Budget 2026: Tax rebate and enhanced grants for firms to deal with competition, costs
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The Government will provide a 40 per cent rebate on corporate income tax to help companies manage cost pressures and stay competitive.
ST PHOTO: LIM YAOHUI
SINGAPORE – All companies in Singapore with at least one local employee will receive a corporate tax rebate, and those seeking to venture abroad will get more support with higher grants and financing.
Prime Minister Lawrence Wong announced measures to help companies venture overseas, including higher levels of support for them to internationalise.
In his Budget speech on Feb 12
Every active company that employed at least one local employee in 2025 will receive a minimum rebate of $1,500, but the total benefit will be capped at $30,000. Eligible companies will automatically receive the benefits from the second quarter of 2026.
“While our economy did well last year, some businesses continue to face cost pressures and operating challenges,” PM Wong said.
“We will support our businesses and help them stay competitive,” he added.
PM Wong, who is also Finance Minister, noted that economic growth will be harder to come by in a world that is more contested, fragmented and dangerous, as he announced measures to help firms venturing overseas.
Budget 2026 provides enhanced support for grant schemes that help companies go international – up to 70 per cent for small and medium-sized enterprises (SMEs), and up to 50 per cent for non-SMEs.
The Government will also enhance the Market Readiness Assistance grant to support companies not just in accessing new markets, but also in deepening activities in existing overseas markets.
Also, more activities will be made eligible for automatic claims under the Double Tax Deduction for Internationalisation scheme, and the cap for deduction will be raised to $400,000 from the previous limit of $150,000.
In addition, the Enterprise Financing Scheme will be enhanced by increasing the maximum loan quantum for trade and fixed asset loans, so that companies have more flexibility to address their different financing needs.
PM Wong said: “We must aim higher, move faster, and be prepared to take calculated risks.”
To achieve that, he said, the Government convened the Economic Strategy Review (ESR) in 2025, and plans to act “decisively” on the recommendations made by the ESR committee
The ESR’s proposals will help achieve economic growth at the higher end of the 2 per cent to 3 per cent range over the next decade.
But PM Wong said that growth itself will not be enough.
“Growth must translate into good jobs and rising incomes for Singaporeans,” he said.
He said that to grow the economy while creating good jobs, Singapore must adapt and connect differently in the changed global environment.
Singapore is engaging like-minded trade partners in new global and regional initiatives, and at the same time, is working with its neighbours to deepen regional integration.
The aim is to translate Singapore’s increased connectivity into real opportunities for local businesses, and help them face unfamiliar regulations and practices, and intense competition.
PM Wong cited the example of Rotary Engineering, an oil and gas infrastructure services firm that continues to internationalise its business.
Rotary started in 1972, offering electrical installation services to oil refineries and petrochemical plants in Singapore.
Over time, the company built a presence in South-east Asia, and it is now venturing farther afield and deepening its presence in the Middle East.
“But doing business overseas is not easy, especially for smaller firms... and so we will do more to support Singapore companies as they venture abroad,” said PM Wong.
Rotary Engineering, an oil and gas infrastructure services firm, has continued to internationalise its business.
PHOTO: ROTARY ENGINEERING
Experts welcomed the internationalisation measures and said immediate beneficiaries will mostly be Singapore SMEs already planning to expand their presence abroad.
Mr David Toh, entrepreneurial and private business leader at PwC Singapore, said the grant enhancements are likely to be “timely, pragmatic and confidence-boosting” for Singapore SMEs.
“The enhanced grants 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,” he said.
Mr Chua Han Teng, a senior economist at DBS Bank, said the enhanced internationalisation schemes will support the expansion of Singapore firms into new overseas markets, diversifying their revenue streams for greater growth, as well as build resilience amid global uncertainty.
He said that SME interest in overseas expansion was evident in a recently conducted DBS Business Pulse Check survey, which found that eight in 10 local SMEs were planning overseas expansion in 2026.
Correction note: This story has been updated for clarity.
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