SG Budget 2026: Deloitte Singapore recommends measures to reinforce adaptability amid global uncertainty and new tax realities

To strengthen Singapore’s position amid global and technological shifts, Deloitte proposes:

• Tax framework refinements and guidance for MNEs adapting to an evolving global landscape and new international tax rules;
• Targeted measures that advance innovation and capability-building in AI and more; and
• Adjustments to personal tax support and workforce policies

SINGAPORE, 12 January 2026 – Deloitte Singapore (“Deloitte”) has put forward its recommendations for Budget 2026.

Businesses are contending with shifting geopolitical alignments, reconfigured supply chains and trade corridors, intensifying competition for investment, and accelerating demand for low-carbon operations. These developments reflect deeper structural shifts that are reshaping the global economy.

Against this backdrop, Deloitte calls for measures to help businesses manage near-term pressures while supporting longer-term innovation, transformation, and resilience.

“Singapore’s economic performance has remained robust, with GDP expanding by 4.8% in 2025, shaped by revitalised external demand and stronger sectoral contributions. Looking ahead, the Ministry of Trade and Industry’s projection of 1% to 3% growth in 2026 signals a more measured outlook for the year ahead, shaped by uneven global spending patterns and persistent macro-financial frictions. Within this setting, tax policy becomes a strategic instrument – not merely a compliance framework but a channel through which the economy can absorb volatility and support business reinvention. This includes building artificial intelligence (AI) capabilities and easing pressures on households. Deloitte’s recommendations aim to contribute to a tax architecture that is outward-looking, and complements Singapore’s economic strategy in the decade ahead,” said Rohan SOLAPURKAR, Tax & Legal Leader (税务与法务领导合伙人), Deloitte Singapore (德勤新加坡).

Tax framework refinements and guidance for MNEs adapting to an evolving global landscape and new international tax rules

Strengthening tax measures: Support for businesses operating internationally (Page 6)

Recent developments in the international tax landscape underscore the need for greater clarity and coherence across Singapore’s international tax rules to support businesses as they operate across jurisdictions. At the same time, Singapore’s long-standing foreign-sourced income rules continue to apply in a business environment that has evolved significantly. Updated guidance to support consistent application and compliance certainty would help with commercially driven decision-making while remaining aligned with Singapore’s tax policy objectives.

Practical refinements that enhance cash flow, reduce structural friction, and ensure long-standing provisions continue to operate coherently in today’s business environment would also provide meaningful support to businesses. In addition, funding support for AI readiness would also help companies identify ways for the technology to improve and transform their operations.

Daniel HO (何仁奇), Mergers & Acquisitions Tax Leader (并购税务领导合伙人), Deloitte Southeast Asia (德勤东南亚), said, “As businesses navigate evolving economic conditions alongside increasing structural and international tax complexity, Budget 2026 presents an opportunity to further strengthen Singapore’s corporate tax framework in ways that support resilience, investment and long-term enterprise growth.

“The rapid boom of AI is something we are all witnessing and living through and it is critical for businesses to be AI-ready. To support this, we recommend setting up a fund that medium-sized businesses can tap into, subject to certain qualifying conditions.”

“Next, Budget 2026 could help companies better manage volatility while pursuing strategic expansion, for instance through measures such as a more flexible loss carry-back framework, targeted enhancements to the group relief and mergers and acquisitions (M&A) allowance frameworks, and broader support for capability-building under the Enterprise Innovation Scheme. At the same time, greater clarity around the operation of Section 10L and Singapore’s long-standing foreign-sourced income rules would be timely to reduce uncertainty and support commercially driven business decisions while remaining aligned with Singapore’s tax policy intent,” added Daniel.

Calibrating Singapore’s Pillar Two implementation under the OECD framework (Page 10)

Singapore’s Pillar Two rules apply to in-scope multinational enterprise (MNE) groups’ financial year beginning on or after 1 January 2025, with the first compliance obligation due in 2026. As in-scope MNE groups prepare for the upcoming compliance obligation, attention is increasingly focused on how these requirements will be administered in practice, including documentation expectations, sequencing and interaction with existing tax and filing frameworks, making Budget 2026 an appropriate juncture to reinforce administrative clarity and execution while remaining aligned with Singapore’s established tax principles and administrative practices.

LIEW Li Mei (刘丽梅), International Tax Leader (国际税务领导合伙人), Deloitte Singapore (德勤新加坡), shared, “Many in-scope MNE groups have already invested significant time and resources to prepare for their Pillar Two compliance obligations. As filing due dates approach, the key issue is no longer the rules themselves, but how they will be applied in practice. Clear administrative guidance on documentation expectations, sequencing and interaction with existing filing processes would help reduce uncertainty and support consistent compliance outcomes during this initial phase.”

Advancing innovation, capability-building and quality investment

Supporting Singapore’s R&D innovation ambitions amid global tax developments (Page 13)

Amid prolonged geopolitical uncertainty, Deloitte recommends strengthening Singapore’s innovation agenda by enhancing support for businesses that are deepening their research and development (R&D) capabilities.

LEE Tiong Heng (李忠兴), Global Investment & Innovation Incentives Leader (全球投资与创新激励领导合伙人), Deloitte Southeast Asia (德勤东南亚), said, “A key priority in advancing innovation is attracting and retaining specialised R&D talent in shortage occupation areas to build the technical depth required for emerging and priority sectors such as AI and semiconductors. The government could consider offering special income tax rates to specialists in these sectors.

“In tandem, clearer and more streamlined R&D incentives that provide greater flexibility for collaborative projects would reinforce the objectives of Singapore’s Research, Innovation and Enterprise (RIE) 2030 plan and facilitate more effective industry partnerships.

“There is also room to refine the R&D tax framework to better reflect how companies undertake joint R&D in practice. While safeguards such as the beneficial ownership requirement continue to play an important role, offering a more versatile approach for genuine collaborative arrangements would support capability development, encourage deeper cooperation between MNEs and SMEs, and strengthen Singapore’s overall competitiveness.”

Refundable Investment Credit (RIC): Incentive strategies to compete and thrive in a global minimum tax environment (Page 14)  

The Refundable Investment Credit (RIC) was introduced in Budget 2024 to enhance Singapore’s attractiveness as an investment destination amid a global minimum tax environment. As the RIC enters its next phase of implementation, Deloitte highlights the importance of continued clarity, coordination and practical guidance to help businesses assess the impact of the credit and recalibrate their investments strategies where necessary.

Yvaine GAN (颜心怡), Global Investment & Innovation Incentives Leader (全球投资与创新激励领导合伙人), Deloitte Singapore (德勤新加坡) said, “Singapore could be bolder in evolving the RIC to reflect intensifying competitive pressures and the practical realities of operating under the OECD/G20 Inclusive Framework’s Pillar Two Global Anti-Base Erosion (GloBE) Rules. The support rate of the RIC could be raised to as much as 70% of qualifying expenditures. Additionally, while the current legislation allows for expenditures such as logistics, intangible assets and a wider range of operational costs that underpin substantive activities, these categories do not appear to be actively awarded in practice.”

“The cash payout mechanism could also be refined. This may include shorter processing timelines to provide businesses with earlier access to liquidity. Companies could also be offered the option of accelerated payouts at a discount. Another avenue is allowing companies to leverage their RIC or payout election balance as collateral for financing. Collectively, these refinements would alleviate cashflow pressures and facilitate more deliberate, long-horizon investment decisions,” Yvaine added.

Goods and Services Tax (GST): Enabling businesses to adapt to e-invoicing with greater confidence (Page 19)

With Singapore rolling out its nationwide e-invoicing initiative via InvoiceNow, Deloitte recommends greater clarity from on the roadmap for the GST InvoiceNow Requirement, including specific timelines and coverage parameters.

“Singapore’s continued digitalisation efforts come at a time where businesses are navigating a more uncertain global economic environment and facing elevated operating costs. As the tax system becomes more connected, the phased implementation of the GST InvoiceNow requirement will be an important lever for improving compliance efficiency and productivity. Greater clarity on the implementation roadmap, particularly for existing GST registrants and software providers, would support businesses in planning ahead and investing with confidence.  Clear and well-sequenced guidance from the authorities would also help enterprises, especially smaller firms, integrate digital tools more smoothly,” said Richard MACKENDER, Indirect Tax Leader (间接税务领导合伙人), Deloitte Singapore and Asia Pacific (德勤新加坡及亚太).

Strengthening trade, sustainability and enterprise resilience (Page 20)

Changes in global trade arrangements, digital processes and sustainability requirements are shaping how businesses strategise and operate. Budget 2026 can continue to augment measures that strengthen execution capability and operational readiness, particularly where implementation demands have increased.

WONG Meng Yew (王明耀), Sustainability & Climate Tax Leader (可持续发展与气候变化税务领导合伙人), Deloitte Singapore (德勤新加坡), said, “Budget 2026 presents an opportunity to further support enterprises, particularly SMEs, in adapting to evolving global trade dynamics and requirements for digitalisation and sustainability.

“In our view, there may be scope to complement existing advisory initiatives with more targeted implementation support. For example, the Business Adaptation Grant could be extended beyond advisory services to cover implementation-related activities relating to trade agreements, compliance, supply chain optimisation and market diversification.

“Strengthening skills and operational capabilities in areas where trade and environmental, social and governance (ESG) increasingly intersect would also help businesses build more resilient supply chains. For example, the Budget could provide support for companies to adopt trade data management solutions to comply with sustainability requirements, such as tracking emissions across their global supply chains. Collectively, such measures would reinforce Singapore’s position as a trusted, future-ready hub for global trade and sustainable growth.”

Adjustments to personal tax support and workforce policies

Personal Tax: Helping individuals and families stay resilient (Page 23)

To maintain a progressive and competitive personal tax system that keeps pace with Singapore’s evolving economic and social landscape, Deloitte recommends a calibrated review of key tax reliefs and support measures. Such refinements can strengthen economic participation, bolster household resilience, and provide meaningful support to individuals and families.

Sabrina SIA (佘爱玲), Global Employer Services Leader (雇主人力资源全球服务领导合伙人), Deloitte Singapore and Southeast Asia (德勤新加坡及东南亚), shared, “In line with the priorities outlined at the National Day Rally 2025, which include supporting workers in an evolving economy, we see an opportunity to refine personal income tax policies to strengthen inclusivity and resilience. Potential measures could include introducing reliefs for caregivers, children and the elderly, as well as increasing the quantum of spouse relief and revising the chargeable income brackets to reflect the effects of inflation. These refinements would help to reaffirm Singapore’s commitment to supporting households while fostering a fair and progressive tax system.”

Refining immigration and workforce strategy for economic competitiveness (Page 24)

As Singapore adjusts to new patterns of economic activity and technological change, immigration frameworks remain central to shaping a workforce that can support industries in transition. Policies that complement local capabilities and respond to evolving skill needs will be increasingly important in ensuring a balanced and future-ready labour market.

For Budget 2026, Deloitte proposes refinements to enhance Singapore’s attractiveness to globally mobile talent while reinforcing pathways for local workforce development. 

Christina KARL, Immigration Leader (出入境签证服务领导合伙人), Deloitte Singapore and Global (德勤新加坡及全球) said, “As Singapore charts its path beyond SG60, immigration and workforce policies must evolve in step with the demands of a more dynamic and innovation-driven economy. Enhancing work options for international students and creating clearer pathways for skilled professionals not only serve as manpower measures, but also as strategic levers to fortify Singapore’s competitiveness. Thoughtfully calibrated refinements, such as more flexible work provisions for Student Pass holders and targeted incentives to attract globally mobile tech talent, would reinforce Singapore’s position as a talent-ready hub while preserving fairness, resilience and social cohesion among its workforce.

“In a world where innovation cycles are shortening and competition for skills is intensifying, Singapore can take bolder steps to ensure that its immigration framework remains responsive, inclusive and globally compelling. By deepening alignment between talent policies and long-term economic priorities, Singapore can continue to anchor high-value activities, nurture future-ready capabilities and secure sustainable growth,” added Christina.  

Conclusion

Budget 2026 will come at a time where data, automation and cross-border dynamics continue to reshape economic activity across the globe.

Deloitte’s recommendations for Budget 2026 combine targeted refinements forward-looking ideas that reinforce Singapore’s resilience amid ongoing shifts, while carving pathways for businesses and workers to benefit from emerging opportunities.

Further details on Deloitte Singapore’s recommendations for Budget 2026 can be found here.