What the 2026 edition covers
The Enterprise Innovation Scheme supports research, intellectual property, employee training and innovation. This article follows the third edition dated 31 August 2026, including all six activity annexes. The original five activities apply for YA 2024–2028. AI adoption is a new sixth activity for YA 2027 and YA 2028 only. Earlier forms describing five activities therefore reflect an earlier edition. The 2026 update also adds the Sectoral AI Centre of Excellence for Manufacturing as a qualified innovation partner for YA 2027 and YA 2028, and uses the Skills and Workforce Development Agency (SWDA) name following the merger on 1 July 2026.
Annual expenditure limits and the meaning of 400%
For each YA, the limits are S$400,000 for Singapore R&D, S$400,000 for IP registration, a combined S$400,000 for IPR acquisition and licensing, and S$400,000 for training. Partner-institution innovation projects have a separate S$50,000 limit. AI adoption has another S$50,000 limit for YA 2027–2028. The six limits total S$1.7 million when all activities are available. Each limit applies independently for the YA and cannot be pooled across years. A 400% benefit is a deduction or allowance measured against qualifying expenditure; it is not a cash reimbursement of four times the expense. The component percentages and treatment above the limit differ by activity.
Grants, business structures and unused deductions
Subtract Government and statutory-board grants or subsidies before computing EIS benefits. A S$100,000 researcher cost subsidised by S$10,000 leaves S$90,000 of qualifying expenditure. Limits apply per company, including a qualifying registered business trust taxed as a company; per sole-proprietor across all that individual’s businesses; and per partnership regardless of partner numbers. A person’s three sole-proprietorships share one activity limit, while a partnership in which that person participates has its own limit. A company and two separate partnerships in which it is a partner likewise have three distinct sets of limits. Unused EIS deductions become trade losses or allowances, subject to the statutory conditions for carry-forward, group relief and carry-back under sections 23, 37, 37A, 37B and 37D.
Choosing a cash payout
Eligible businesses can convert up to S$100,000 of qualifying expenditure across the first five activities into cash at 20%, giving a maximum S$20,000 per YA. Each application needs at least S$400 of expenditure. AI expenditure cannot be converted. The payout is not taxable and may be used for any purpose, but the election is irrevocable and converted expenditure no longer qualifies for any deduction or allowance. Annual conversion limits cannot be combined. In the guide’s example, S$80,000 of R&D produces S$16,000 and S$20,000 of training produces S$4,000. The remaining S$10,000 of training expenditure may qualify for enhanced deductions, but there is no further cash entitlement for that YA.
Employee and continuing-business requirements for cash
A claimant must operate in Singapore and have at least three full-time Singapore citizen or permanent-resident employees with CPF contributions for at least six months in the relevant basis period. Each employee must earn at least S$1,400 gross monthly and have a contract requiring at least 35 hours of work weekly. Sole-proprietors, equity partners and shareholder-directors are excluded; a non-equity salaried partner under a contract of service can count. A centrally hired or seconded employee can count at the business where the person works solely, if work arrangements and cost recharges are documented and the structure has genuine commercial reasons. The same employee cannot count at the entity bearing the initial payroll cost. The business must still be trading when payment is made. ACRA statuses such as amalgamated, in liquidation, struck off, ceased registration or dissolved are treated as cessation.
Partnership elections and limited-partner restrictions
A partnership cash election is deemed agreed by every partner, including a partner who withdrew during the basis period, and remains final. For LLP partners and limited partners of an LP, relevant deductions against other income are cumulatively restricted to contributed capital at the end of the current basis period. EIS-generated losses and allowances remain subject to that restriction. If the partnership converts expenditure into cash, partners cannot deduct their shares of that converted amount for the YA.
Filing, records and later corrections
Companies claim enhanced deductions in their income tax returns. Sole-proprietors and partners use “Submit EIS Enhanced Deduction/Allowance Records” after filing their returns and before the relevant filing deadline. Cash applicants likewise file their tax return first, then submit one “Apply for EIS Cash Payout” application for the YA before the deadline. A sole-proprietor includes all businesses in that one application. Paper individual returns can take up to seven business days to register before the service becomes available. Keep activity and expenditure records, retain the acknowledgement and check application status in myTax Portal. Payment follows verification and does not prevent a later audit. If the same expenditure was claimed both as a deduction and cash, notify IRAS promptly through Email Us > EIS Enhanced Deductions – Amend Filing; incorrect payouts may be recovered and penalties may apply.
Singapore R&D: qualifying costs and the 400% calculation
Annex A covers qualifying R&D performed in Singapore. Staff costs excluding directors’ fees and consumables qualify for the additional and enhanced deductions; no other prescribed expenditure category is identified in this edition. The first S$400,000 receives 100% base deduction plus 150% additional deduction plus 150% EIS enhancement. Qualifying expenditure above S$400,000 retains the base 100% and additional 150%, giving 250%. The additional deduction and relaxation allowing Singapore R&D unrelated to the existing trade are extended through YA 2028. For outsourced R&D or cost-sharing arrangements, 60% of the relevant net fees is deemed qualifying expenditure; a higher actual qualifying proportion can be used if substantiated. On fees of S$1.1 million less a S$100,000 grant, the deemed amount is S$600,000: additional deduction is S$900,000 and EIS enhancement is capped at S$600,000.
R&D unrelated to the trade and concessionary-rate income
Non-trade-related qualifying R&D is first deducted against normal-rate income; unused amounts may offset concessionary income under section 37A. Where only concessionary streams exist, the deduction is first applied to the highest-rate stream with the prevailing corporate-rate/highest-concessionary-rate adjustment, followed by the statutory loss rules. Apply the EIS expenditure cap before the tax-rate adjustment. For S$500,000 qualifying R&D and a 10% concessionary rate, deductions are S$500,000 + S$750,000 + S$600,000 = S$1.85 million; multiplying by 17%/10% gives S$3.145 million. If S$100,000 is instead converted into S$20,000 cash, the remaining base, additional and enhanced deductions are S$400,000, S$600,000 and S$450,000 respectively. Their S$1.45 million total becomes S$2.465 million after adjustment. Cash-convertible expenditure is measured before the adjustment.
IP registration deductions
Annex B covers official and professional registration fees for patents, trademarks, designs and plant varieties used for the business. The Singapore business must have the required legal and economic ownership. EIS provides 100% base plus 300% enhanced deduction on the first S$400,000, with 100% base deduction on excess qualifying costs. Registration need not succeed: a rejected application can still qualify. Claim the full cost of each filing, using part of a filing only to fill the remaining annual enhanced-deduction limit. For common expenditure, determine the deductions before allocating them to income streams. Deduct Government subsidies first.
IP registration cash conversion and one-year ownership
Cash conversion is elected per registration application and must include its entire qualifying cost, subject to the S$100,000 overall cap. Excess cost is forfeited, not left available for tax deduction. For registration spanning several YAs, convert after approval or rejection only if no part was previously deducted; use the cap for the YA when registration finishes. Costs of S$80,000, S$10,000 and S$40,000 in YA 2024–2026 therefore produce at most S$20,000 cash in YA 2026, with S$30,000 forfeited. Keep the registered IPR, or do not assign its application, for at least one year. An early disposal brings enhanced deductions back into taxable income or triggers cash recovery. Base-deduction recapture remains the lower of disposal proceeds and the earlier base deduction, even after one year. Report cash-related disposal within 30 days; deduction claw-back is included in the disposal-year computation and the disposal form submitted after the return.
Who qualifies for enhanced IPR acquisition and licensing relief
Annex C restricts enhanced acquisition and licensing benefits to businesses with revenue below S$500 million, assessed for the relevant basis period, which need not be twelve months. A group uses consolidated parent-and-subsidiary revenue under FRS 110, including overseas entities, with group status tested at the period end. A Singapore branch uses head-office and all-branch revenue, or group revenue where applicable. An individual sole-proprietor aggregates all businesses. A partnership uses its own revenue if controlled by an individual or if there is no single controlling partner; a corporate controlling partner triggers the group test. Acquisition and licensing share one S$400,000 annual cap after subsidies. A business failing this EIS test may still qualify for normal section 19B WDA and the separate section 14U deduction on up to S$100,000 of licensing expenditure, subject to their conditions.
Acquisition WDA: ownership, timing and instalments
Qualifying companies and partnerships must legally and economically own acquired IPRs used in their business; an exemption from legal ownership under section 19B(2B) does not qualify for enhanced WDA. The first S$400,000 receives 100% base and 300% enhanced WDA; excess receives base WDA only. Elect straight-line claims over five, ten or fifteen years, giving annual fractions of 20%, 10% or 6⅔%. Partial asset cost can use the remaining enhanced limit. For instalments, fix the enhanced entitlement using the asset cost, then multiply the relevant annual fraction of total base-plus-enhanced WDA by principal repaid during the year divided by asset cost. Include deposits but exclude finance charges. Entitlement is locked in for qualifying acquisitions in YA 2024–2028, so instalment-related claims can continue beyond YA 2028.
Licensing restrictions and software rights
Qualifying licence fees receive 100% base and 300% enhanced deduction within the combined activity cap. Legal and incidental licensing costs are not qualifying licence fees, and section 14U excludes trademarks and software-use rights from its qualifying IPR definition. Enhanced licensing deductions are not available for related-party licences, subject to a possible ministerial exemption, or for an IPR on which that same business previously received section 19B WDA. The licensor can independently qualify for its own acquisition, R&D, registration or third-party licensing benefits if the relevant conditions are met. Software IPR acquired for use in the company’s own business can qualify for acquisition benefits; acquisition for onward licensing cannot. Licensing cash conversion need not be elected separately for each IPR.
Cash conversion for acquired IPRs
Acquisition cash conversion is per IPR and includes the full qualifying acquisition cost, with excess over the S$100,000 cap forfeited. For instalment acquisitions, test the three-local-employee condition in the basis period when the agreement is signed. Disregard finance charges and allocate forfeited cost against the last principal instalment first, then earlier instalments as necessary. A S$120,000 asset paid in three S$40,000 annual instalments produces cash of S$8,000, S$8,000 and S$4,000; S$20,000 of the last principal instalment is disregarded. Payment follows actual principal repayment. Submit the acquisition instalment template through the cash-payout service after the tax return for each relevant YA. Qualifying agreements signed in the YA 2024–2028 basis periods can support later instalment payouts beyond YA 2028.
Disposal, expiry and cessation: WDA recovery rules
An acquired IPR must be held for at least one year. If it expires without revival, is sold/transferred/assigned in whole or part, or the relevant business permanently ceases before the elected writing-down period ends, no WDA is allowed in that year or later years. Expiry or business cessation does not itself recapture earlier base WDA. On disposal, proceeds above tax written-down value create a balancing charge capped at prior base WDA; there is no balancing allowance where proceeds are below that value. After the writing-down period, the base balancing charge is capped at IPR cost. A specified event within one year recaptures prior enhanced WDA and forfeits the undrawn balance. After one year but before the writing-down period ends, prior enhancement is retained but undrawn enhancement is forfeited. After that period, enhanced WDA is not recovered.
Cash recovery and the two disposal examples
Cash for an acquired IPR is fully recovered if a specified event occurs within the first year. During years two to five, recovery equals (5 minus completed years held)/5 multiplied by the payout; after five years there is no recovery. Report the event within 30 days. IRAS recovery notices require repayment within 30 days of the notice, with late penalties possible. Annex C-1 first illustrates a S$200,000 design: five-year WDA gives S$40,000 base and S$120,000 enhancement annually. After two claims it is sold for S$280,000; tax written-down value is S$120,000, so the base balancing charge is S$80,000, not S$160,000. Prior S$240,000 enhancement is retained and S$360,000 undrawn enhancement is forfeited. A second example converts a S$110,000 patent acquired on 1 August 2023 into S$20,000 cash. Expiry on 31 May 2027 follows only three completed years, requiring S$8,000 recovery and notification by 30 June 2027.
Interaction with investment allowance
An IPR approved for investment allowance is not automatically excluded from EIS. However, the same cost cannot receive both enhanced WDA and investment allowance. A S$600,000 acquisition may use enhanced WDA on S$400,000 and investment allowance on the remaining S$200,000. The full S$600,000 still counts in assessing capital-expenditure requirements in the investment allowance certificate. Other Economic Expansion Incentives Act conditions continue to apply.
Employee training: courses, fees and subsidies
Annex D gives 100% base plus 300% enhanced deduction on the first S$400,000 of qualifying employee training expenditure. Eligible courses must qualify for SWDA funding and align with the Skills Framework. Qualifying fees are course, assessment and certification fees paid directly or reimbursed by the employer to SWDA-registered providers. Deduct subsidies received by either employer or employee, including SkillsFuture Credit. A S$1,000 reimbursement less a S$200 subsidy and S$400 SkillsFuture Credit leaves S$400 qualifying expenditure. An expired course may still qualify if expenditure was incurred before its support end date and in a YA 2024–2028 basis period. Training of centrally hired or seconded staff can qualify with exclusive deployment, documented recharges and genuine commercial reasons. Other deductible training and qualifying costs above the limit retain normal 100% treatment. Cash conversion uses the shared S$100,000 cap.
Innovation projects with qualified partner institutions
Annex E provides a 400% deduction on up to S$50,000 of qualifying annual expenditure charged by a polytechnic, ITE or other approved partner. The business must collaborate directly and benefit from the project; an intermediary acting for another business cannot claim. Activities predominantly involve R&D, engineering/design/creative work, IP activities or software/database development under the Oslo Manual framework. The institution validates eligibility and issues the innovation-project invoice. Only its charges qualify: S$30,000 charged by the partner qualifies, but an additional S$5,000 spent outside that collaboration does not qualify under this activity. Subtract grants. No double deduction is permitted under another tax provision. If an R&D-qualifying project is claimed under this activity, expenditure above S$50,000 cannot then be claimed under sections 14C or 14D. Cash conversion remains subject to the shared overall cap.
AI adoption in YA 2027 and YA 2028
Annex F permits 400% relief on the first S$50,000 of qualifying AI expenditure for the trade or business. For expenditure normally deductible under section 14, this consists of 100% base plus 300% enhancement, with normal base deduction potentially continuing above the limit. For qualifying expenditure not normally deductible under section 14, the EIS deduction is 400% within the limit. Qualifying expenditure covers subscribing to or licensing an AI system from another person, or subscribing to, acquiring or licensing a qualifying AI business service. It excludes physical infrastructure and hardware such as servers, storage and computing equipment. There is no AI cash-payout option.
Recognising an AI system and an AI business service
An AI system infers outputs from inputs, producing predictions, content, recommendations or decisions that affect physical or virtual environments. Capabilities include content generation, reasoning, knowledge retrieval, natural-language processing, planning/optimisation and multimodal image or audio processing. Examples include machine-learning models, conversational AI, computer vision, translation and sentiment analysis. An AI business service must support development, deployment, operation or maintenance of such a system. Relevant online platforms, system development, strategy consulting, data analytics, R&D, engineering/compliance and system-related training can qualify. Integrating AI demand forecasting with sales/inventory systems and training staff on it qualifies; unrelated general management consulting does not.
AI mixed packages, prohibited overlap and practical records
Remove subsidies and include only the qualifying part of a mixed purchase. If a vendor breakdown cannot be obtained despite reasonable efforts, use a reasonable documented apportionment. The guide compares a S$12,000 package with AI features against an otherwise comparable S$8,000 package without them, treating the S$4,000 difference as qualifying AI expenditure. Keep the comparison and the basis of allocation for an IRAS request. Do not claim the same amount under the listed other deduction provisions, including sections 14A, 14C, 14D, 14EA, 14EB, 14U and 14ZG. An AI system previously granted section 19 or 19A allowances, or sub-licensed to another person, cannot receive this AI deduction. Keep evidence connecting the cost to actual business AI adoption. The guide’s enquiry numbers are 6351 3375 for sole-proprietorships/partnerships and 1800 356 8622 for companies.
Official source
This article independently explains the substantive contents of the official PDF, including the relevant conditions, procedures and annexes. The linked document remains the authoritative source for its original wording, and later changes should be checked separately.
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