1. 40% Corporate Income Tax Rebate for YA 2026

To help businesses manage rising costs, the Government will grant:

✅ 40% Corporate Income Tax (CIT) rebate for YA 2026
✅ Minimum $1,500 cash benefit for companies with at least one local employee in 2025
✅ Maximum total benefit capped at $30,000

This support will be automatically credited from 2Q 2026 onwards.

💡 This is especially beneficial for SMEs with modest tax payable, as they will still receive the minimum cash payout.

2. Double Tax Deduction for Internationalisation (DTDi) Enhanced

To encourage overseas expansion:

The automatic claim cap increases from $150,000 → $400,000 per YA
More activities will no longer require prior approval
Applies from YA 2027

This significantly reduces compliance friction for businesses expanding abroad.

Singapore Budget 2026: Harnessing AI as a Strategic Advantage for Businesses

3. Enterprise Innovation Scheme (EIS) Expanded to Cover AI

To support digital transformation and AI adoption:

400% tax deduction on qualifying AI expenditure
Up to $50,000 per YA
Applies for YA 2027 and YA 2028

In addition, the list of approved partner institutions will be expanded.

💡 This is a major move for companies investing in automation, data, and AI solutions.

4. Financial Sector Incentives Extended to 2031

To maintain Singapore’s position as a global financial hub:

(a) Withholding Tax Exemptions Extended

For qualifying financial transactions with non-residents.

(b) Finance & Treasury Centre (FTC) Incentive Extended

Concessionary tax rate continues
WHT exemption expanded to cover interest-like borrowing costs

(c) Global Trader Programme (GTP) Extended

Valid until 31 Dec 2031
New qualifying commodity:
Environmental Attribute Certificates

5. Tax Deduction for CPF Top-Ups for Platform Workers

From YA 2027:

Platform operators can claim tax deduction for CPF MediSave top-ups made for eligible platform workers.

This aligns the tax treatment with traditional employers.

6. Schemes That Will Lapse After 31 Dec 2026

To keep incentives relevant, the following will be discontinued:

❌ Investment Allowance for Emissions Reduction (IA-ER)
❌ Double tax deduction for rated retail bond upfront costs

However, alternative decarbonisation and bond schemes will remain available.

7. Stronger Support for Philanthropy and Corporate Volunteerism

(a) 250% Tax Deduction for Donations Extended

Now valid for donations made from 2027 to 2029.

(b) Corporate Volunteer Scheme Extended

Businesses can continue to claim 250% tax deduction on qualifying volunteer costs.

This reinforces Singapore’s culture of giving.

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8. Not-for-Profit Tax Incentive Extended to 2032

Approved NPOs will continue to enjoy tax exemption on qualifying income, ensuring Singapore remains an attractive base for the non-profit sector.

9. Vehicle Tax Change – PARF Rebate Reduced

To reflect the shift toward cleaner vehicles:

PARF rebate reduced by 45 percentage points
Cap lowered from $60,000 → $30,000
Applies to vehicles registered from Feb 2026 onwards

10. Tobacco Excise Duty Increased by 20%

Effective 12 February 2026, excise duties for all tobacco products increase by 20% to discourage consumption.

What This Means for Your Business

Immediate Benefit (YA 2026)

✔ CIT rebate (cash flow support)

Medium-Term Planning

✔ DTDi enhancement for overseas expansion
✔ AI tax deductions under EIS

For Financial & Treasury Groups

✔ Incentives extended to 2031 → long-term certainty

For ESG & Decarbonisation Projects

⚠ IA-ER removed → must review alternative support schemes

Quick Summary Table

Area	Change	Effective
CIT Rebate	40% (min $1,500, cap $30k)	YA 2026
DTDi	Auto claim cap ↑ to $400k	YA 2027
EIS	400% deduction for AI	YA 2027–2028
FTC / GTP	Extended to 2031	From 2026
CPF for Platform Workers	Tax deductible	YA 2027
Donations	250% deduction extended	2027–2029
PARF	Rebate reduced	Feb 2026
Tobacco Duty	+20%	Feb 2026

Final Thoughts

Singapore Budget 2026 focuses on three key themes:

Immediate cost relief for businesses
Long-term innovation and internationalisation
Maintaining global competitiveness

For companies, the biggest opportunities lie in:

✔ Maximising the YA 2026 CIT rebate
✔ Structuring AI and innovation investments to qualify for EIS
✔ Leveraging DTDi for regional expansion

Disclaimer: This article is for informational purposes only and does not constitute tax or compliance advice. Employers should consult tax professionals or refer to official IRAS guidance for tailored instructions.

Source: https://www.iras.gov.sg/news-events/singapore-budget/budget-2026–tax-changes-and-enterprise-disbursements