QTI can complement the other value propositions Singapore offers as an investment location, bolstering the case for multinationals to maintain operations here for expansion into the region.

Deduction for platform operators

• New tax deduction for CPF cash top-ups: From Year of Assessment (YA) 2027, platform operators will be allowed to claim a tax deduction for CPF cash top-ups made on behalf of their platform workers under the Voluntary Contributions to MediSave Account scheme (VC-MA), for top-ups made on or after 1 January 2026. This brings the tax treatment for platform operators to an equal footing with employers who make CPF cash top-ups for employees under the VC-MA.
• Improving parity and incentives: The new deduction removes an existing asymmetry where platform operators could not claim a tax deduction and lowers the after-tax cost of VC-MA contributions. It should encourage platform operators to support workers’ MediSave balances, thus complementing the Matched MediSave Scheme for eligible platform workers and strengthening healthcare financing adequacy of platform workers.

Other tax changes

• Extension of withholding tax exemption for financial-sector payments: The withholding tax exemption for the following types of payments to non-residents (other than Singapore permanent establishments) is extended to 31 December 2031:
  • All Section 12(6) payments made by specified entities for the purpose of their trade or business;
  • Payments on structured products offered by financial institutions;
  • Payments on over-the-counter financial derivatives made by qualifying financial institutions;
  • 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 (MAS).
• Extension of not-for-profit organisation tax incentive: The incentive is extended till 31 December 2032 to continue supporting Singapore’s philanthropic and charitable ecosystem.
• Extension of 250% tax deduction for qualifying donations to Institutions of a Public Character (IPCs) and eligible institutions: To encourage more philanthropic activities in Singapore, tax deduction of 2.5 times the qualifying donations to IPCs and eligible institutions will continue to be granted for donations made from 1 January 2027 to 31 December 2029.
• Extension of 250% tax deduction under the Corporate Volunteer Scheme: To encourage corporate volunteerism, tax deduction under Corporate Volunteer Scheme will continue to apply for qualifying expenditure incurred from 1 January 2027 to 31 December 2029.
• Sunset of double tax deduction scheme for qualifying upfront costs attributable to rated retail bonds: This scheme will lapse after 31 December 2026.

Vehicle tax changes

• Reduced deregistration proceeds: Lower Preferential Additional Registration Fee (PARF) rebates will reduce expected deregistration values and increase ownership costs for cars and taxis first registered under the revised rules.
• Quantum, timing, and scope: PARF rebates are cut by 45% and the cap halves to SGD 30,000. The new rebate schedule applies to cars registered with certificates of entitlement (COEs) from the second bidding exercise in February 2026, and to taxis registered on or after 13 February 2026. Non-PARF-eligible vehicle types remain excluded. 
• Operational adjustments for fleets: Leasing companies, ride-hailing operators, corporate owners, and dealers should re-evaluate the increased costs for acquiring new cars and taxis given the lower rebate values.
• Repricing residuals and renewal strategy: With lower pollution from electric cars reducing the policy need for high PARF support, businesses may have to reassess optimal holding periods, refurbishment versus replacement decisions, and review their pricing to customers. 

Tobacco excise tax increase

• Excise duties on all tobacco products up by 20%: From 12 February 2026, the excise tax rates on tobacco products have gone up by 20%. The magnitude of rate increase is more than the 10% increase in 2018 and 15% increase in 2023.
• What tobacco product distributors should watch out for: The usual — immediate implementation of the higher rates means that tobacco product distributors need to tightly control the sale and distribution of their current inventory, to make sure that the correct excise rates are applied and paid. Prior experience from past excise rate increases suggests that the risk of inadvertent underpayments is high, for example because of inaccurate system records or outdated procedures.

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