Budget 2026 arrives at a time of structural shifts in the global order. Geopolitical tensions continue to evolve, and the breakneck pace of technological change, particularly in artificial intelligence (AI), is reshaping competitiveness. For an open and highly connected economy like Singapore, such shifts directly influence trade flows, capital allocation and business confidence.
In this context, the Budget theme “Securing Our Future Together in a Changed World” reflects more than fiscal planning. It signals an intention to lead through change – not by reacting defensively to uncertainty, but by strengthening institutional capability, investing proactively in technology, and reinforcing social cohesion while navigating global complexity.
Singapore has entered 2026 from a position of relative economic strength. The stronger-than-expected growth in gross domestic product (GDP) in 2025 provides momentum, even as projections for 2026 moderate to amid softer global conditions. The central policy question is not whether the economy is stable today, but whether the measures introduced are sufficiently forward-looking to sustain competitiveness over the next decade.
In our opinion, the measures introduced are a step in the right direction to help companies and businesses grow, adapt, expand and venture abroad, and it is for them to embrace these schemes and incentives, such as the Market Readiness Assistance (MRA) grant and the Double Tax Deduction for Internationalisation (DTDi) scheme, to the fullest.
AI: A structural priority, not a policy add-on
A defining feature of Budget 2026 is the elevation of AI to a national strategic priority. The establishment of a National AI Council chaired by the Prime Minister himself signals that AI is not merely a technology initiative, but a core pillar of economic strategy. This institutional anchoring provides clarity and long-term direction – an important signal in a fragmented global environment.
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Enterprise support measures, tax deductions to include AI expenditures as a qualifying expenditure and other digital capability initiatives collectively reflect a coherent push towards AI enablement. Free access to premium AI tools for Singaporeans who sign up for selected courses will encourage workers to see for themselves what and how AI can be used for in their work, beyond the basics. That said, the effectiveness of these measures will hinge on execution and accessibility.
Large enterprises may focus on integrating AI into supply chains, financial systems, risk management and customer analytics. For small and medium enterprises (SMEs), however, the barriers are often more fundamental: financing and implementation costs, access to talent, and uncertainty over return on investment. While tax deductions lower effective costs, they may not fully address upfront capital intensity or the operational complexity of transformation, and some SMEs may not be in a tax paying position to fully benefit from this initiative. Expenditure or cost support measures like the Productivity Solutions Grant will help.
For Singapore to truly lead through change, AI adoption must move beyond incentives and into structured enablement. Industry-specific toolkits, regulatory sandboxes, shared infrastructure and co-funded pilot programmes could accelerate adoption in a more targeted way. Otherwise, the risk is uneven uptake, with digital transformation concentrated among larger firms.
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Encouragingly, Budget 2026 pairs technology investment with skills development. This reflects an understanding that competitiveness will increasingly be shaped not only by access to capital, but by the depth of human capital. AI systems are tools; productivity gains materialise only when workers are equipped to deploy them effectively.
Balancing short-term relief with long-term investment
Budget 2026 continues sustained structural investment in research, innovation and productivity enhancement. This consistency is critical.
The pairing of short-term business relief with longer-term research and capability investment demonstrates strategic layering. Immediate support cushions cyclical pressures, while sustained funding builds structural resilience. That balance reflects policy discipline. With the Corporate Income tax (CIT) Rebate or CIT Rebate Cash Grant, every firm receives something.
Meanwhile, businesses will increasingly evaluate not just funding levels, but policy coherence. The interaction between tax measures, digitalisation incentives, workforce policy and international tax developments must remain aligned. As global minimum tax frameworks and other international standards reshape the tax landscape, Singapore’s incentives toolkit must remain credible, compliant and commercially meaningful. Continued consultation, enhancement and transparent guidance will be essential in maintaining investor confidence.
Inclusivity as an enabler of transformation
Economic transformation, if unevenly distributed, can erode social cohesion. Budget 2026 recognises this and addresses it by maintaining structural spending in healthcare, social support and infrastructure, alongside targeted measures such as additional CDC vouchers and strengthened CPF support for senior workers.
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These handouts are often viewed as short-term relief, but they serve a broader purpose. By cushioning households from cost-of-living pressures, the government creates stability and public confidence – conditions necessary for more ambitious structural reforms in the longer term and sustained economic growth.
Fiscal sustainability remains a long-term consideration. Singapore’s sound fiscal management provides space for targeted transfers, but as healthcare and ageing-related expenditure rise, continued transparency on medium-term fiscal strategy will reinforce confidence.
External positioning in a fragmented world
Budget 2026 acknowledges the need for new alliances and evolving forms of cooperation. It may seem obvious, given Singapore’s outsized trade to GDP ratio, that the country will focus on external integration. Nonetheless, continued commitment to trade agreements and regional investment requires careful calculus now, perhaps more than ever.
The new measures provide a much-needed confidence boost for companies making their own calculations before venturing abroad. Notably, the government will allow more qualifying activities under the DTDi scheme to be eligible for automatic tax deduction claims while substantially increasing the tax deduction cap which does not require without prior approval from S$150,000 to S$400,000. These will serve to lessen the procedural effort and cost concerns for businesses. Furthermore, the MRA grant has also been enhanced for companies in this budget to deepen their overseas presence.
Leading through change: Beyond the announcements
In our view, what distinguishes Budget 2026 is its attempt to integrate resilience with reinvention. AI enablement is paired with skills investment. Economic competitiveness is framed alongside social cohesion. Short-term relief coexists with structural transformation.
This framing reflects what leading through change demands: discipline, foresight and coherence. Yet leadership through change is not measured by announcements alone. It is measured by outcomes in the form of economic growth, income growth, productivity growth, sustained investment inflows, wage progression and technological adoption at scale.
Three areas merit continued attention. First, deeper sector-level implementation pathways will accelerate the uptake of AI and other emerging technologies. Second, sustained policy coherence across tax, trade and digital frameworks will be increasingly important in a globally fragmented environment. Third, maintaining fiscal transparency as structural spending rises will anchor long-term confidence. We look forward to more details from the government on how these measures and support will be implemented and rolled out meaningfully, the ultimate test of its effectiveness.
Lee Tiong Heng is global investment & innovation incentives leader at Deloitte Southeast Asia. Larry Low is government & public services industry tax leader at Deloitte Singapore.
