TAX CHANGES: BUSINESSES

Corporate Income Tax (“CIT”) Rebate for the Year of Assessment (“YA”) 2026

To support companies in managing cost pressures, a Corporate Income Tax (“CIT”) rebate of 40% of tax payable will be granted for YA 2026.

Companies that employed at least one local employee in Calendar Year (“CY”) 2025 will receive a minimum benefit of S$1,500 in the form of a CIT Rebate Cash Grant.

The total maximum benefit (i.e. CIT rebate and CIT rebate cash grant combined) is capped at S$30,000 per company.

The benefits will be automatically granted from the second quarter of CY 2026 onwards.

A company is considered to have met the “local employee condition” if it has made CPF contributions to at least one Singapore Citizen or Permanent Resident employee, excluding shareholders who are also directors, during CY 2025.

Enhancement of Double Tax Deduction for Internationalisation (“DTDi”) Scheme

To further support businesses expanding overseas, the Government will enhance the DTDi scheme.

Currently, businesses may claim 200% tax deduction on qualifying expenses, with automatic claims allowed for the first S$150,000 of qualifying expenses per YA for selected activities.

Under Budget 2026, the expenditure cap for claims without prior approval will be increased to S$400,000 per YA.

In addition, the scope of expenses that can be claimed without prior approval will be expanded to include expenses incurred on:

Overseas market development trips
Overseas investment study trips
Investment feasibility and due diligence studies
Master licensing and franchising
Market surveys and feasibility studies
Overseas business development
Production of corporate brochures for overseas distribution

Businesses will continue to be required to seek approval from Enterprise Singapore or Singapore Tourism Board for claims exceeding S$400,000 or for certain activities such as overseas trade offices and e-commerce campaigns.

The changes will apply to expenses incurred from YA 2027 onwards.

Enhancement of Enterprise Innovation Scheme (“EIS”)

The Enterprise Innovation Scheme (“EIS”), which currently provides 400% tax deductions or allowances on qualifying innovation expenditure, will be enhanced to support Artificial Intelligence (“AI”) adoption.

The following enhancements will apply for YA 2027 and YA 2028:

The list of partner institutions will be expanded to include the Sectoral AI Centre of Excellence for Manufacturing.
A new qualifying activity for AI-related expenditure will be introduced. Businesses can claim 400% tax deduction or allowance on up to S$50,000 of qualifying AI expenditure per YA.

Unlike other EIS qualifying activities, the cash payout option will not be available for this AI expenditure category.

Further implementation details will be provided by Inland Revenue Authority of Singapore (“IRAS”) by mid-2026.

Extension of Withholding Tax Exemptions for the Financial Sector

Withholding tax exemptions applicable to certain financial sector transactions with non-resident persons will be extended until 31 December 2031.

These exemptions apply to payments such as:

Section 12(6) payments made by specified entities
Payments on structured products
Payments on over-the-counter financial derivatives
Payments under cross-currency swaps
Interest on margin deposits for derivatives contracts
Payments under securities lending or repurchase agreements
Interest rate or currency swap payments by MAS

The extension aims to maintain Singapore’s competitiveness as a global financial centre.

Extension and Enhancement of Finance and Treasury Centre (“FTC”) Incentive

The FTC incentive, which grants approved finance and treasury centres a concessionary tax rate of 8% or 10% on qualifying income, will be extended until 31 December 2031.

In addition, the scope of withholding tax exemption available to approved FTCs will be expanded to cover interest-like borrowing costs that are subject to withholding tax.

This expanded exemption will apply to payments made on or after 13 February 2026.

Extension and Enhancement of Global Trader Programme (“GTP”)

The Global Trader Programme (“GTP”) will be extended until 31 December 2031.

The scheme currently provides concessionary tax rates of 5%, 10% or 15% on income from qualifying global trading activities.

Under Budget 2026, the list of qualifying commodities will be expanded to include Environmental Attribute Certificates, to support Singapore’s development as a sustainable trading hub.

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

The Not-for-Profit Organisation Tax Incentive (“NPOTI”), which grants tax exemption on income derived by approved not-for-profit organisations, will be extended until 31 December 2032.

This aims to ensure Singapore remains an attractive base for non-profit organisations.

Tax Deduction for CPF Cash Top-ups Made by Platform Operators

Platform operators will be allowed to claim tax deduction for CPF cash top-ups made on behalf of their platform workers under the Voluntary Contributions to MediSave Account (“VC-MA”) scheme.

This change aims to encourage platform operators to support their workers in building MediSave savings.

The change will apply from YA 2027 for contributions made from 1 January 2026 onwards.

Lapse of Investment Allowance for Emissions Reduction (“IA-ER”) Scheme

The IA-ER scheme, which grants investment allowance for projects that improve energy efficiency or reduce greenhouse gas emissions, will lapse after 31 December 2026.

Companies may continue to receive support through other schemes such as:

Resource Efficiency Grant for Emissions
Refundable Investment Credits for Decarbonisation.

Lapse of Double Tax Deduction for Rated Retail Bonds

The double tax deduction scheme for qualifying upfront costs relating to rated retail bonds will be allowed to lapse after 31 December 2026.

Other schemes supporting bond issuance, such as the Qualifying Debt Securities (“QDS”) scheme and the Global-Asia Bond Grant Scheme, will remain available.

TAX CHANGES: BUSINESSES, INDIVIDUALS AND BODIES OF PERSONS

Extension of 250% Tax Deduction for Donations

The 250% tax deduction for qualifying donations to Institutions of a Public Character (“IPCs”) and eligible institutions will be extended for donations made from 1 January 2027 to 31 December 2029.

Eligible donations include:

Cash donations
Gifts of shares listed on SGX
Gifts of units in unit trusts listed on SGX
Gifts of artefacts to approved museums
Gifts of land or buildings to IPCs.

Extension of Corporate Volunteer Scheme (“CVS”)

The Corporate Volunteer Scheme (“CVS”), which allows businesses to claim 250% tax deduction on qualifying expenditure incurred for employee volunteer activities, will be extended for expenditure incurred from 1 January 2027 to 31 December 2029.

The current annual cap of S$250,000 per business per YA will continue to apply.

TAX CHANGES: OTHERS

Preferential Additional Registration Fee (“PARF”) Rebate

The PARF rebate for cars and taxis will be reduced as electric and hybrid vehicles become more common.

The PARF rebate rates will be reduced by 45 percentage points, and the rebate cap will be lowered from S$60,000 to S$30,000.

The revised rebate schedule will apply to:

Cars registered with COEs obtained from the second COE bidding exercise in February 2026, and
Taxis registered on or after 13 February 2026.

Increase in Excise Duties for Tobacco Products

Excise duties on tobacco products will be increased by 20% across all tobacco products with effect from 12 February 2026.

For example:

Cigarettes: from 49.1 cents per stick to 58.9 cents per stick
Manufactured tobacco: from $491/kg to $589/kg.