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| Source: Singapore Budget website. Infographic on a refreshed economic strategy. |
Businesses will receive a 40% corporate income tax rebate in the year of
assessment 2026 to help with cost pressures and operating challenges,
the Singapore PM and Minister for Finance Lawrence Wong, announced in
his FY2026 Budget Statement.
"Every active company that employed
at least one local employee last year will receive a minimum benefit of
S$1,500. The total benefit for each company will be capped at
S$30,000," he said.
"This will provide short-term relief, as we press on with our restructuring and transformation efforts".
"The 40% corporate income tax rebate will ease the tax burden for all businesses, and benefit even more small and medium enterprises (SMEs) given the cap of S$30,000," said Ajay Kumar Sanganeria, Partner, Head of Tax, KPMG in Singapore.
"However, it is unlikely to provide immediate relief for companies facing cash flow constraints or those that are loss-making. These firms will need to rely on other assistance schemes for support."
Internationalisation
The
Singapore government also recognised the challenges that businesses
face as they internationalise. Wong said there will the Market Readiness
Assistance grant would be extended to support companies in existing
overseas markets in addition to its current remit on accessing new
markets.
More activities will also be added to the Double Tax
Deduction for Internationalisation scheme, under which companies
automatically enjoy a 200% tax deduction for eligible activities, capped
at S$150,000. "We will allow more qualifying activities to be eligible
for such automatic tax deduction claims and raise the cap to S$400,000,"
Wong said.
The Enterprise Financing Scheme will also see the
maximum loan quantum for trade and fixed asset loans increased. Wong
also shared that there will be more support for companies "pursuing
significant overseas ventures that require higher capital outlay".
"Amid uncertainty from ongoing geopolitical tensions and evolving trade and customs dynamics, the enhanced support reflects the government’s recognition of higher risks and costs associated with extending beyond our own borders."
Yong added that the increased support levels for grant schemes, enhancement to the Market Readiness Assistance grant and increased cap for the Double Tax Deduction for Internationalisation scheme will help alleviate immediate cash flow concerns which come with expanding into new markets. "Besides making the claim for double tax deduction easier, the expanded list of qualifying activities may also allow more expenditure to qualify," he said.
Karen Ng, Regional Head of Expansion - Enterprise - North and South Asia, Deel said: "It’s a welcome development to see that Singapore does not only want its companies to thrive at home, but to compete and succeed globally. The enhanced grants announced during the Budget 2026 include bigger tax deduction cap for internationalisation and higher loan quantum are all strong signals that overseas growth is now seen as part of the national playbook, not a side project for a few regional champions.
"This is especially important for businesses, particularly for small to mid‑sized firms that have the product‑market fit but lack resources such as in‑house legal, HR and finance muscles to navigate multiple jurisdictions at once."
Ng added that what’s often overlooked is that global expansion isn’t about opening offices, it’s about running a compliant, well-governed workforce across borders. "Every new market brings its own employment rules, tax requirements, and payroll complexity. The companies that will truly benefit from this Budget are those that pair new incentives with specialist support and technology-enabled workforce models that manage compliant hiring, local contracts, and payroll, so leaders can stay focused on customers, talent, and growth," she pointed out.
"From an SME point of view, the internationalisation grant enhancements are likely to be seen as timely, pragmatic, and confidence‑boosting. They lower financial and execution barriers, encourage longer‑term commitment to overseas markets, and recognise the realities SMEs face when competing internationally. In doing so, they position international growth as a viable next step for a broader base of Singapore enterprises," commented David Toh, Entrepreneurial and Private Business Leader, PwC Singapore.
"Expanding the Market Readiness Assistance grant to support Singapore companies to grow in overseas markets where they are already active, rather than only in markets new to them, should lead to a higher takeup rate. Expanding it further to companies that only operate within Singapore but support other companies that export from Singapore could potentially have an even bigger impact," noted Frank Debets, Asia Pacific Customs and Trade Leader, PwC Singapore.Startups
There
will be more help for startups at the growth stage, Wong added.
Startups can now get early-stage funding easily, but not when they need
to scale. To catalyse growth capital in Singapore, Wong said an
additional S$1 billion is earmarked for the Startup SG Equity scheme,
under which the government provides initial capital to catalyse and
crowd in private funding for promising startups. The scheme will now
cover growth-stage companies as well.
"Beyond this, we will take
a more systemic approach to strengthening our growth capital ecosystem.
We will convene a new work group led by Minister Chee Hong Tat, working
closely with the industry, to develop strategies to position Singapore
as a leading centre for growth capital," Wong said.
Another
initiative which will enjoy more funding is the Anchor Fund, which was
set up to attract and anchor high-quality listings. A second S$1.5
billion tranche will go to the Anchor Fund, Wong said, and as with the
first tranche, will be a co-investment between the Singapore government
and Temasek.
"Ramping up support to not just early-stage startups, but also growth-stage companies, helps to increase the probability of Singapore enterprises becoming world beaters. Positioning Singapore as the leading centre for growth capital can create a virtuous cycle: more enterprises based here succeed and scale, in turn increasing the demand for public listings in Singapore," said Patrick Yeo, Markets Leader, PwC Singapore.
Kexin Lim, Partner specialising in Tax and Entrepreneurial and Private Business, PwC Singapore, called the injection of an additional S$1 billion into Startup SG Equity "significant" and a "strong signal of Singapore’s commitment to nurturing innovation through times of disruption and uncertainty".
"By extending support beyond early‑stage ventures to include growth‑stage companies alongside Singapore's current schemes to attract high quality entrepreneurs, the scheme strengthens the startup pipeline and reinforces Singapore’s position as a leading hub for scale‑up capital," Lim said.
"EDB’s focus on anchoring high growth enterprises earlier in their journey will deepen Singapore’s economic base and reinforce our role as a global centre for innovation driven growth. Growth stage companies are investments in Singapore’s future competitiveness. By helping innovative firms scale from Singapore, we are unlocking new opportunities for Singaporeans to take on high value roles, build deep skills, and grow meaningful careers," said Chiu Wu Hong, Partner, Head of Private Enterprise, KPMG in Singapore.EDB refers to Singapore's Economic Development Board.
Wages
More support for lower-wage workers was also announced:
- The local qualifying salary (LQS), the minimum salary that local employees must be paid in firms that hire foreign workers, will be raised for full-time local employees from S$1,600 to S$1,800.
- At the same time, co-funding of the Progressive Wage Credit Scheme (PWCS) will go up from 20% to 30%.
"We will also extend the PWCS for two more years, to 2028. From next year, we will raise the minimum wage increase to qualify for PWCS support from S$100 to S$200. This will better encourage and reward the firms that invest in their workers," Wong added.
Wong noted that the measures build on the Progressive Wage Model (PWM), developed by the government together with NTUC and tripartite partners. "The PWM goes beyond a simple flat minimum wage and instead links pay increases to skills, productivity, and career progression — and it is delivering results," he said.
"We will also continue to strengthen training support for the PWM. Last year, I announced additional support under the Workfare Skills Support for workers who take up long-form training courses. We will go further to enhance the basic tier of the scheme, and increase the hourly allowance for workers who upgrade their skills."
"As operating costs rise and economic conditions remain uncertain, wage sustainability has become an increasingly complex challenge for employers in Singapore. The issue is no longer simply about pay increases, but about how organisations balance fair and competitive compensation with long-term business viability," said Jessica Zhang, Senior VP, APAC, ADP.
"ADP’s People at Work 2025 research shows that three in five workers in Singapore are living paycheck to paycheck, underscoring the direct link between pay decisions and workforce confidence. In this environment, predictability and consistency of pay are just as important as wage levels in supporting employee’s financial wellbeing.
"Achieving sustainable outcomes will increasingly depend on data-led workforce decisions. Greater visibility into total workforce costs and workforce composition enables organisations to manage compensation responsibly, while continuing to build employee trust and support long-term financial stability," Zhang concluded.
Merger of SkillsFuture and Workforce Singapore
SkillsFuture Singapore. set up in 2016, overseen by the Ministry of Education, will be merged with Workforce Singapore, part of the Ministry of Manpower, into a new statutory board jointly overseen by both ministries. The new agency will manage skills training, career guidance, and job matching services.
"For workers and jobseekers, that means support will be more seamless — from career planning, to skills acquisitions, and job matching and transitions. For employers, the support will be more integrated, covering workforce planning, job redesign, hiring, and workforce development," said Wong.
"This goes beyond making an organisational change. It is about continually strengthening our system of lifelong learning and career support, so Singaporeans can continue to adapt, grow and realise their full potential. In a world where change is constant, we must remain a society that never stops learning — and never stops striving to do better."
"Tighter, more fluid collaboration between the public sector, private industry, and academic institutions is also essential to ensure Singapore’s workforce is able to pivot faster and more effectively to changing requirements in the AI era. The merger of Workforce Singapore and SkillsFuture Singapore is well positioned to deliver exactly this, more accurately aligning skills training measures with real-world disruption to avoid the skills mismatch among local talents," said Haresh Khoobchandani, VP, APAC & Japan, Autodesk.
"By merging SkillsFuture and Workforce Singapore into a new statutory board to focus on future-ready skills such as practical AI capabilities, the government is directly integrating Singapore’s skills and jobs ecosystem. Equipping workers with these skills ensures that hybrid work doesn't lead to proximity bias, but rather to a more inclusive, equitable, and human-centric workspace where every voice at the table is heard clearly," said Niko Walraven, Area VP - APAC, Neat.
"The merging of SkillsFuture Singapore and Workforce Singapore as a single entity offers a stronger and more coordinated approach for the government to tackle head-on the immense challenges of job restructuring, upskilling and future proofing the city state's jobs-skills ecosystem. Jobs and skills are inalienable components in today's world of work; this move will enable a singular agency to focus on fortifying Singapore's workforce transformation policies to build a future-ready labour force," said Martijn Schouten, Workforce Transformation Leader, PwC South East Asia Consulting.Support for mid-career switches
From March 2026, the Mid-Career Training Allowance will be extended to those who take up not just full-time, but also part-time training. Coverage will also be expanded to include more industry-relevant courses.
Senior workers, on the other hand, will receive help on planning their later-stage careers and support on refreshing their skills. "We will also equip employers to design age-friendly jobs and multigenerational workplaces," Wong said.
A Tripartite Workgroup on Senior Employment has been set up to study these issues, Wong said, with recommendations to be be released later in 2026.
The Senior Employment Credit, created to support employers who continue to employ senior workers, has been extended to end-2027.
Carbon tax
The tax has been raised to S$45 per tonne for this year and next. Wong noted that Singapore has the highest carbon tax rate in Asia. "If global climate momentum continues to weaken, we may need to position ourselves towards the lower end of the S$50 to S$80 per tonne range by 2030," he said.
The Energy Efficiency Grant and support for green loans under the Enterprise Financing Scheme have also been extended to help firms invest in energy-efficient and sustainable solutions.
As the country has reached its 2030 solar deployment target of 2 gigawatt-peak ahead of schedule, a new target has been set - 3 gigawatt-peak by 2030. "Beyond that, we will continue to maximise solar deployment across all viable surfaces, and progressively set more ambitious targets further into the future," Wong shared.
Plans to import low-carbon electricity from the region are advancing, as are activities to diversify Singapore's current energy mix. "We are building up capabilities in nuclear energy to be able to assess its safety and viability for Singapore. We have initiated cooperation with the US and France, and are discussing similar arrangements with other partners like South Korea," Wong said.
"Singapore’s latest climate measures enhance the nation’s competitive edge by positioning rising climate expectations as a strategic opportunity rather than a compliance cost. The carbon tax is a signal for businesses to reduce carbon emissions while grants and green financing schemes enable businesses to invest in low-carbon technologies, develop critical capabilities, and drive innovation—strengthening their long-term resilience. As climate risk becomes a universal business reality, the government’s long-term commitments provide the clarity and confidence needed for decisive action," said Cherine Fok, Partner, ESG Consulting, KPMG in Singapore.
"Budget 2026 sends an unambiguous signal that Singapore's climate commitments are unwavering, but not unrealistic. The emphasis is on tangible solutions and innovation in areas of key national interests such as energy and transport/aviation resilience, paced in line with global realities and calibrated for competitiveness," shared Bing Yi Lee, Financial Services Assurance, Sustainability and Climate Change Partner, PwC Singapore.
"These messages provide clear policy certainty underpinning long-term decarbonisation investments, and businesses should make use of available support schemes, including the extended Energy Efficiency Grant and Enterprise Financing Scheme – Green (EFS-Green), to build resilience and competitive advantage, in line with Singapore’s long‑term policy direction."
Mark Addy, Partner, Energy & Natural Resources, KPMG in Singapore said: "It is encouraging to hear that the government remains committed to its climate strategy despite slowing global momentum.
"With carbon tax already at S$45/tonne, the importance of maintaining competitiveness regionally and globally cannot be overstated. Monitoring international developments before committing to the next carbon tax rate rise is a sensible approach."
To support of a target of 100% cleaner vehicles by 2040, there are incentives to encourage early adoption of electric vehicles, and charging infrastructure is being expanded nationwide, Wong added.
The aviation and maritime sectors are also getting greener. Singapore supports demand for sustainable aviation fuel, with a target of 1% sustainable fuel use for flights departing Singapore in 2026, while in shipping, the government is partnering industry to develop a low-carbon ammonia bunkering solution on Jurong Island.
"If successful, Singapore will be among the first countries in the world to supply ammonia commercially as a fuel for international shipping," Wong said.
Yong Jiahao, Partner, IGH & Manufacturing, Tax, KPMG in Singapore, said that the support provided for sustainable aviation fuel, and the continuous effort to partner the industry to develop low carbon ammonia bunkering for international shipping, demonstrate that the growth that Singapore is aiming for doesn't always have to come at the sacrifice of sustainability.
"Singapore has once again demonstrated its commitment to greening efforts, regardless of the weakening of the global climate momentum," Yong said.
"The move to pioneer low carbon ammonia bunkering solution in Jurong Island sends a strong signal of ambition and leadership. In doing so, new opportunities are created for local companies across the clean fuel value chain and our role as a global international maritime hub is strengthened.
"Once successful, ammonia can be an important part of the shipping sector’s decarbonisation pathway, which gives shipowners and solution providers the confidence that Singapore is ready to enable the next generation of green shipping."
Explore
Read about the Budget's emphasis on AI and innovation and what this means for businesses
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*SME stands for small and medium sized enterprise.
