Singapore launches AI support measures and tax cuts in 2026 budget

Singapore has launched a number of schemes to leverage artificial intelligence, including tax breaks for businesses and support for workers to learn AI skills.

Prime Minister Lawrence Wong, who presented the country’s budget on Thursday, announced that Singapore would set up a National AI Council, which he would chair.

“AI is a powerful tool, but it is still a tool. AI must serve the national interest and the people,” he said.

Singapore will also define clear rules on how AI can be developed and used to ensure that it benefits society safely and responsibly, Mr Wong added.

On the countermeasures front, Singapore will launch a new “Champions of AI” program to support companies that want to leverage AI to transform their businesses. Support is tailored to each company and includes corporate transformation and employee training.

“If these companies succeed, they will set industry benchmarks and encourage others to follow suit,” Wong said.

The country will also expand its Enterprise Innovation Scheme, which provides businesses with a 400% tax credit on eligible spending. Such spending will be expanded to include AI spending, capped at S$50,000 ($39,654) per year in 2027 and 2028.

“Every Singaporean can take the initiative to learn and develop AI-related skills,” Mr Wong said, adding that the Skillsfuture website will be redesigned to make AI learning pathways clearer and more accessible so Singaporeans can quickly find courses that match their job needs and proficiency.

The Skillsfuture website provides learning opportunities and training support for Singaporeans, who are given credits to enroll in Skillsfuture courses once they turn 25.

However, Wong pointed out that most AI tools are free at a basic level, but require paid subscriptions to access more advanced models.

Singapore will then offer six months of free access to premium AI tools to Singaporeans who take selected AI training courses. “This allows them to practice, experiment and apply what they have learned,” he pointed out.

Artificial intelligence is becoming a key driver of Singapore’s digital economy, but implementation alone does not guarantee improved productivity, said Jessica Chan, senior vice president for APAC at business services provider ADP.

Without job redesign and hands-on training, the transition to AI risks widening the skills gap and undermining long-term talent development, Zhang added.

As such, she believes the main challenge will not be simply implementing new tools, but will be equipping employees with the skills to work effectively with AI.

“Accessible learning pathways, regular exposure to AI, and targeted upskilling that strengthens critical thinking, data literacy, and communication skills can have a greater impact than broad training alone.”

Separately, Mr Wong also announced that the city-state would inject an additional S$1.5 billion ($1.18 billion) to boost its stock market.

This replenishment to the Financial Sector Development Fund will also help develop Singapore’s money management industry, Mr Wong announced.

Established in 1999, the FSDF provides grants to businesses and individuals in the financial services sector to promote Singapore as a financial centre.

This comes after Singapore announced an injection of S$5 billion in 2025, known as the Equity Market Development Program (EQDP), to boost the vibrancy of the domestic stock market.

EQDP is Straits Times Index STI rose 22.67% in 2025, the largest increase since 2009.

S$4 billion has already been awarded to nine asset managers, with the remainder expected to be deployed in the second quarter of 2026.

Wong also said the government will consider introducing other measures to boost the market, such as streamlining listing rules and requirements to make it easier for high-growth companies to list, and establishing a dual-listing bridge linking SGX and Nasdaq.

“These measures will increase the depth and vibrancy of our public equity markets and provide further avenues for companies to grow and scale from Singapore,” Mr Wong said.

Mr Cleng Yeo, private tax leader at Deloitte Singapore, said he expected the additional S$1.5 billion to “significantly increase the liquidity of Singapore’s stock market”, adding that he expected more unlisted high-growth companies in Southeast Asia to consider Singapore as a listing destination in the coming years.

Singapore expects a surplus of S$8.5 billion in fiscal 2026, which starts in April. This figure is lower than the surplus of S$15.1 billion in the 2025 financial year.

Wong attributed the 2025 surplus to better-than-expected economic performance and increased corporate tax collections.

The country also saw an increase in property-related revenue collections such as motor vehicle tax and stamp duty. This was driven by strong demand for private cars and real estate, Wong added.

Chua Hak Bin, co-head of regional research at Maybank Investment Banking Group, told CNBC that the budget surplus is “prudent”, noting that since this is the first year of the government’s elected term, the government will want to preserve some “dry powder” in case of unexpected shocks or economic downturns.

Under Singapore’s constitution, the government must maintain a balanced budget during each term and can only draw on past reserves with presidential approval. Governments are not allowed to borrow money to cover operating costs.

Singapore has used its past reserves only twice: during the global financial crisis in 2008 and during the COVID-19 pandemic.

“Revenue forecasts are generally conservative and, in line with previous budget forecasts, the actual fiscal surplus for 2026 is likely to be higher,” Chua added.