Beyond Singapore tax incentives, Singapore’s corporate tax framework is a key consideration for foreign companies establishing operations in the region. The headline corporate income tax rate is 17%, applied on a territorial basis with a single-tier system that eliminates double taxation at the shareholder level. There is no tax on dividends distributed by Singapore-resident companies, and Singapore generally does not impose tax on capital gains. 

Beyond the base tax rate, the government offers a range of tax incentive schemes, grants, and financing programmes designed to support business formation, innovation, internationalisation, and sustainable growth. This guide explains the principal schemes relevant to foreign companies in 2026, including updates announced in Budget 2026. 

Key Developments in Budget 2026 

Budget 2026, delivered on 12 February 2026, introduced several targeted measures that affect the tax incentive landscape for companies operating in Singapore. Foreign companies should note the following: 

Corporate Income Tax Rebate for YA 2026 

A CIT Rebate of 40% of tax payable will be granted for Year of Assessment (YA) 2026. Active companies that employed at least one local employee in calendar year 2025 will receive a minimum benefit of S$1,500 in the form of a CIT Rebate Cash Grant. The total maximum benefit (CIT Rebate plus Cash Grant) is capped at S$30,000 per company. The rebate is automatically computed by IRAS based on filed returns. 

Enterprise Innovation Scheme (EIS) — AI Expenditure Enhancement 

For YA 2027 and YA 2028, a new qualifying activity for artificial intelligence (AI)-related expenditure will be introduced under the EIS. Businesses may claim 400% tax deductions or allowances on up to S$50,000 of qualifying AI expenditure per YA. There is no option to convert this category of expenditure into a cash payout. The list of approved partner institutions for innovation projects will also be expanded to include the Sectoral AI Centre of Excellence for Manufacturing. IRAS will provide further details by 30 June 2026. 

Double Tax Deduction for Internationalisation (DTDi) Enhancement 

From YA 2027, the expenditure cap for DTDi claims that do not require prior approval will be raised from S$150,000 to S$400,000 per YA. The scope of qualifying activities eligible for automatic claims will also be expanded to cover a wider range of overseas market development trips, investment feasibility studies, master licensing and franchising, and related activities. Enterprise Singapore will provide further details by 30 June 2026. 

Extension of Key Incentive Regimes 

The Finance and Treasury Centre (FTC) incentive and the Global Trader Programme (GTP) have both been extended to 31 December 2031. The FTC’s withholding tax exemption scope has been expanded to include interest-like borrowing costs, and the GTP’s list of qualifying commodities now includes Environmental Attribute Certificates. Withholding tax exemptions for the financial sector have also been extended to 31 December 2031. 

Pillar Two — Global Minimum Tax 

Singapore has implemented the Domestic Top-up Tax (DTT) and Multinational Enterprise Top-up Tax (MTT) for in-scope multinational enterprise (MNE) groups, effective for financial years beginning on or after 1 January 2025. These measures align with the OECD’s Pillar Two framework and raise the effective tax rate for in-scope MNE groups operating in Singapore to 15%. Higher corporate income tax collections from Pillar Two are expected from FY 2027 onwards. 

The OECD’s Side-by-Side (SbS) package, released in January 2026, introduces safe harbour provisions that may allow certain qualifying tax incentives to be treated as additions to covered taxes for GloBE purposes. Singapore is expected to adopt these provisions and is reviewing its existing incentive suite for compatibility. Foreign companies with group revenues exceeding €750 million should assess the impact of these rules on their Singapore operations. 

Research, Innovation and Enterprise (RIE) 2030 

Budget 2026 allocates S$37 billion to the RIE 2030 plan for R&D and innovation activities from 2026 to 2030, with funding for the Ministry of Trade and Industry expected to more than double. This signals continued investment in strategic sectors including semiconductors, aerospace, biomedical sciences, quantum technology, and decarbonisation. 

Singapore Tax Incentives for Corporate

Start-Up Tax Exemption Scheme (SUTE) 

The SUTE provides qualifying new companies with tax exemptions for their first three consecutive Years of Assessment: 

• 75% exemption on the first S$100,000 of normal chargeable income. 

• 50% exemption on the next S$100,000 of normal chargeable income. 

To qualify, a company must be incorporated in Singapore, be a tax resident in Singapore for the relevant YA, and have no more than 20 shareholders throughout the basis period. At least one shareholder must be an individual holding at least 10% of the issued ordinary shares. Investment holding companies and property development companies are excluded. 

Important: SUTE is available only to Singapore-incorporated companies. A foreign company or a Singapore branch of a foreign company cannot claim this exemption. Foreign entrepreneurs intending to benefit from SUTE should incorporate a Singapore private limited company rather than operating through a branch. 

Partial Tax Exemption (PTE) 

After the initial three-year SUTE period (or for companies that do not qualify for SUTE), the Partial Tax Exemption applies. From YA 2020 onwards, PTE provides: 

• 75% exemption on the first S$10,000 of normal chargeable income. 

• 50% exemption on the next S$190,000 of normal chargeable income. 

The maximum annual tax exemption under PTE is S$102,500. PTE is available to all companies, including Singapore branches of foreign companies, provided they are not claiming SUTE. 

Capital Gains and Dividend Treatment 

Singapore does not impose a general capital gains tax. However, the distinction between capital gains and revenue gains depends on the facts and circumstances of each case. IRAS may treat gains from the disposal of assets as taxable income if the transactions are considered to be in the nature of a trade or business. 

Under Section 13Z of the Income Tax Act 1947, gains from the disposal of ordinary shares in a company are not taxable where the divesting company held at least 20% of the ordinary shares in the investee company for a continuous period of at least 24 months immediately before disposal, subject to conditions. This safe harbour provision has been extended and enhanced: from 1 January 2026, qualifying preference shares are also included, and the 20% threshold may be assessed on a group basis. Companies should obtain specific tax advice on whether their disposal gains qualify for this treatment. 

Dividends paid by Singapore-resident companies are exempt from further taxation under the one-tier corporate tax system. There is no dividend withholding tax in Singapore, regardless of whether the shareholder is a resident or non-resident. 

Double Taxation Agreements 

Singapore has signed avoidance of double taxation agreements (DTAs), limited DTAs, and exchange of information (EOI) arrangements with around 100 jurisdictions. Comprehensive DTAs typically provide for reduced withholding tax rates on dividends, interest, and royalties, as well as rules for allocating taxing rights on business profits, employment income, and other income categories. 

To claim benefits under a DTA, a company must be a Singapore tax resident and obtain a Certificate of Residence (COR) from IRAS. Tax residency is determined by where the control and management of the company’s business is exercised, not by the place of incorporation. 

Note: Singapore does not have a comprehensive income tax DTA with the United States. The bilateral arrangements with the US are limited to agreements covering shipping and aircraft income and a Tax Information Exchange Agreement (TIEA). Companies with US-Singapore cross-border operations should plan accordingly, as standard domestic tax rules apply to most categories of income between the two countries. 

Innovation and Sector-Specific Incentives 

Enterprise Innovation Scheme (EIS) 

The EIS, introduced in Budget 2023 and available from YA 2024 to YA 2028, provides 400% tax deductions or allowances on qualifying expenditure across the following categories: 

• Research and development projects conducted in Singapore (capped at S$400,000 per YA). 

• Registration of intellectual property (capped at S$400,000 per YA). 

• Acquisition of intellectual property rights (capped at S$400,000 per YA). 

• Training of employees (capped at S$400,000 per YA). 

• Innovation projects with polytechnics, ITE, or other approved partner institutions (capped at S$50,000 per YA). 

• Qualifying AI expenditure — new for YA 2027 and YA 2028 (capped at S$50,000 per YA, no cash payout option). 

Alternatively, for the first five categories, businesses may convert up to S$100,000 of qualifying expenditure into a non-taxable cash payout at 20% (maximum S$20,000 per YA), subject to meeting the three-local-employee condition. 

Pioneer Certificate and Development & Expansion Incentive (DEI) 

The Pioneer Certificate Incentive (PC) provides full tax exemption on qualifying income, while the Development and Expansion Incentive (DEI) offers concessionary tax rates of 5%, 10%, or 15% for companies undertaking qualifying new or expanded activities in Singapore. Both are administered by the Economic Development Board (EDB) and typically run for periods of five years, with possible extensions subject to further commitments. 

To qualify, companies must demonstrate significant economic contributions through employment creation, business expenditure, and capability development in Singapore. These incentives are discretionary and application-based. 

Refundable Investment Credit (RIC) 

Introduced in Budget 2024, the RIC provides tax credits of 10%, 30%, or 50% on qualifying capital and operating expenditure for companies making substantial investments in Singapore. Qualifying activities include new manufacturing capacity, digital services expansion, and decarbonisation projects. Each award may cover periods of up to 10 years, and unutilised credits are refundable within four years. The RIC is administered by EDB and is application-based. 

Internationalisation Support 

Double Tax Deduction for Internationalisation (DTDi) 

The DTDi scheme allows companies to claim 200% tax deductions on qualifying expenses incurred for international market expansion and investment development activities. From YA 2027, the expenditure cap for automatic claims (without prior approval from Enterprise Singapore) will be raised from S$150,000 to S$400,000 per YA. 

Qualifying activities eligible for automatic claims include overseas business development trips, trade fairs, overseas advertising and promotional campaigns, investment feasibility and due diligence studies, master licensing and franchising, and related activities. For expenses exceeding the automatic claim threshold or falling outside the specified scope, prior approval from Enterprise Singapore is required. 

Market Readiness Assistance Grant (MRA) 

The MRA grant, administered by Enterprise Singapore, supports Singapore-registered SMEs expanding into new overseas markets. It currently covers up to 50% of eligible costs for qualifying activities, with an enhanced support level of up to 70% for SMEs announced to take effect from 1 April 2026. Companies should refer to Enterprise Singapore’s website for the current grant parameters, as terms are reviewed periodically. 

Enterprise Financing Scheme (EFS) 

The EFS, administered by Enterprise Singapore, provides government-backed financing to support Singapore-based enterprises at various stages of growth. The scheme covers trade loans, working capital loans, project loans, venture debt, and other financing needs. Enterprise Singapore shares a portion of the loan default risk with participating financial institutions. Specific loan parameters, limits, and eligibility criteria are updated periodically; companies should check Enterprise Singapore’s website for current terms. 

How Impetus Group Can Help 

Impetus Group Pte. Ltd. provides tax advisory, accounting, audit, and corporate secretarial services to foreign companies establishing and operating in Singapore. Our team can assist with identifying applicable tax incentives, ensuring compliance with IRAS filing requirements, and advising on the tax implications of corporate structures and transactions. 

If you are considering how Singapore’s tax incentive framework applies to your business, contact our team to discuss your requirements. 

Frequently Asked Questions 

Disclaimer: This article is intended for general informational purposes only and does not constitute legal, tax, or professional advice. The information is current as at the date of publication and may be subject to change. Readers should seek independent professional advice before making decisions based on the content of this article. Impetus Group Pte.Ltd. accepts no liability for any loss arising from reliance on the information provided.