Deloitte urges Budget 2026 support as growth slows to 1%–3%

MTI forecasts Singapore’s growth at 1%–3% for 2026, down from last year’s pace.

Deloitte is calling for targeted tax, innovation, and workforce measures in Budget 2026 to help businesses and households navigate global uncertainty and tightening international tax rules.

Deloitte framed its proposals against a slowing growth outlook, citing Singapore’s 4.8% GDP growth in 2025 and MTI’s 2026 forecast of 1%–3%.

It stated that tax and fiscal policy should help absorb volatility whilst supporting business reinvention and easing cost pressures on households.

On international tax, Deloitte urged clearer and more consistent guidance on Singapore’s foreign-sourced income rules and Section 10L, to reduce uncertainty for multinational enterprises.

It also highlighted the need for practical administrative guidance on Pillar Two, noting that Singapore’s global minimum tax rules apply to in-scope MNEs for financial years commencing on or after 1 January 2025, with the first compliance obligations due in 2026.

For corporate tax, Deloitte suggested refinements such as a more flexible loss carry-back framework, enhancements to group relief and M&A allowance regimes, and broader capability support under the Enterprise Innovation Scheme.

It also proposed being more ambitious with the Refundable Investment Credit, including potentially raising support to up to 70% of qualifying expenditure and improving the cash payout mechanism through faster or more flexible options.

On innovation and transformation, Deloitte recommended targeted support to build AI readiness, including a dedicated fund for medium-sized enterprises.

It also called for measures to attract and retain specialised R&D talent, including possible special income tax rates for experts in areas such as AI and semiconductors, and clearer, more streamlined R&D incentives that better support collaborative projects.

In areas of digitalisation, trade, and sustainability, Deloitte urged greater clarity on the rollout of GST InvoiceNow requirements and suggested extending the Business Adaptation Grant beyond advisory work to cover implementation efforts such as trade compliance, supply-chain optimisation, and sustainability data management.

For households and the workforce, Deloitte floated adjustments to personal income tax reliefs, including support for caregivers, children, and the elderly, potential increases to spouse relief, and updates to chargeable income brackets to reflect inflation.

It also proposed refinements to immigration and workforce policies to attract globally mobile talent, including more flexible work arrangements for Student Pass holders and targeted incentives to bring in technology talent whilst continuing to develop the local workforce.