Setting out spending for the year ahead totalling SG$154.7 billion, the Singapore Budget 2026 – announced on 12 February 2026 by Prime Minister and Minister for Finance, Mr Lawrence Wong – puts artificial intelligence (AI), innovation and the international growth of Singapore businesses at its core.
Key business and investor highlights for 2026
Against a backdrop of global uncertainty, Singapore recorded 5% growth in 2025, with growth projected for 2026 of 2% to 4%, and inflation expected at 1% to 2%. Key Budget measures relevant to businesses and investors include:
- 40% corporate income tax rebate for Year of Assessment 2026
- More activities eligible for the Double Tax Deduction for Internationalisation scheme
- Enhanced Market Readiness Assistance grant
- Enterprise Innovation Scheme to include qualifying AI expenditures
- New national AI missions in four key sectors
- Increase in the minimum qualifying salary for the Employment Pass and S Pass
- New agency for career development
Taxation and financial support
Budget 2026 offers a mix of tax relief and growth financing aimed at improving business sustainability and expansion readiness.
40% corporate income tax rebate for Year of Assessment 2026
For the Year of Assessment (YA) 2026, companies can claim a 40% corporate income tax rebate. If you have hired at least one local employee in 2025, you will also receive a minimum cash grant of SG$1,500. The total benefit will be capped at SG$30,000. Compared with last year’s Budget, the package is more moderate.
More activities eligible for the Double Tax Deduction for Internationalisation scheme
Elsewhere, the Budget outlines more activities that will be eligible for the Double Tax Deduction for Internationalisation (DTDi). The DTDi is one of the schemes available to support businesses expanding globally from Singapore.
Budget 2026 sets out a wider range of activities that will qualify for the automatic DTDi claims, with the cap increasing to SG$400,000, giving companies more headroom to pursue overseas opportunities.
Enhanced Market Readiness Assistance grant
An enhanced Market Readiness Assistance (MRA) grant is also a welcome move. The grant helps eligible small and medium-sized enterprises (SMEs) offset the upfront costs of overseas expansion. Budget 2026 indicates that the MRA will be refined to help companies not only enter new markets but also strengthen and scale their presence in markets where they already operate.
Support levels for other grant schemes that back internationalisation efforts will also be enhanced. Funding support may go up to 70% for SMEs and up to 50% for non-SMEs, depending on the scheme and eligibility criteria.
Other important measures
In addition, there are proposals to do more to catalyse growth capital in Singapore through an enhanced Startup SG Equity scheme, to not only focus on early-stage funding, but to now also set aside SG$1 billion to expand its scope to include growth-stage companies.
Other notable measures include:
- Enhancements to the Enterprise Financing Scheme (EFS) to give companies more flexibility to cater to different financing needs
- Launching a second SG$1.5 billion tranche of the Anchor Fund as a co-investment between the government and Temasek Holdings
- Expansion of the Monetary Authority of Singapore (MAS) Equity Market Development Programme (EQDP) to develop Singapore’s fund management industry, allocating a further SG$1.5 billion to the Financial Sector Development Fund (FSDF)
- Extending the Energy Efficiency Grant (EEG) and support for green loans under the EFS
AI, innovation and technology
Importantly, Budget 2026 places a significant emphasis on embracing new technologies, with the government committing SG$37 billion under the Research, Innovation and Enterprise 2030 (RIE2030) plan. RIE2030 is Singapore’s five-year national research and innovation programme starting from April 2026, setting out priorities to develop local talent and accelerate technology adoption.
Similarly, a number of measures in Budget 2026 are aimed at practical AI adoption for companies. To manage these efforts, a National AI Council will be formed and chaired by Mr Lawrence Wong, signalling top-level direction to drive Singapore’s AI agenda.
Enterprise Innovation Scheme to include qualifying AI expenditures
Notably, the Enterprise Innovation Scheme (EIS) will be strengthened to include AI expenditures as a qualifying activity for YA 2027 and YA 2028. This will be capped at SG$50,000 per YA. The EIS is a tax incentive that encourages companies to invest in innovation and capability building. It supports efforts to improve products and develop new ways of delivering services by offering 400% tax deductions or allowances on eligible costs.
Expanded scope under the Productivity Solutions Grant
The Productivity Solutions Grant (PSG) has been a key support measure for SMEs looking to digitalise. For eligible local SMEs, PSG typically co-funds up to 50% of qualifying costs, with support of up to SG$30,000, across a mix of industry-focused tools and general business software. Going forward, it will be expanded to support a wider range of digital and AI-enabled solutions.
New national AI missions in four key sectors
There are also additional measures announced around new national AI missions aimed at driving AI-led transformation in key sectors of the economy – advanced manufacturing, connectivity, finance and healthcare – which will, for instance, accelerate innovation, build best-in-class factories and help to automate airport and seaport operations to strengthen Singapore’s position as a leading global hub.
Other important measures
Other notable measures include the:
- Launch of a new Champions of AI programme to support firms with plans to deploy AI more extensively
- Redesign of the SkillsFuture website to make AI learning pathways clearer and easier to access
- Provision of six months of free access to premium AI tools to further encourage learning
- Development of a larger AI park to drive collaboration
Hiring and workforce development
Additionally, Budget 2026 outlines new measures that support sustainable growth and development across Singapore’s workforce.
Increase in the minimum qualifying salary for the Employment Pass and S Pass
In particular, the qualifying salary for the Singapore Employment Pass (EP) and S Pass will increase. Currently, new EP applications must meet a minimum qualifying salary of SG$5,600, or SG$6,200 for positions in the financial services sector. These minimum benchmarks will be raised from January 2027 to SG$6,000 and SG$6,600 respectively.
A similar timeline applies to S Pass holders, where the current minimum qualifying salary for new applicants is SG$3,300, or SG$3,800 in financial services. This will increase to SG$3,600 and SG$4,000 from January 2027.
In line with the higher baseline qualifying salaries, the age-tiered salary thresholds for EP and S Pass applicants will also be raised. These changes will take effect for new applications from 1 January 2027, and for renewals from 1 January 2028.
Adjustments to the Work Permit levies
Meanwhile, adjustments to Work Permit levies are outlined in Budget 2026, with levies for basic skilled workers in the Marine and Process sectors rising by SG$100 and SG$150 respectively. The tiered structure in the Manufacturing and Services sectors will also be simplified. These will be implemented from 2028.
Increase in Local Qualifying Salary
The minimum salary that local employees must be paid by firms that hire foreign workers – the Local Qualifying Salary (LQS) – will be increased for full-time local employees to SG$1,800 this year.
To help businesses with some of the cost of this, co-funding support through the Progressive Wage Credit Scheme (PWCS) will rise this year from 20% to 30%, with the PWCS also being extended to 2028. In addition, from next year, the minimum wage increase needed to qualify for PWCS support will also increase from SG$100 to SG$200 to encourage firms to invest in their workforce.
New agency for career development
A new agency will also be established for career development, with SkillsFuture Singapore and Workforce Singapore set to merge. This is aimed at making it easier for companies to access support for hiring, job redesign as well as workforce planning and development.
Other important measures
In tandem, as part of efforts to strengthen training support, there will be an increase in the hourly allowance for workers who upgrade their skills through the Workforce Skills Support scheme.
Also of note is the ongoing enhancement of the Level-Up programme, with the Mid-Career Training Allowance being extended to those who take up part-time training, and coverage being expanded to include more courses. There will also be an extension of the Senior Employment Credit to the end of 2027 to support businesses hiring senior workers.
How we can support companies
Overall, Budget 2026 seeks to put Singapore on a solid footing in a shifting global landscape while also anticipating future economic challenges. For businesses and investors, measures focused on innovation, and AI in particular, on accelerating the international growth prospects of businesses, and on skills and workforce development should instil confidence.
If you would like to learn more about the 2026 Budget, we will be hosting an in-person “Singapore 2026: Budget impacts and market outlooks” breakfast briefing on Thursday, 26 February 2026. This is with the support of the Singapore Economic Development Board (EDB) and many of our Chamber partners. For more details and to sign up to attend, please visit our registration page here.
Our local team of experts is well-versed in the practical aspects of doing business in Singapore. For matters related to starting and managing operations here, reach out to us today.
Frequently asked questions
What are the key "bottlenecks" Budget 2026 helps businesses solve?
Budget 2026 is framed around easing several common constraints that can slow business growth. One bottleneck is the upfront cost of expansion, so measures that enhance internationalisation support are intended to lower that initial financial barrier.
Another is execution capability, especially when businesses want to adopt artificial intelligence (AI) but find it difficult to integrate it into existing processes; measures such as the broadened Productivity Solutions Grant (PSG) support, the inclusion of AI-related spending under the Enterprise Innovation Scheme (EIS) and sector-focused AI missions are aimed at narrowing that gap.
Which companies benefit from Singapore budget?
The measures in Budget 2026 are most relevant to companies that are actively building operations, investing in productivity or planning to expand beyond Singapore.
Employers may be impacted, particularly those managing workforce planning, as changes to Employment Pass (EP) and S Pass salary benchmarks, the Local Qualifying Salary (LQS) and Work Permit levies can influence operating costs and compliance requirements over the next few years. To prepare for these changes, please get in touch with our team.
How can my business in Singapore leverage the new Budget 2026 initiatives to expand into ASEAN?
Budget 2026 can support your ASEAN expansion plan by reducing the upfront expense of building presence in neighbouring markets. Internationalisation measures, including the expanded Double Tax Deduction for Internationalisation (DTDi) scope and the refined direction of the Market Readiness Assistance (MRA) grant, can be aligned with typical expansion activities.
If you’re looking to enter other ASEAN markets from Singapore, please reach out to our team to explore the latest measures applicable to your business.
What specific support is available for Singapore firms eyeing East Asian, American and European markets?
For companies targeting East Asian, American and European markets, Budget 2026 points to support that can reduce both the cost and the financing burden of expansion. DTDi enhancements broaden the range of activities eligible for automatic claims and increase the cap, which can reduce the after-tax cost of qualifying internationalisation expenditure.
Grant measures, including the enhanced focus of the MRA grant and strengthened support levels under other internationalisation schemes, can help offset upfront costs associated with market entry and scaling, subject to scheme rules.
AI measures may also help with improving operational efficiency and consistency, which can be useful when you’re scaling into other markets.
How can Hawksford help in aligning my 2026 commercial roadmap with the Budget’s benefits?
We usually start by understanding what you want to achieve and then highlighting the initiatives that can realistically support those moves. This can give you a clearer idea on how to pursue your 2026 plans while making use of the support that is available. If expansion is a near-term priority, we can also help you plan your entry into other markets.
With offices in key locations, our team can provide on-the-ground support to complete your entity formation. Where you need to hire quickly without setting up a local entity, we provide Employer of Record (EoR) solutions to onboard staff in-market. For more information on how to position your activities, please get in touch.
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