Singapore gives enhanced tax deductions for qualifying R&D, including under the Enterprise Innovation Scheme (EIS), with an option to convert part of the expenditure into a cash payout. They are administered by the Inland Revenue Authority of Singapore. Eligibility turns on the definition of R&D in the Income Tax Act 1947 and on whether the R&D relates to the taxpayer's trade; where the R&D is carried out decides how much is deductible. This page covers who can claim, what counts and where.
Who can claim
Businesses with qualifying R&D expenditure. The cash payout option also needs at least three full-time local employees, each earning a gross monthly salary of at least S$1,400. The base deduction and the enhanced deductions are available to companies, and to sole proprietors and partnerships carrying on a trade or business, that incur R&D expenditure in the basis period. There is no size test and no minimum spend. The R&D must be related to the trade or business, with an exception for R&D carried out in Singapore.
| Test | Rule | Notes |
|---|---|---|
| Entity | A person carrying on a trade or business in Singapore | Companies, sole proprietors, partnerships |
| Expenditure | Qualifying R&D expenditure incurred in the basis period for the Year of Assessment | Staff costs and consumables for the enhanced tiers |
| Relationship to trade | R&D related to the trade, or R&D carried out in Singapore | Overseas R&D must relate to the trade |
| Beneficiary of the R&D | The claimant undertakes the R&D, directly or through an R&D organisation, and bears the cost | Payments under an R&D cost-sharing agreement can qualify for deduction, subject to conditions |
| Cash payout | At least three full-time local employees earning at least S$1,400 a month | See the cash payout page |
| Registration | None | Claimed in the tax return |
What counts as R&D
R&D means systematic, investigative and experimental study that involves novelty or technical risk, carried out in the field of science or technology to acquire new knowledge, or to use the results to produce or improve materials, devices, products, produce or processes. IRAS reads the definition as three requirements, all of which must be met:
- Objective. To acquire new knowledge, or to create new or improve existing materials, devices, products, produce or processes. The objective is judged at the start of the project.
- Novelty or technical risk. Novelty means something new in the field, not merely new to the company. Technical risk means a scientific or technological uncertainty that a competent professional in the field could not resolve from existing knowledge: whether the result can be achieved, or how.
- Systematic, investigative and experimental study in a field of science or technology. Planned work with hypotheses and tests, in natural sciences, engineering or technology, not in business, social sciences or the arts.
IRAS's guidance stresses that the R&D is the part of a project that resolves the technical risk, not the whole project, and that a project can be commercially new without involving any R&D.
Activities that do not qualify
Activities such as quality control, routine testing, market research and efficiency surveys are excluded. The Act lists the exclusions in full.
| Excluded | Why it matters |
|---|---|
| Quality control and routine testing of materials, devices or products | Testing to a known standard involves no technical risk |
| Research in the social sciences or humanities | Outside science and technology |
| Routine data collection | Not an investigation |
| Efficiency surveys and management studies | Business process work |
| Market research and sales promotion | Commercial, not technical, risk |
| Routine modifications to products, processes or production methods | No novelty |
| Cosmetic modifications and stylistic changes | Appearance is not technology |
Software development that applies established techniques, configuration and integration are routine modifications or lack technical risk in IRAS's reading, and it has published software-specific guidance; see the industries page.
Where the work is done
Location decides the rate, not the eligibility. R&D carried out in Singapore earns the enhanced deductions: 400% on the first S$400,000 of staff costs and consumables each Year of Assessment from YA 2024 to YA 2028, and 250% above that. R&D carried out overseas that is related to the trade earns the base 100% deduction only. Where a project is split, the Singapore and overseas portions are identified separately. The Singapore versus overseas page works through the split.
Illustrative example
Illustrative example. Jurong Robotics Pte Ltd, a hypothetical company, is developing a gripper that can handle soft, irregular food items at line speed. Published grippers either crush the items or run too slowly, and its engineers record why. They frame hypotheses about compliant materials and sensing, build and test prototypes in Singapore and log the results: systematic study with technical risk in a field of technology, aimed at a new product. The customer survey and the ISO certification testing are excluded. Jurong's Singapore staff costs and consumables of S$500,000 earn a 400% deduction on the first S$400,000 and 250% on the remaining S$100,000; the small part of the work done by its Malaysian subsidiary earns 100%.
Related pages
Official sources
Educational content only, not tax advice. See the disclaimer.