Singapore Budget 2026: Transforming Today, Securing Tomorrow

Corporate Tax

Corporate Income Tax (“CIT”) Rebate and CIT Rebate Cash Grant

• To help companies manage cost pressures, a CIT Rebate of 40% of tax payable will be granted for the Year of Assessment (“YA”) 2026.
• Active companies that employed at least one local employee in calendar year 2025 (the “local employee condition”) will receive a minimum benefit of S$1,500 in the form of cash payout (“CIT Rebate Cash Grant”), which will be disbursed from the second quarter of 2026 onwards.
• The local employee condition is met where the company has made Central Provident Fund (“CPF”) contributions in 2025 to at least one local employee (i.e., Singapore Citizen or Permanent Resident), excluding shareholders who are also directors of the company.
• The maximum benefits of CIT Rebate and CIT Rebate Cash Grant that a company can receive is capped at S$30,000.

Double Tax Deduction for Internationalisation (“DTDi”) scheme

• To further support businesses in their internationalisation efforts, the expenditure cap for claims without prior approval will be increased from S$150,000 to S$400,000 per YA.
• The scope of claims which do not require prior approval will also be expanded to cover all eligible expenses incurred on overseas market development trips and overseas investment study trips, and 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 can continue to apply to Enterprise Singapore or Singapore Tourism Board for expenses exceeding S$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 onwards.

Extension of withholding tax exemptions for the financial sector

• To maintain the competitiveness of our financial sector, the withholding tax exemptions for the following payments made to non-resident persons (excluding permanent establishments in Singapore) are extended to 31 December 2031:
  • Section 12(6) payments by specified entities for their trade or business (*);
  • Payments on structured products offered by Singapore financial institutions;
  • Payments on over-the-counter financial derivatives 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, and their respective members;
  • 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.

(*) Specified entities are also not required to withhold tax on all Section 12(6) payments to permanent establishments in Singapore.

Enterprise Innovation Scheme (“EIS”)

• To support businesses in adopting AI and transforming key sectors of the economy, the EIS will be enhanced for YA 2027 and YA 2028 as follows:
  • Expanded list of partner institutions to include the Sectoral AI Centre of Excellence for Manufacturing; and
  • Introduction of a new qualifying activity for AI expenditure, allowing businesses to claim 400% tax deductions or allowances on up to S$50,000 of qualifying AI expenditure per YA.
• The cash payout option will not apply to this new AI qualifying activity.

Finance and Treasury Centre (“FTC”) incentive

• To encourage companies to conduct treasury management activities in Singapore, the FTC incentive will be extended to 31 December 2031.
• In addition, the scope of the withholding tax exemption for approved FTCs will be broadened to include interest-like borrowing costs that are subject to withholding tax, where the loans are used for qualifying activities or services.
• The expanded exemption will apply to payments made on or after 13 February 2026.

Global Trader Programme (“GTP”)

To reinforce Singapore’s position as a leading global trading hub, the following enhancements will be made to the GTP:

• Extension of the scheme to 31 December 2031; and
• Expansion of qualifying commodities to include Environmental Attribute Certificates, with effect from 13 February 2026.

Not-for-Profit Organisation Tax Incentive (“NPOTI”)

• To ensure Singapore remains an attractive location for non-profit organisations, the NPOTI will be extended to 31 December 2032.

CPF cash top-ups made by platform operators under Voluntary Contributions to Medisave Account (“VC-MA”) scheme

• To encourage platform operators to make CPF cash top-ups on behalf of their platform workers who are eligible for the Matched Medisave scheme, such platform operators will be allowed to claim a tax deduction for CPF cash top-ups made under the VC-MA scheme.
• The change will apply from YA 2027 for CPF cash top-ups made from 1 January 2026.

Investment Allowance for Emissions Reduction (“IA-ER”) scheme

• The IA-ER scheme will lapse after 31 December 2026.

Double Tax Deduction (“DTD”) for qualifying upfront costs of rated retail bonds

• The DTD scheme for rated retail bonds will lapse after 31 December 2026.
• Other schemes, including the Qualifying Debt Securities scheme and the Global-Asia Bond Grant scheme, remain available to bond issuers.

Qualifying donations to Institutions of a Public Character (“IPCs”) and eligible institutions

• To continue encouraging philanthropy, the 250% tax deduction for qualifying local donations made to IPCs and eligible institutions will be extended to 31 December 2029.

Corporate Volunteer Scheme (“CVS”)

• To further encourage corporate volunteering, the 250% tax deduction under the CVS will be extended to qualifying expenditure incurred from 1 January 2027 to 31 December 2029.

Others

Preferential Additional Registration Fee (“PARF”) rebate

• As electric and hybrid vehicles are less pollutive and become increasingly prevalent, the PARF will be streamlined in the following manner:
  • PARF rebate will be reduced by 45 percentage points across all age tiers; and
  • PARF rebate cap will be reduced from S$60,000 to S$30,000.
• The revised PARF rebate schedule:

  (*capped at S$30,000)

• The revised PARF rebate schedule and cap will apply to cars registered with Certificates of Entitlement (“COEs”) obtained from the second COE bidding exercise in February 2026.
• For vehicles that do not require COE bidding (e.g. taxis), the revised PARF rebate schedule and cap will apply to those registered on or after 13 February 2026.
• These changes do not apply to vehicles that are not eligible for PARF rebates, such as goods-cum-passenger vehicles, classic cars, and laid-up vehicles.