Enterprise Innovation Scheme (EIS)

Enterprise Innovation Scheme (EIS)

Provides Singapore firms with enlarged tax deductions for qualifying innovation, intellectual property, and training expenses.

The Enterprise Innovation Scheme (EIS) is a statutory tax incentive co-administered by the Inland Revenue Authority of Singapore (IRAS) and Enterprise Singapore (ESG), announced in Budget 2023 and active for Years of Assessment 2024 through 2028. It provides enhanced 400% tax deductions on qualifying innovation expenditure across four original activities: qualifying R&D undertaken in Singapore, registration of intellectual property, acquisition and licensing of intellectual property rights, and training courses eligible for SkillsFuture Singapore funding. Budget 2026 added artificial intelligence expenditures as a fifth qualifying activity. The deduction applies on up to S$400,000 of expenditure per qualifying activity per year of assessment, and a separate S$50,000 annual cap applies to innovation projects conducted with polytechnics, ITE, or other qualified partner institutions.

Eligible businesses that do not have sufficient taxable income to fully utilise the enhanced deductions may opt to convert up to S$100,000 of total qualifying expenditure per year of assessment into a direct cash payout at a 20% conversion rate, yielding a maximum cash benefit of approximately S$20,000 per year. The cash payout option excludes the newly added AI qualifying activity under Budget 2026 rules. The scheme is self-assessed for most tax deduction purposes, with IRAS processing returns and ESG verifying eligibility for R&D and innovation project activities; self-employed persons and partnerships access the cash payout option through IRAS digital services.

Eligibility is broad: any business registered and operating in Singapore that incurs qualifying innovation expenditure is eligible, including sole proprietors. There is no application deadline or competitive selection — the benefit is claimed annually on the income tax return filed with IRAS. Companies with significant R&D, IP, or workforce training budgets in Singapore should ensure expenditures are properly documented and mapped to the qualifying activity categories defined in the IRAS e-Tax Guide for the Enterprise Innovation Scheme (available as a 746KB PDF on the IRAS website) before the relevant year of assessment closes.