The Enterprise Innovation Scheme (EIS) is the umbrella under which Singapore's enhanced R&D deductions sit for the Years of Assessment 2024 to 2028. It raised the deduction on qualifying R&D carried out in Singapore to 400% on the first S$400,000 of staff costs and consumables each Year of Assessment, added the same 400% tier to four other innovation activities, and introduced an optional cash payout for businesses with limited taxable income. Budget 2026 added AI adoption as a sixth qualifying activity for YA 2027 and YA 2028. This page explains the scheme as a whole; the other Singapore pages cover the R&D activity in detail.
What it is
| Qualifying activity | Enhanced deduction | Cap | Cash payout available |
|---|---|---|---|
| R&D carried out in Singapore | 400% on staff costs and consumables; 250% above the cap | First S$400,000 per Year of Assessment | Yes |
| Registration of intellectual property (patents, trademarks, designs, plant varieties) | 400% | First S$400,000 | Yes |
| Acquisition and licensing of intellectual property rights | 400% for businesses with revenue below S$500 million | First S$400,000 | Yes |
| Training courses eligible for SkillsFuture funding | 400% | First S$400,000 | Yes |
| Innovation projects with polytechnics, ITE or other qualified partners | 400% | First S$50,000 | Yes |
| AI adoption (Budget 2026, YA 2027 and YA 2028) | 400% | Up to S$50,000 a year | No |
| Cash payout | 20% of up to S$100,000 of qualifying expenditure across the activities, up to S$20,000 per Year of Assessment | Businesses with at least three full-time local employees earning at least S$1,400 a month | |
Who it applies to
All businesses carrying on a trade in Singapore, including companies, sole proprietors and partnerships, for the Years of Assessment 2024 to 2028. The scheme was introduced in Budget 2023 and the IRAS e-Tax Guide sets out the conditions for each activity. The cash payout is aimed at smaller and loss-making businesses that cannot use deductions, and its employee condition keeps it to businesses with a local workforce.
The R&D activity is the one this guide is about. Its enhanced tiers apply only to R&D carried out in Singapore and only to staff costs and consumables; other R&D expenditure and overseas R&D continue to earn the 100% base deduction outside the EIS tiers. The enhanced deductions page sets out the tiers and the eligible expenditure page the categories.
How it works
- Identify expenditure under each activity for the basis period, applying each activity's conditions.
- Apply the caps: S$400,000 per activity per Year of Assessment for the first four, S$50,000 for innovation projects and for AI adoption. The caps are per business, shared among related activities as the e-Tax Guide sets out.
- Decide whether to convert up to S$100,000 of qualifying expenditure, across the activities, into a cash payout at 20%, forgoing the deduction on that amount.
- Claim the deductions in the corporate income tax return by 30 November of the Year of Assessment.
- Apply for the cash payout, if elected, after filing the return and before the filing due date.
- Keep the records for each activity; IRAS reviews EIS claims as it does other deductions.
The scheme is time-limited. The 400% tiers and the cash payout end with YA 2028 unless extended, and the AI adoption category runs for YA 2027 and YA 2028 only. Current law applies until then; any extension would be announced in a future Budget.
The scheme replaced a patchwork of earlier enhancements with one framework and one set of caps, which simplifies planning: a business can see its total EIS position across activities on one schedule. The activities interact only through the cash payout, where the S$100,000 conversion cap is shared, and through the general rule that an item of expenditure can be claimed under one activity only.
Worked example
Illustrative example. Pasir Ris Technologies Pte Ltd, a hypothetical company, has the following EIS expenditure in the basis period for YA 2026:
| Activity | Expenditure | Deduction |
|---|---|---|
| R&D in Singapore: staff costs and consumables | S$500,000 | S$400,000 at 400% plus S$100,000 at 250%: S$1,850,000 |
| Patent registration | S$30,000 | S$120,000 |
| SkillsFuture-eligible training | S$20,000 | S$80,000 |
| Innovation project with a polytechnic | S$40,000 | S$160,000 |
| Total deduction | S$590,000 spent | S$2,210,000 |
Pasir Ris is loss-making. It converts S$100,000 of the R&D expenditure into a cash payout of S$20,000, having five full-time local employees above S$1,400 a month, and reduces its deduction on that S$100,000 to nil; the remaining deductions become losses carried forward.
Common questions
Is the EIS the same as the old Productivity and Innovation Credit? No. The PIC scheme ended with YA 2018; the EIS is a new scheme with different activities and conditions.
Can the S$400,000 cap be shared across years? No. It applies per Year of Assessment.
What happens after YA 2028? Unless extended, the enhanced tiers revert to the pre-EIS rules. Watch future Budgets.
Does the AI adoption category have a cash payout? No. Budget 2026 made it a deduction-only category.
Can a loss-making company use the deductions at all? They increase its losses, which carry forward subject to the shareholding test, so the benefit arrives when the company becomes profitable; the cash payout is the only immediate cash element.
Related pages
Official sources
Educational content only, not tax advice. See the disclaimer.