Singapore stacks its R&D relief in layers. Every dollar of qualifying R&D expenditure earns the 100% base deduction. Staff costs and consumables for R&D carried out in Singapore earn additional deductions that bring the total to 250%. And under the Enterprise Innovation Scheme the first S$400,000 of those costs each Year of Assessment from YA 2024 to YA 2028 earns a further top-up to 400%. This page explains the layers, the computation and what they are worth at the 17% corporate tax rate.
What it is
| Layer | Statute | Applies to | Rate |
|---|---|---|---|
| Base deduction | Section 14C | All qualifying R&D expenditure related to the trade, in Singapore or overseas, and R&D in Singapore whether or not related to the trade | 100% |
| Additional deduction | Section 14D | Staff costs and consumables for R&D carried out in Singapore | Additional 150%, so 250% in total |
| EIS enhancement | Section 14D as amended for the EIS | The first S$400,000 of staff costs and consumables for R&D in Singapore, per Year of Assessment, YA 2024 to YA 2028 | Total 400% |
| Outsourced R&D in Singapore | Section 14D | 60% of the fee, treated as staff costs and consumables | Same tiers |
| Cash payout | EIS | Up to S$100,000 of qualifying expenditure, across EIS activities | 20%, up to S$20,000 per Year of Assessment, in place of the deduction on the converted amount |
Who it applies to
Any business with qualifying R&D expenditure. The base deduction is the only layer available for overseas R&D and for other R&D expenditure such as overheads and software. The additional and EIS layers are reserved for staff costs and consumables for R&D carried out in Singapore, which is the policy point of the scheme: to reward R&D performed locally. A loss-making company still earns the deductions; they increase its losses, which carry forward subject to the shareholding test, and the cash payout is its only immediate cash.
How it works
- Classify each item as staff costs, consumables, outsourced R&D, other R&D expenditure or capital, and as Singapore or overseas.
- Apply the base deduction of 100% to all qualifying revenue expenditure.
- Apply the additional deduction of 150% to Singapore staff costs and consumables, including the relevant portion of outsourced fees.
- Apply the EIS top-up of a further 150% to the first S$400,000 of those Singapore staff costs and consumables, bringing that slice to 400%.
- Elect any cash payout on up to S$100,000 of qualifying expenditure, removing the deduction on the converted amount.
- Enter the figures in the tax computation with the return.
The value of a deduction is the deduction multiplied by the tax rate. At 17%, each dollar at 400% saves 68 cents of tax, each dollar at 250% saves 42.5 cents and each dollar at 100% saves 17 cents, for a company with enough profit to use it. Partial tax exemptions for smaller companies reduce the effective rate on the first slices of chargeable income and therefore the value of the deductions for those companies.
Three details of the computation deserve care. The S$400,000 cap is measured on staff costs and consumables together, not separately. Outsourced fees enter the cap at 60% of the fee, treated as staff costs and consumables, and that portion counts towards the S$400,000. And where expenditure is converted to the cash payout, it leaves the computation entirely, so a company that converts S$100,000 and also has S$400,000 of other Singapore staff costs still fills the 400% tier with the remaining expenditure.
Worked example
Illustrative example. Clementi Biotech Pte Ltd, a hypothetical profitable company taxed at 17% on the relevant income, has qualifying expenditure in the basis period for YA 2026 as follows.
| Item | Amount | Deduction | Tax saved at 17% |
|---|---|---|---|
| Singapore staff costs and consumables, first S$400,000 | S$400,000 | 400%: S$1,600,000 | S$272,000 |
| Singapore staff costs and consumables above the cap | S$200,000 | 250%: S$500,000 | S$85,000 |
| Other Singapore R&D expenditure (overheads, software) | S$80,000 | 100%: S$80,000 | S$13,600 |
| Overseas R&D related to the trade | S$120,000 | 100%: S$120,000 | S$20,400 |
| Total | S$800,000 | S$2,300,000 | S$391,000 |
A plain 100% deduction on the same S$800,000 would have saved S$136,000. The enhanced layers are worth S$255,000 more. Had Clementi been loss-making, the deductions would have become losses carried forward and the cash payout of up to S$20,000 would have been its only cash.
Common questions
Do the additional deductions reduce when we take the cash payout? The converted expenditure earns no deduction at all; the rest is unaffected.
Can we claim 400% on overseas R&D? No. Overseas R&D earns the base 100% only.
Is the S$400,000 cap per project? No. Per business, per Year of Assessment.
Do partial tax exemptions change the arithmetic? They lower the effective rate on the first slices of chargeable income, so for a small company the tax saved per dollar of deduction is less than 17 cents on those slices.
What about YA 2029 onwards? Unless extended, the EIS top-up ends; the 250% tier under section 14D continues for in-Singapore staff costs and consumables under current law, subject to future legislation.
Related pages
Official sources
Educational content only, not tax advice. See the disclaimer.