Singapore to form National AI Council, expands tax breaks to ease AI adoption

Singapore has unveiled a raft of initiatives in its latest budget, including the formation of a National AI Council and fiscal incentives, to pave the way for broader adoption of artificial intelligence (AI) among businesses in the city-state.

Delivering the Budget 2026 speech in the Singapore parliament, prime minister and finance minister Lawrence Wong noted that AI has the potential to raise productivity, unlock new discoveries and transform lives for a nation faced with a tight labour market and an ageing population.

To steer the country’s AI agenda, the government will establish a National AI Council chaired by Wong. The council is tasked with aligning research and development, regulation, and investment promotion to ensure different agencies “pull in the same direction”.

In addition, National AI Missions will be set up to spur AI adoption in four sectors: advanced manufacturing, connectivity and logistics, finance, and healthcare. Each mission is tasked to look into areas where AI can help, such as automating logistics operations and enhancing financial advisory work.

There will also be a new Champions of AI programme to support firms that want to tap AI to transform their businesses. Support will be tailored to each company, including guidance on enterprise transformation and workforce training.

Mark Tham, country managing director for Singapore at Accenture, said Singapore’s new AI-forward initiatives show that AI adoption is progressing from experimentation to enterprise-scale AI transformation.

Specifically, he said the formation of the National AI Council provides “high-level sponsorship and alignment” across the public and private sectors, while the national AI missions “anchor efforts around clear value creation”. This mirrors what Accenture is seeing among leading enterprises – scaling AI with intent, governance, and measurable business outcomes, he added.

For enterprise IT leaders and CIOs, the budget also provides tax breaks to offset the cost of AI projects. For the years of assessment 2027 and 2028, businesses can claim a 400% tax deduction on AI-related expenditures, capped at S$50,000 per year. Additionally, the Productivity Solutions Grant will be expanded to cover a wider range of AI-enabled tools.

Cassandra Goh, CEO of Silverlake, believes the fiscal levers will spur organisations to modernise legacy infrastructures, particularly those used in banking, with high-performance, AI-native architectures. “As a regional leader in financial technology, we are ready to help our partners harness these strategic advantages to build future-ready banks that will secure Singapore’s leadership in a fragmented global economy,” she said.

Wong noted that to build a vibrant AI-enabled economy, it helps to have a focal point. To that end, he announced the development of a larger AI Park at One-North, expanding on the existing Lorong AI co-working space to bring AI founders, practitioners, researchers, and innovators together to build AI applications for businesses and public services.

In doing so, Singapore is looking to play to its strengths as a trusted hub. “Our advantage does not lie in building the largest frontier models,” Wong said, adding that Singapore is more focused on deploying impactful AI applications not only effectively and responsibly, but also faster and more coherently than larger countries.

However, the success of these AI applications will depend on connectivity and secure, high-performance networks, without which AI investments risk underdelivering on productivity gains and service improvements, said Adeline Liew, country business leader at Alcatel-Lucent Enterprise.

“Infrastructure must be viewed as a strategic enabler rather than a back-office utility,” Liew said. “AI readiness should be treated as a core business capability – embedded into enterprise architecture, security frameworks, and operational strategy. This includes networks designed to handle high-volume data traffic intelligently, ensure real-time responsiveness, and safeguard digital assets.”

To mitigate the risks of AI displacing jobs, the Singapore government will help workers acquire practical AI skills, starting with accountancy and legal professionals, followed by those in other fields. The SkillsFuture website will also be redesigned to make AI learning pathways clearer, while Singaporeans who complete selected AI training courses will receive six months of free access to premium AI tools.

Amit Khandelwal, regional vice-president and managing director for Southeast Asia at UiPath, said: “As intelligent systems such as agentic AI take on more reasoning and execution tasks, our human workforce will increasingly oversee and guide these agentic business processes. Reskilling our workers will ensure that Singaporeans remain at the centre of its national AI push”.

The budget also includes a sustained commitment to deep tech, with S$37bn allocated under the RIE2030 (Research, Innovation, and Enterprise) plan, including investments in quantum computing, where Singapore made an early bet almost two decades ago by setting up the Centre for Quantum Technologies at the National University of Singapore.

Earlier this year, Singapore teamed up with Japan to advance developments in quantum computing through a memorandum of cooperation on quantum science, technology and innovation as nations race to move quantum computing from research to becoming commercially viable infrastructure capable of shaping the future of industries.