Singapore Budget 2026: Corporate Tax Rebate Reduced, Internationalization Incentives Enhanced

Singapore's Budget 2026, announced by Prime Minister Lawrence Wong on February 12, includes several tax adjustments for businesses. Key changes focus on corporate income tax, incentives for internationalization, and support for innovation.

The corporate income tax (CIT) rebate for the Year of Assessment (YA) 2026 will be reduced to 40% of tax payable, down from 50% for YA 2025. Active companies employing at least one local employee will continue to receive a minimum cash grant, but the overall cap for the rebate and cash grant combined is lowered to $30,000 from $40,000.

The Double Tax Deduction for Internationalisation (DTDi) scheme is set to be enhanced starting from YA 2027. The expenditure cap for claims without prior approval will be raised to $400,000 per YA. The scope of eligible expenses will also be expanded to cover certain overseas market development and investment study trips.

Furthermore, the Enterprise Innovation Scheme (EIS) will incorporate new initiatives related to artificial intelligence (AI) for YA 2027 and YA 2028. Businesses can claim a 400% tax deduction on up to $50,000 of qualifying AI expenditures per YA, with the scheme also broadening to include AI centers for the manufacturing sector.