February 2026 / Singapore

The Singapore Budget 2026, delivered by Prime Minister and Minister for Finance Lawrence Wong on 12^th February 2026 is a clear guideline to a highly targeted value-creation economy, where innovation, Artificial Intelligence (AI) and the international expansion of Singapore businesses are keys. As stated by PM Wong, in an uncertain World where growth will be harder, Singapore will not turn inward, but will stay an open country, while “connecting in smarter, more diversified and more resilient ways”. Singapore will redouble its efforts to diversify globally and to integrate regionally.

I. Corporate Tax Regimes: near-term liquidity vs. long-term incentives 

To mitigate the immediate impact of rising operational costs and support businesses, the Singaporean government has introduced a dual-layer support mechanism for the Year of Assessment (YA) 2026.

• Corporate Income Tax (CIT) Rebate: Companies will receive a 40% rebate on tax payable for YA 2026. Companies that are active and that employed at least one local worker (Singapore Citizen or PR) in 2025 will receive a minimum cash payout of S$1,500.
• The Cap: The benefit of the cash grant is capped at S$30,000 per company.

 II.Talent Landscape: the rising floor for foreign professionals

The 2026 Budget reinforces the "quality over quantity" mandate for foreign talent. As per previous years, firms must prepare for a upward shift in salary benchmarks starting 1^st January 2027.

Key Employment Pass (EP) and S Pass Revisions#

Note: Revised criteria apply to renewals from January 1^st 2028.

Please note that the minimum qualifying salary for Employment Pass and S-Pass increases progressively with age from age 23.

For Employment Pass:

• up to $11,500 at age 45 and above for all sectors, excluding financial services;
• up to $12,700 at age 45 and above for financial services.

For S-Pass:

• up to $5,100 at age 45 and above for all sectors, excluding financial services;
• up to $5,650 at age 45 and above for financial services.

Local Qualifying Salary (LQS), Levies and Senior Employment Credit

To ensure the local workforce remains competitive, the LQS, the minimum salary required for a local employee to count towards a firm's foreign worker quota, will rise from S$1,600 to S$1,800 starting from 1^st July 2026. Additionally, for the Marine and Process sectors, levies for basic-skilled workers will be raised by $100 and $150 respectively from 2028.

The Government will extend the Senior Employment Credit to end-2027, to support employers who continue to employ senior workers.

III. Innovation and Expansion: the "Champions of AI" mandate

The government is deploying S$1 billion into Startup SG Equity to support growth-stage deep-tech firms, focusing on AI-led transformation.

• Enterprise Innovation Scheme (EIS) Expansion: For YA 2027 and YA 2028, the EIS includes AI expenditures as a qualifying activity, offering a 400% tax deduction (capped at S$50,000 per YA).
• Double Tax Deduction for Internationalisation scheme (DTDi): From YA 2027, the cap for automatic claims is raised from S$150,000 to S$400,000 and more qualifying activities to be eligible for such automatic tax deduction claims will be allowed.
• Market Readiness Assistance (MRA) Grant: This grant aims to support companies to enter new market and to strengthen their activities in existing overseas markets. Support levels for grant schemes are enhanced to 70% for SMEs (Small and Medium Enterprises) and 50% for non-SMEs. Crucially, the "new market" requirement will be removed in 2H 2026, allowing firms to use the grant to deepen presence in existing markets.

What should Management do?

Budget 2026 is a call to move up the value chain. While the increase in EP and S Pass thresholds adds pressure to the P&L, the enhancements to the DTDi and the EIS for AI provide a strategic hedge. Navigating these changes and turning them into a competitive advantage, requires robust planning and expert execution.

Strategic Priorities for 2026:

1. Workforce Audit: Review staff earning between S$5,600 and S$6,000 for EP eligibility in 2027.
2. LQS Compliance: Adjust salaries for lower-wage local staff to S$1,800 by July 2026.
3. Capital Allocation: Utilize the 70% MRA grant to scale operations in existing regional markets.

How Diacron can assist your business

Founded in 1995, Diacron has a long-standing history of guiding companies through complex regulatory landscapes and global expansion. With over 30 years of experience and a robust international presence across more than 15 offices worldwide, including a dedicated team in Singapore, we specialize in tailored accounting, tax, and corporate services. As you look to capitalize on the Singapore Budget 2026 initiatives, our experts are uniquely positioned to partner with you on your strategic priorities. With Diacron, your business is well-equipped to manage local operational pressures while seamlessly scaling across international borders.