Singapore Budget 2026: What Every SME Needs to Know

Corporate Income Tax (“CIT”) Rebate

Businesses will be granted a 40% CIT Rebate for the Year of Assessment (“YA”) 2026. A minimum $1,500 CIT Rebate Cash Grant will be given to active companies that meet the local employee condition – employed at least one local employee (Singapore Citizen or Permanent Resident), excluding shareholder-director in calendar year 2025.

The total maximum benefits, comprising both the CIT Rebate and CIT Rebate Cash Grant, is capped at $30,000. Eligible companies will receive the benefit automatically from Q2 2026.

Comparison across recent years

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

• Expenditure cap for automatic 200% deduction on qualifying market expansion and investment development activities will be raised from $150,000 to $400,000 per YA.
• Scope of claim with no prior approval required will be expanded to cover all eligible expenses incurred on:

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

• Qualifying period for the DTDi scheme will end on 31 December 2030.

Comparison to previous position

Enhancement to Enterprise Innovation Scheme (“EIS”)

The EIS scheme currently allows for 400% tax deductions/allowances on up to $400,000 of qualifying expenditure per year for qualifying activities and up to $50,000 of expenditure per year for innovation projects carried out with polytechnics, the Institute of Technical Education (ITE) or other qualified partners. Eligible businesses also have the option to convert up to $100,000 of total qualifying expenditure into cash at a rate of 20%.

Enhancement for YA 2027 and YA 2028 in support of businesses adopting AI:

• Expansion of qualified partners to include Sectoral AI Centre of Excellence for Manufacturing
• New qualifying AI activity (up to $50,000 per YA eligible for 400% deduction)
• Cash payout option will not be available for this new AI activity

(IRAS will release more details by mid-2026)

Extension to Withholding Tax Exemptions for the Financial Sector

All Section 12(6) payments made by banks, finance companies and certain approved entities to non-resident persons are exempt from withholding tax.
This was scheduled to lapse on 31 December 2026.

The exemptions will be extended till 31 December 2031.

(MAS will release more details by 30 June 2026)

Extension of Tax Incentive or Schemes

• Finance and Treasury Centre (FTC) Incentive
  Extended to 31 December 2031. Scope expanded to include interest-like borrowing costs.
• Global Trader Programme (GTP)
  Extended to 31 December 2031. Expanded commodity list.
• 250% Tax Deduction for Qualifying Donations
  Extended to 31 December 2029.
• Corporate Volunteer Scheme (CVS)
  Extended to 31 December 2029.
• Not-for-Profit Organisation Tax Incentive (NPOTI)
  Extended to 31 December 2032.
• Progressive Wage Credit Scheme (PWCS)
  Co-funding increased and extended to 2028.
• Senior Employment Credit (SEC)
  Extended to 31 December 2027 with expanded coverage.

Grants and Other Support Measures

• Enhancement of grant support levels for internationalisation schemes – From 1 April 2026 to 31 March 2029, local SMEs will receive support of up to 70% of eligible costs, while local non-SMEs will receive up to 50% of eligible costs under selected schemes, including the Business Adaptation Grant (until 6 October 2027) and Global Innovation Alliance programmes.
• Enhancement of the Market Readiness Assistance (“MRA”) Grant – With effect from 1 April 2026, the MRA Grant support level for local SMEs will increase to 70% of eligible costs (from 50%) until 31 March 2029. The grant cap of S$100,000 per company per new market will be extended, and from the second half of 2026, the “new to target overseas market” criterion will be removed to allow deeper engagement in existing overseas markets.
• Expansion of the Productivity Solutions Grant (“PSG”) – Expanded to support a wider range of AI-enabled and digital solutions to facilitate business transformation and productivity improvements.
• Enhancement of loan quantum under the Enterprise Financing Scheme (“EFS”) – Borrower and borrower-group caps for each EFS facility will be lifted, subject to an overall exposure limit of S$50 million per borrower group across all EFS facilities.

Enhanced Grant Support for Overseas Market Access

The Market Readiness Assistance (“MRA”) grant helps enterprises to expand overseas by defraying the costs of overseas market promotion, business development, and market set-up. The MRA grant is available to local Small and Medium Enterprises (“SMEs”) at a support level of up to 50% of eligible costs, capped at $100,000 per company per new market. The enhanced $100,000 cap is scheduled to lapse after 31 March 2026.

Expansion of the Productivity Solutions Grant (“PSG”)

To support businesses in AI adoption, a wider range of AI-enabled solutions will be made available for businesses under the PSG. The PSG provides support for businesses to adopt pre-approved IT solutions and equipment, to improve their productivity and automate existing processes. MDDI will share more details at the Committee of Supply 2026.

Business Adaptation Grant (until 6 October 2027) To help local enterprises by tariffs to adapt their business operations and strengthen supply chain resilience through advisory and reconfiguration support.

Progressive Wage Credit Scheme

The PWCS provides transitional wage support for employers to adjust to the Progressive Wage encourage employers to voluntarily raise wages of lower-wage workers. Employers should use this period of transitional support to invest in upskilling their employees, transform their businesses, and improve productivity. The PWCS was enhanced at Budget 2025, with 2025 and 2026 co-funding support raised from 30% to 40% and 15% to 20% respectively.

Strengthening Assurance for Mid-Career Workers & Seniors

• Expansion of SkillsFuture Level-Up Programme
• Senior Employment Credit extended to 2027

With evolving tax regulations and new incentives introduced in Budget 2026, businesses should take proactive steps to optimise their tax position. At Ledgen, we help you navigate these changes with clarity and confidence, from identifying applicable incentives to ensuring full compliance. Speak to our team to find out how your business can benefit.

Authored by Ruth, Sandy, and Tina