Singapore enacted the Finance (Income Taxes) Act 2026, introducing corporate tax relief, enhanced deductions for AI expenditure, changes to individual taxation and amendments to its Pillar Two framework.
Singapore published the Finance (Income Taxes) Act 2026 in the Official Gazette on 6 November 2026. The Act introduced measures to implement the tax changes announced in Budget 2026, alongside several amendments and additional provisions.
The Act primarily amends the Income Tax Act 1947 (ITA) and the Multinational Enterprise (Minimum Tax) Act 2024 (MMTA). It also introduces related changes to the Economic Expansion Incentives Act 1967, Goods and Services Tax Act 1993 and Property Tax Act 1960.
The Finance (Income Taxes) Act 2026 (Act No. 23 of 2026) was passed by the Parliament of Singapore on 6 October 2026, assented to by President Tharman Shanmugaratnam on 29 October 2026, and gazetted on 4 November 2026.
The key measures included the following:
Corporate tax cuts and deductions
Under Section 92M of the ITA, companies will receive a 50% corporate tax remission on tax payable for Year of Assessment (YA) 2026, subject to a maximum of SGD 40,000.
Companies that made Central Provident Fund (CPF) contributions for at least one local employee, defined as a Singapore citizen or permanent resident, during calendar year 2025 will also qualify for a tax-exempt cash grant of SGD 2,000. The grant will count towards the maximum corporate tax remission of SGD 40,000.
The Act also introduces an enhanced deduction for qualifying artificial intelligence (AI) expenditure under new Section 14ZK. Businesses carrying on a trade or business will be eligible to claim the deduction for YA 2027 and YA 2028.
The deduction will amount to 300% of qualifying expenditure that would otherwise be deductible under Section 14, or 400% for capital or other expenditure that is not deductible under that section. Qualifying expenses include AI software licences, subscriptions and eligible AI business services, but exclude physical hardware. The enhanced deduction will be subject to an annual expenditure cap of SGD 50,000.
Additionally, the Act increases the expenditure cap for double tax deductions on market development and investment development activities under Sections 14B and 14H. From YA 2027, the cap will rise from SGD 150,000 to SGD 400,000.
The eligible expenditure categories will also expand to cover speaking slots at overseas trade missions, transportation of samples and fees paid to independent consultants for overseas networking events, market research and business network development.
Pillar Two rules updated
The Act amends the Multinational Enterprise (Minimum Tax) Act 2024 to align Singapore’s domestic legislation with the OECD’s Global Anti-Base Erosion (GloBE) rules under Pillar Two.
The changes incorporate obligations under the OECD Multilateral Competent Authority Agreement for the exchange of GloBE Information Returns (GIR).
The amendments also give the Comptroller authority to require designated local entities to file GloBE Information Returns directly in Singapore if the relevant international exchange arrangements fail or are delayed.
Additionally, the legislation standardises the calculation of Financial Accounting Net Income or Loss (FANIL) in Singapore dollars for constituent entities and joint ventures located in Singapore.
Self-employed tax relief
The legislation introduces a simplified expense deduction option for self-employed individuals under Section 14ZL, effective from YA 2027.
Eligible individuals earning income from a trade, business, profession or vocation will be able to claim deemed expenses equal to 20% of their gross income from the relevant activity, provided their annual gross income does not exceed SGD 50,000.
The Act also provides an explicit income tax exemption for government cash payments and CPF contributions made under the ComLink+ Package for Employment on or after 1 May 2025.
In addition, amendments to Section 15 clarify the income tax treatment of mandatory Medisave contributions made by platform operators on behalf of platform workers, with the changes applying from 1 January 2026.
Incentives extended
The Act extends the validity of several tax incentive schemes to provide businesses with greater certainty over their tax arrangements.
The Funds Tax Exemption Scheme under Section 13R will continue until 31 December 2032. The Global Trading and concessionary rate incentives under Sections 43E and 43I, together with withholding tax exemptions on qualifying payments under Section 45I, will be extended until 31 December 2031.
The deduction scheme for renovation and refurbishment expenditure under Section 14Z will be extended until 31 December 2029.
The legislation also revises and streamlines the tax exemption frameworks applicable to approved international shipping enterprises under Sections 13A and 13E, with the changes taking effect from YA 2027.
Tax appeal rules revised
The Act introduces mandatory electronic service requirements for specified corporate tax applications and notices, including those covered by Sections 50, 76 and 93A of the ITA.
It also revises procedural requirements for tax appeals. The minimum advance notice period for hearings before the Board of Review will increase from 14 days to 35 days under the ITA, GST Act and Property Tax Act.
Furthermore, the legislation standardises the deadline for filing court appeals and serving related documents following Board of Review decisions at 28 days.
