Singapore's Parliament introduced the Finance (Income Taxes) Bill 2026 (Bill No. 22/2026) at first reading on September 8, 2026, amending the Income Tax Act 1947 (ITA) and the Multinational Enterprise (Minimum Tax) Act 2024 (MMTA). The bill published by the Parliament of Singapore bundles a YA2026 corporate tax rebate, a 300% deduction for qualifying AI expenditure, Pillar Two reporting and currency mechanics, a shipping incentive restructure, and higher market development caps, with several provisions deemed in force on dates in 2025 and early 2026.
What tax relief can companies claim for the year of assessment 2026?
New section 92M remits 50% of a company's tax payable for the year of assessment 2026, capped at SGD 40,000 and reduced by a SGD 2,000 cash grant. A company that made a Central Provident Fund contribution for at least one local employee in calendar 2025 receives the SGD 2,000 grant, provided it is still trading and not in liquidation at disbursement. Where 50% of the tax payable is below SGD 2,000, the remission is nil, and the grant is tax exempt.
How does the new 300% AI expenditure deduction work, and who can claim it?
New section 14ZK allows a person carrying on a trade or business to deduct qualifying AI expenditure for the years of assessment 2027 and 2028. The deduction follows the formula A multiplied by B%, where A is the lower of the qualifying AI expenditure or SGD 50,000, and B is 300% where the expenditure is otherwise deductible under section 14, or 400% where it is not.
"Qualifying AI expenditure" covers subscribing to or licensing an AI system, or subscribing to, acquiring or licensing a qualifying AI business service, but excludes spending on physical infrastructure or hardware. An "AI system" is a machine based system that infers from inputs to generate predictions, content, recommendations or decisions. The deduction is denied where the AI system is sub-licensed in the same basis period, where a capital allowance was already claimed for the same system, where the expenditure is subsidised by a government grant, or where a deduction is available under other innovation provisions. Where a single payment bundles software and hardware, the taxpayer must apportion it reasonably, and the Comptroller may override an unreasonable split.
What changes for Pillar Two MNE groups with Singapore operations?
Part 2 amends the MMTA to operationalise the OECD Inclusive Framework Side-by-Side package, the milestone this monitoring job was tracking. Section 36 expands the definition of the GloBE Information Return (GIR) to include qualified UTPR, qualified domestic minimum top-up tax, and MTT or DTT, enabling the GIR exchange framework.
Section 9 (amended by clause 37) lets constituent entities that have a FANIL, as specified in paragraph 6(14) of the First Schedule, and use the Singapore dollar as their functional currency carry out Part 3 GloBE calculations directly in SGD, rather than translating. The change applies to financial years beginning on or before December 31, 2026. Pillar Two teams with SGD functional currency should model the election against their current translation based computations.
Which other deductions and incentives does the bill reshape?
The bill raises the market development allowance cap under section 14B from SGD 150,000 to SGD 400,000 for the year of assessment 2027 onward, and adds an extended further deduction for non-approved firms incurring trade mission, market research and foreign network consultant expenses between YA2027 and December 31, 2030. The investment development allowance cap under section 14H moves to the same SGD 400,000 line.
Approved international shipping enterprises face the larger structural change: income currently exempt under section 13A moves to a section 13E exemption from YA2027, with new loss rules that ring fence shipping losses against shipping income, releasing any balance only after the tax exempt period ends. The section 13R sunset extends from December 31, 2027 to December 31, 2032.
For self-employed individuals, new section 14ZL offers a 20% deemed deduction of specified trade, business, profession or vocation income for YA2027 onward, in lieu of actual expenses, disapplying automatically where income from one source exceeds SGD 50,000. Platform worker CPF payments routed to medisave are tax exempt from January 1, 2026.
| Measure | Section | Applies from |
|---|---|---|
| YA2026 corporate tax rebate (50%, cap SGD 40,000) plus SGD 2,000 cash grant | 92M (new) | YA2026 |
| 300% or 400% AI expenditure deduction (cap SGD 50,000) | 14ZK (new) | YA2027 to YA2028 |
| 20% deemed deduction for self-employed income | 14ZL (new) | YA2027 onward |
| GIR definition expansion and SGD functional currency election | MMTA ss.2, 9 | Financial years beginning on or before December 31, 2026 |
| Shipping exemption migration 13A to 13E with loss ring fencing | 13A, 13E | YA2027 onward |
| Market development and investment development cap raised to SGD 400,000 | 14B, 14H | YA2027 onward |
| ComLink+ Progress Packages exemption | 13(1)(zra) | Deemed May 1, 2025 |
| Platform worker CPF to medisave exemption | 15 | Deemed January 1, 2026 |
Continuous, per jurisdiction monitoring surfaces a bill the day it publishes at first reading, before specialist counsel catches up; Obsidian's verified regulatory companion tracks this Finance Bill alongside the awaited MMTA Regulations amendments.
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Act now: model the YA2026 rebate and grant eligibility against your 2025 CPF records, scope which AI subscriptions qualify for the 300% deduction before YA2027, have Pillar Two teams assess the SGD functional currency election for FY2026, and brief shipping and market development teams on the new deadlines before second reading.
