The 2026 Singapore Budget Statement was delivered by Lawrence Wong, Prime Minister and Minister for Finance, on 12 February 2026.

Five clear themes underpin the Budget:

1. Building an AI-first economy and investing in frontier technologies
2. Driving productivity and transformation, with near-term support for businesses (especially SMEs)
3. Strengthening internationalisation and Singapore’s position as a global hub
4. Providing cost-of-living and life-stage support
5. Enhancing resilience through security and sustainability initiatives

Aligned with these themes, several tax measures are particularly relevant to foreign-owned SMEs operating in Singapore.

1. 40% Corporate Income Tax Rebate – Year Of Assessment 2026

The Corporate Income Tax (CIT) Rebate for YA 2026 mirrors the concession announced last year.

Singapore companies will receive a 40% rebate on final tax payable for YA 2026.

Where a company has little or no tax liability, eligible companies may receive a CIT Rebate Cash Grant of up to S$1,500.

Eligibility For The Cash Grant

To qualify, a company must:

• Be active; and
• Have employed at least one local employee during calendar year 2025

A “local employee” refers to a Singapore Citizen or Permanent Resident for whom CPF contributions were made.

Where a company qualifies for both the rebate and the cash grant, the combined benefit equals 40% of tax payable, capped at S$30,000 per company.

Example

ABC Pte Ltd

• Employed two Employment Pass holders in 2025
• YA 2026 tax payable: S$50,000

CIT Rebate: S$50,000 × 40% = S$20,000

ABC does not qualify for the cash grant (no local employees).

XYZ Pte Ltd

• Employed two local employees in 2025
• YA 2026 tax payable: S$50,000

Total Benefit: S$20,000, structured as:

• CIT Rebate: S$18,500
• CIT Rebate Cash Grant: S$1,500

The total remains capped at 40% of tax payable.

2. Double Tax Deduction For Internationalisation (DTDi)

Under the Double Tax Deduction for Internationalisation scheme, companies may claim a 200% tax deduction on qualifying expenditure incurred for overseas market expansion and investment development.

Budget 2026 increases the automatic expenditure cap from:

• S$150,000 → S$400,000 per year

This significantly enhances support for companies expanding regionally or globally.

In addition, the scope of expenses that can be claimed without prior approval has been expanded to cover all eligible overseas market development trips and overseas investment study trips.

Expenditure beyond S$400,000 will still require prior approval from Enterprise Singapore or the Singapore Tourism Board.

For foreign-owned SMEs using Singapore as a regional base, this is a meaningful enhancement.

3. Enhancements to the Enterprise Innovation Scheme (EIS)

The Enterprise Innovation Scheme allows companies to claim 400% tax deductions or allowances on qualifying expenditure including:

• Qualifying R&D conducted in Singapore
• Registration of intellectual property
• Acquisition and licensing of IP rights

Budget 2026 adds a new category:

Up to S$50,000 of qualifying AI-related expenditure for YA 2027 and YA 2028.

Key Points:

• The overall EIS expenditure cap remains S$400,000 per year
• Companies may convert up to S$100,000 of qualifying expenditure into a 20% cash payout
• However, this cash conversion option will not apply to AI-related expenditure

This signals a clear policy direction: encouraging AI capability building but maintaining fiscal discipline around cash support.

4. Extension Of 250% Tax Deduction For IPC Donations

The enhanced 250% tax deduction for donations made to Institutions of a Public Character (IPCs) was due to expire at the end of YA 2027.

Budget 2026 extends this incentive to 31 December 2029 (YA 2030).

This provides certainty for philanthropic planning and supports the broader social compact, particularly amid cost-of-living pressures.

What This Means For Foreign-Owned SMEs

From a tax perspective, Budget 2026 reinforces three strategic priorities:

1. Immediate relief to offset operating costs
2. Stronger incentives for regional expansion
3. Clear alignment toward AI and innovation capability building

For foreign-owned SMEs using Singapore as a regional headquarters, the message is consistent:

Singapore continues to support companies that hire locally, expand internationally, and invest in innovation.

Last month, I outlined how a trailing spouse working remotely for an overseas employer may be taxed in Singapore.

This month, I turn to a practical question many expatriates face as filing season approaches – what tax reliefs and deductions are available when filing a Singapore personal income tax return?

This article focuses specifically on reliefs available to individuals who are tax residents of Singapore and hold a work pass issued by the Ministry of Manpower (e.g. Employment Pass, One Pass or EntrePass). Reliefs that are only available to Singapore citizens or permanent residents are intentionally excluded.

Key Terminology

Before diving into the reliefs, it is helpful to clarify a few commonly used terms:

Financial Year (Individuals)

For individuals, Singapore’s financial year follows the calendar year and ends on 31 December.

Year Of Assessment (YA)

The Year of Assessment is the year in which you receive your Notice of Assessment from the Inland Revenue Authority of Singapore (IRAS).
The YA relates to income earned in the preceding calendar year.
For example, YA 2026 relates to income earned in the year ending 31 December 2025.

Chargeable Income

This is your final taxable income after allowable deductions and reliefs.

Tax Reliefs

These are statutory deductions that reduce your chargeable income.

Personal tax reliefs can only be claimed by individuals who are tax residents of Singapore.  If you are a non-resident for tax purposes, you cannot claim personal reliefs when filing your return.

Common Reliefs Available To Expatriates

Below are the most commonly claimed reliefs by expatriates when filing their Singapore personal income tax return.

1) Earned Income Relief 

If you are employed by a Singapore business, this relief is automatically granted by IRAS.

The amount of the Relief depends on your age as of 31 December of the preceding year:

• Below 55: S$1,000
• 55 to 59: S$6,000
• 60 and above: S$8,000

2) Supplementary Retirement Scheme (SRS) Contributions

Foreigners are generally not eligible to contribute to the Central Provident Fund (CPF), which is Singapore’s mandatory retirement savings system.

As an alternative, expatriates may consider the Supplementary Retirement Scheme (SRS).

While SRS planning deserves a separate discussion, the key features are:

• Contributions qualify for personal tax relief in the year of contribution.
• Investment returns within the SRS account are tax-free before withdrawal.
• Generally, only 50% of withdrawals are taxable at retirement, subject to conditions.

For foreigners, the annual contribution cap (and corresponding relief) is $35,700, provided the contribution is made to an approved SRS operator within the calendar year.

3) Spouse Relief / Spouse Relief (Disability)

You may claim Spouse Relief if:

• Your spouse is not working, and
• Your spouse earns no more than S$8,000 per year (or foreign-currency equivalent), including income such as rental or investment income.

The relief amount is:

• S$2,000 – Spouse Relief
• S$5,500 – Spouse Relief (Disability), if your spouse is certified as having a disability

4) Qualifying Child Relief (QCR) / Child Relief (Disability)

You may claim relief for each dependent child, subject to meeting the qualifying conditions.

Importantly, your child does not need to reside in Singapore to qualify. However, the child must not earn more than S$8,000 per year (or foreign-currency equivalent).

The relief amounts are:

• S$4,000 per child – Qualifying Child Relief (QCR)
• S$7,500 per child – Child Relief (Disability)

Key conditions that must be satisfied:

• The child must be unmarried, and be:
  • your biological child,
  • your spouse’s child,
  • a legally adopted child, or
  • a step-child from marriage
• The child must be:
  • below 16 years of age, or
  • 16 years or older and studying full-time at any time during the year

Where both parents are working, only one parent may claim the QCR for each qualifying child.

Key Changes From YA 2026

For individuals who have been in Singapore for several years, it is worth noting that some reliefs have now been discontinued.

Foreign Domestic Worker Levy (FDWL) Relief

From YA 2025 onwards, working women are no longer able to claim relief for the levy paid in respect of a foreign domestic worker.

Course Fees Relief

From YA 2026, Course Fees Relief is no longer available.

It is also important to note that course fees are generally not deductible as employment expenses, even if the course is related to your role or qualifications. While completing a course may improve career prospects or lead to a promotion, the cost is typically treated as a personal expense, particularly if incurred before any change in employment or remuneration.

Relief Caps

Under Singapore tax law, the total amount of personal reliefs that an individual may claim is capped at S$80,000 per Year of Assessment.

Deductions (Separate From Reliefs)

If you incur expenses in the course of carrying out your employment duties, you may be able to claim a deduction, provided:

• The expense was incurred wholly and exclusively for your employment, and
• The expense was not reimbursed by your employer.

Good record-keeping is essential. Examples include:

• Detailed travel logs showing the purpose of meetings attended
• Working papers supporting any home-office claims, including how the portion of rent claimed was calculated

Donations

One deduction which is commonly missed are donations.  

Cash donations to an approved Institution of Public Character (IPC) for local causes are tax-deductible.

Key points to note:

• Approved donations are deductible at 2.5 times the amount donated (i.e. S$2.50 deduction for every S$1 donated)
• The recipient charity must be approved and based in Singapore
• Donations made to foreign charities are not deductible, even if the underlying cause relates to Singapore

While the range of reliefs for work pass holders is more limited than for citizens or permanent residents, careful planning — particularly around SRS contributions, family-related reliefs, and donations — can still result in meaningful tax savings.

Reliefs and deductions are not automatic. Claims should be supported by proper documentation and made with a clear understanding of the underlying conditions. Where circumstances are complex — such as overseas dependants, cross-border income, or mixed employment arrangements — seeking timely professional advice can help ensure compliance while optimising outcomes.