Prime Minister and Minister for Finance Mr. Lawrence Wong delivered Singapore’s Budget 2026 on 12 February, setting out S$154.7 billion in spending for the year ahead.
The budget prioritises artificial intelligence, international expansion, and workforce quality.
Our take: If you’re planning to incorporate in Singapore or already operating here, two things need attention.
- Employment pass salary thresholds rise in January 2027 – budget now if your hiring extends past this year.
- The expansion support carries value. The grants and tax deductions favor companies building regional operations, not those using Singapore as a registry address.
Corporate Tax Relief
Companies can claim a 40% corporate income tax rebate for Year of Assessment 2026, capped at S$30,000. Businesses should also understand their annual corporate tax filing obligations in Singapore. Businesses that hired at least one local employee in 2025 receive a minimum cash grant of S$1,500.
A company with S$100,000 in corporate tax liability receives a S$30,000 rebate (capped). A smaller company with S$10,000 in tax liability receives S$4,000.
No local hires? You still get the rebate, but not the additional S$1,500 cash grant.
International Expansion Support
Double Tax Deduction for Internationalisation
The DTDi scheme now covers more qualifying activities. The cap rises to S$400,000, giving businesses more room to claim deductions on overseas expansion costs.
Qualifying overseas activities include:
- Market research
- Investment study trips
- Trade fairs
- Business development trips
The expanded scope means companies can claim deductions on a broader range of internationalisation activities.
A Singapore company spending S$300,000 on overseas market research, trade fair participation, and business development trips can claim tax deductions totaling S$600,000 (200% of actual expenditure) under the DTDi scheme.
Market Readiness Assistance (MRA) Grant
The MRA grant has been refined. Previously focused on market entry, it now supports companies scaling operations in existing markets.
Grant support levels increase to 70% for SMEs and 50% for non-SMEs, depending on the scheme and eligibility.
An SME looking to expand its presence in Vietnam – where it already has initial operations can now apply for MRA support to strengthen that market position, not just enter new markets. This is especially valuable given Singapore’s growing network of free trade agreements. This changes the calculation for businesses deciding between deepening existing markets versus entering new ones.
Enterprise Financing Scheme (EFS)
The EFS receives enhancements to provide more flexibility for different financing needs. Maximum loan amounts for Trade and SME Fixed Assets loans increase.
Workforce and Employment
Employment Pass (EP) and S Pass Changes
Minimum qualifying salaries rise from January 2027:
- Employment Pass: S$6,000 (from S$5,600)
- Employment Pass (Financial Services): S$6,600 (from S$6,200)
- S Pass: S$3,600 (from S$3,300)
- S Pass (Financial Services): S$4,000 (from S$3,800)
Age-tiered salary thresholds adjust accordingly. Changes apply to new applications from 1 January 2027 and renewals from 1 January 2028.
Foreign businesses incorporating in Singapore during 2026 need to account for these increases if hiring plans extend into 2027. An EP candidate previously qualifying at S$5,700/month will need S$6,000/month from January 2027.
Current EP holders renewing in 2026 still qualify under existing thresholds. The new thresholds only apply to renewals from 2028 onward, giving businesses time to adjust compensation structures.
Local Qualifying Salary
The minimum salary for local employees at companies hiring foreign workers rises to S$1,800 from July 2026.
The Progressive Wage Credit Scheme (PWCS) co-funding increases from 20% to 30% in 2026. The scheme extends to 2028. From 2027, the minimum wage increase needed to qualify for PWCS support rises from S$100 to S$200.
Work Permit Levies
Work Permit levies adjust from 2028. Marine sector levies increase by S$100, the Process sector by S$150. The Manufacturing and Services sectors will see simplified tiered structures.
AI and Innovation
Research and Development Investment
S$37 billion committed under the Research, Innovation and Enterprise 2030 plan. The five-year programme runs from April 2026.
A National AI Council will be formed, chaired by the Prime Minister.
Enterprise Innovation Scheme (EIS)
AI expenditure becomes a qualifying activity under the EIS for YA 2027 and YA 2028, capped at S$50,000 per year. The scheme offers 400% tax deductions on eligible innovation costs.
A company spending S$40,000 on qualifying AI implementation can claim tax deductions of S$160,000 (400% of expenditure). This effectively reduces the after-tax cost of AI adoption.
Productivity Solutions Grant (PSG)
The PSG expands to support more digital and AI-enabled solutions. Eligible SMEs can access co-funding up to 50% of qualifying costs, with support reaching S$30,000.
National AI Missions
Four sector-specific AI missions target:
- Advanced manufacturing
- Connectivity (airports, seaports)
- Finance
- Healthcare
These missions focus on practical AI adoption and building competitive advantages in specific verticals.
AI Support Programmes
A Champions of AI programme will support companies deploying AI at scale. The SkillsFuture website will be redesigned with clearer AI learning pathways. Six months of free access to premium AI tools will be provided to encourage learning.
Startup and Growth Capital
Startup SG Equity
S$1 billion allocated to extend the scheme beyond early-stage funding to include growth-stage companies. This addresses the capital gap many deep tech companies face when scaling.
Deep tech startups previously unable to access government co-investment beyond Series A can now potentially secure support for Series B and later rounds.
Anchor Fund and Equity Market Development
- S$1.5 billion for a second tranche of the Anchor Fund, a co-investment between the government and Temasek Holdings.
- S$1.5 billion more for the MAS Equity Market Development Programme to develop Singapore’s fund management industry.
Budget 2026: What This Means for Corporate Compliance
Two dates matter. Employment Pass applications from January 2027 require higher salary thresholds. Existing pass renewals transition to new requirements from January 2028.
If you’re incorporating now and hiring extends beyond this year, budget for the 2027 salary levels.
The internationalisation support requires proper documentation. DTDi claims to need records of qualifying activities. MRA applications need structured proposals showing how you’ll scale in markets, not just enter them.
We see companies leave money on the table because their documentation framework isn’t set up correctly.
The talent threshold increases are a signal about what Singapore wants: specialised capability, not general headcount.
For HC Consultancy, this means having earlier conversations with clients about compensation structures, especially for companies planning multi-year hiring.
AI expenditure under EIS needs careful classification. Not all technology spending qualifies – you need clear documentation showing innovation and capability building, not routine IT purchases. The 400% deduction is substantial, but claiming it incorrectly creates problems during audits.
If you’re evaluating Singapore incorporation in 2026, look at two components: compliance cost (rising modestly through salary thresholds) and expansion infrastructure (strengthening substantially through grants and deductions).
Companies with genuine regional strategies benefit. Companies using Singapore primarily for tax optimisation without operational substance will find the economics less favourable.
Incorporating before year-end 2026 locks in current EP salary thresholds for initial hires. But this only makes sense if you’re actually hiring in 2026. Incorporating early just to avoid 2027 thresholds creates unnecessary compliance work.
Budget 2026 layers onto existing requirements – beneficial ownership reporting, Corporate Service Providers (CSP) Act compliance, and annual filing obligations. It adds to what you’re already managing; it doesn’t replace anything.
HC Consultancy assists foreign businesses with Singapore incorporation, employment pass applications, and ongoing corporate secretarial compliance. For guidance on how Budget 2026 affects your plans, contact us for a consultation.
