Deloitte proposes tax framework adjustments, AI support in Budget 2026 wish list
It also suggests measures to support workers
[SINGAPORE] Deloitte called for support to help companies build artificial intelligence (AI) capabilities and ease pressures on households, as well as suggested refinements to Singapore’s tax architecture, in its Budget 2026 wish list released on Monday (Jan 12).
Noting global developments that “reflect… structural shifts that are reshaping the global economy”, Deloitte called for “measures to help businesses manage near-term pressures while supporting longer-term innovation, transformation and resilience”.
Rohan Solapurkar, tax and legal leader at Deloitte Singapore, said that the more measured outlook for 2026 will be “shaped by uneven global spending patterns and persistent macro-financial frictions”.
Tax policy will thus be a strategic instrument, as a “channel through which the economy can absorb volatility and support business reinvention”, he said.
He added that Deloitte’s recommendations aim to contribute to an outward-looking tax architecture that complements the country’s economic strategy.
Increasing competitiveness
Strengthening tax measures could provide support for businesses to operate internationally, Deloitte said.
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Practical refinements to tax measures could enhance cash flow, reduce structural friction and ensure that longstanding provisions continue to operate coherently.
Daniel Ho, mergers and acquisitions tax leader at Deloitte South-east Asia, recommended setting up a fund to help medium-sized companies get AI-ready.
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 could help companies manage volatility while pursuing strategic expansion, he said.
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He added that more clarity around the operation of Section 10L – which governs gains arising from the sale or disposal of foreign assets – and longstanding foreign-sourced income rules would be timely amid current uncertainty.
With the Organisation for Economic Co-operation and Development’s Pillar Two global minimum tax rules’ first compliance obligation due for multinational enterprises in 2026, international tax leader Liew Li Mei said how the rules are applied in practice will be a key issue.
She suggested that Budget 2026 should provide clear administrative guidance on documentation expectations, sequencing and interaction with existing filing processes.
Enhancing innovation and resilience
Deloitte also recommended more support to advance innovation, capability-building and quality investments.
To attract and retain specialised research and development (R&D) talent in emerging and priority sectors such as AI and semiconductors, Deloitte South-east Asia global investment and innovation incentives leader Lee Tiong Heng suggested special income tax rates for such specialists.
He also recommended clearer and more streamlined R&D incentives that provide greater flexibility for collaborative projects, and noted room for R&D tax framework tweaks, to better reflect how companies undertake joint R&D in practice.
Yvaine Gan, global investment and innovation incentives leader at Deloitte Singapore, also proposed changes to the Refundable Investment Credit (RIC), a framework introduced in 2024 to enhance the Republic’s tax incentive landscape amid a global minimum tax environment.
The RIC’s support rate, currently set at up to 50 per cent, could be eased to as much as 70 per cent of qualifying expenditures, she suggested.
“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,” she said.
Gan also highlighted potential refinements to the cash payout mechanism, such as shorter timelines for earlier access to liquidity, and the option of accelerated payouts at a discount. Companies could also be allowed to leverage their RIC or payout election balance as collateral for financing, she said.
For Singapore’s goods and services tax, Deloitte also recommended greater clarity on the road map for the nationwide e-invoicing initiative via InvoiceNow, including specific timelines and coverage parameters.
To strengthen businesses’ capabilities and readiness when it comes to trade arrangements, digital processes and sustainability requirements, Wong Meng Yew, sustainability and climate tax leader at Deloitte Singapore, said there may be scope to complement existing advisory initiatives with more targeted implementation support.
The Business Adaptation Grant, for instance, could be extended beyond advisory services to cover implementation-related activities relating to trade agreements, compliance, supply-chain optimisation and market diversification, he said.
He suggested that the Budget could also provide support for companies to adopt trade data management solutions to comply with sustainability requirements, such as tracking emissions across their global supply chains.
People and workers
Global employer services leader for Deloitte Singapore and South-east Asia Sabrina Sia noted an opportunity to refine personal income tax policies for greater inclusivity and resilience.
This could potentially include introducing reliefs for caregivers, children and the elderly, as well as increasing the quantum of spousal relief and revising the chargeable income brackets to reflect the effects of inflation, she said.
Deloitte noted the importance of workforce policies that complement local capabilities and respond to evolving skill needs, to ensure a future-ready labour market amid shortening innovation cycles and intensifying competition for skills.
Christina Karl, immigration leader at Deloitte Singapore and Global, proposed more flexible work provisions for Student Pass holders and targeted incentives to attract globally mobile tech talent.
Deloitte noted that Budget 2026 will come at a time when “data, automation and cross-border dynamics continue to reshape economic activity across the globe”.
Its recommendations “combine targeted refinements (and) forward-looking ideas that reinforce Singapore’s resilience amid ongoing shifts, while carving pathways for businesses and workers to benefit from emerging opportunities”, it concluded.
For more of BT’s Budget 2026 coverage, go to bt.sg/budget26
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