Enhanced tax benefits and the 2027 AI addition
The scheme provides 400% deductions or allowances on the first S$400,000 of qualifying annual expenditure in each of four areas: Singapore R&D, IP registration, IPR acquisition or licensing, and qualifying training. Qualifying innovation projects with specified partners have a S$50,000 expenditure cap. A separate AI-adoption activity adds 400% deductions on up to S$50,000 for YA 2027 and YA 2028. Businesses must conduct active operations in Singapore and incur the relevant expenditure in the qualifying basis period. Each activity has its own detailed tests.
Cash conversion is an alternative, not an extra deduction
Eligible businesses may convert up to S$100,000 of expenditure per YA at 20%, producing a maximum non-taxable payout of S$20,000. They must meet the three full-time local employee condition and file the income tax return before the statutory deadline. AI-adoption expenditure is excluded. Converted amounts cannot also receive tax deductions, and the election is irrevocable. IP registration and IPR acquisition have full-cost conversion rules, so spending above the cap can be forfeited. Apply through the EIS digital service after filing the return and retain expenditure evidence.
Official source
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