Enterprise Innovation Scheme (EIS)

To further incentivise businesses, especially the small and medium enterprises (SMEs) and the large local enterprises (LLEs), to invest in R&D, the tax deduction for qualifying R&D expenditure incurred on qualifying R&D undertaken in Singapore will be further enhanced as follows:

1. A further 150% tax deduction is granted on the first $400,000 of qualifying R&D expenditure incurred by a person on qualifying R&D undertaken in Singapore in a basis period, in addition to the 100% base deduction under Section 14C and the current additional 150% tax deduction under Section 14D(1). This means that a total of 400% tax deduction is available on the first $400,000 of qualifying R&D expenditure incurred in the basis period.
2. The current additional 150% tax deduction allowable under Section 14D(1) remains applicable to qualifying R&D expenditure exceeding $400,000 incurred in the basis period.

All other conditions governing the additional tax deduction for qualifying R&D expenditure incurred on qualifying R&D undertaken in Singapore remain the same.

Extend the relaxation of the “related to trade or business” condition

Currently, R&D claims under Section 14C of the ITA need not be related to the taxpayer’s existing trade or business if the R&D activity is undertaken in Singapore. The relaxation of this “related to trade or business” condition is effective for YA 2009 to YA 2025. 

To align with the EIS, the effective period to which the relaxation of the “related to trade or business condition” is extended to and including YA 2028.

Extend the additional tax deduction for qualifying R&D expenditure under Section 14D

The additional tax deduction of 150% on qualifying R&D expenditure under Section 14D(1) is available up to YA 2025. To align with the EIS, the additional 150% tax deduction for qualifying R&D expenditure on qualifying R&D projects (related or not related to trade) is extended to and including YA 2028.

To encourage more firms to create and protect their innovations, the tax deduction for qualifying IP registration costs will be enhanced as follows:

1. Extend the tax deduction for qualifying IP registration costs till YA 2028; and
2. Enhance the tax deduction to 400% (i.e. 100% tax deduction and additional 300% tax deduction) for up to $400,000 of qualifying IP registration costs incurred by a person for each YA from YA 2024 to YA 2028. The 100% tax deduction will continue to be allowable for qualifying IP registration costs in excess of $400,000 incurred by the person for each YA from YA 2024 to YA 2028.

Specific condition applicable to the option to convert qualifying IP registration costs into a cash payout

The option to convert into a cash payout is on a per registration basis, subject to a cap of $100,000 of qualifying expenditure across all the qualifying activities for each YA. A business must convert the total registration costs incurred in relation to a single application for registration of an IP into cash, subject to the cap. The registration costs in excess of the cap are forfeited and will not be available for deduction against the income of the business. 

Minimum ownership period of IPRs

In order to qualify for the enhanced tax deduction and option to convert qualifying expenditure into a cash payout, businesses must own the related IPRs registered (or, where applicable, ensure the application for registration or grant of the related IPR is not assigned to another person) for a minimum period of one year (one-year ownership period). Claw-back provisions shall apply if the one-year ownership period requirement is not complied with.

All other conditions of the existing scheme remain the same.

If you have disposed off the IPRs, please submit the EIS – Disposal of IPRs Form within 30 days from the disposal date.

Businesses may either acquire or license IPRs to develop new products, services, or processes. 

To encourage more firms to engage in IP-related activities and use innovations to improve their productivity and outcomes, the WDA under Section 19B and tax deduction under Section 14U will be enhanced as follows:

1. Acquisition of IPRs under Section 19B: 
   1. Extend the granting of WDA for qualifying IPR acquisition till YA 2028 (i.e. WDA is allowed for capital expenditure incurred in respect of qualifying IPRs acquired on or before the last day of the basis period for YA 2028);
   2. Enhance the WDA to 400% (i.e. 100% WDA and additional 300% WDA) for up to $400,000 of capital expenditure incurred by a company or partnership to acquire qualifying IPRs in each basis period from YA 2024 to YA 2028. Capital expenditure incurred in excess of $400,000 will continue to enjoy the 100% base WDA.
2. Licensing of IPRs under Section 14U: 
   1. Extend the tax deduction for qualifying IPR licensing expenditure till YA 2028;
   2. Enhance the tax deduction to 300% for up to $400,000 of qualifying IPR licensing expenditure incurred by a person for each YA from YA 2024 to YA 2028. Together with the 100% base deduction allowed under Section 14 or Section 14C (as the case may be), a total of 400% tax deduction is available on the first $400,000 of qualifying IPR licensing expenditure.

The amount of qualifying IPR acquisition costs and qualifying IPR licensing expenditure eligible for the new enhanced WDA and enhanced tax deduction is subject to a combined cap of $400,000 for each relevant YA, and is computed based on the amount of qualifying expenditure incurred by the business net of any Government grant or subsidy received by the business in respect of the acquisition and licensing of IPRs.

The new enhanced WDA and enhanced tax deduction is only available to businesses with annual revenue² of less than $500 million in the basis period of the YA of claim.

Specific condition applicable to the option to convert qualifying expenditure incurred on acquisition of IPRs into a cash payout

1. For acquisition of IPRs, the option to convert into a cash payout is on a per IPR basis, subject to a cap of $100,000 of qualifying expenditure across all the qualifying activities for each YA. Where the capital expenditure incurred on a qualifying IPR is in excess of the cap of $100,000, the excess is forfeited upon conversion and will not be available for deduction as WDA against the income of the company or partnership concerned.
2. For licensing of IPRs, the option to convert into a cash payout need not be made on a per IPR basis.

Minimum ownership period of IPRs

1. For acquisition of IPRs, in order to qualify for the enhanced WDA and option to convert qualifying expenditure into a cash payout, companies and partnerships must own the relevant qualifying IPRs for a minimum period of one year (one-year ownership period). Claw-back provisions shall apply if the one-year ownership period requirement is not complied with.
2. The one-year ownership period requirement is not applicable to licensing of IPRs.

All other conditions under Section 19B and Section 14U remain the same.

If you have disposed off the IPRs, please submit the EIS – Disposal of IPRs Form within 30 days from the disposal date. 

To further reinforce existing measures to encourage employers to invest in enterprise training and capabilities of their employees, an additional 300% tax deduction is granted on the first $400,000 of qualifying training expenditure incurred in a basis period.

Together with the 100% base deduction under Section 14 of the ITA, a total of 400% tax deduction is granted on the first $400,000 of qualifying training expenditure incurred for each YA. All other training expenditure, including qualifying training expenditure exceeding $400,000, incurred during the basis period continues to enjoy 100% base deduction, subject to the general tax deduction rules under Sections 14 and 15.

The enhanced tax deduction is applicable to qualifying training expenditure incurred on courses that are eligible for SkillsFuture Singapore (SSG) funding and aligned with the Skills Framework.

For the purpose of the EIS, qualifying training expenditure refers to course fees paid by employers (whether directly or in the form of reimbursement) to a SSG-funded course provider, including certification fees and assessment fees. The enhanced tax deduction is computed based on the amount of qualifying training expenditure incurred by a business net of any Government grant or subsidy received by the business in respect of the course.

The training course fee is considered incurred by the business when the training provider issues an invoice to the business for EIS eligible courses attended by its employees or to be attended by its employees at a future date. Only training attended within the supporting period is eligible for EIS. Supporting period refers to the period for which a course is supported by SSG fundings and deemed to be aligned to SSG's Skills Framework. The list of EIS eligible courses and their corresponding supporting period is available on go.gov.sg/eis-training.

For expired EIS eligible courses, EIS benefits may still be claimed on the qualifying training costs if they are incurred during the basis periods for YA 2024 to YA 2028, and before the course expiry date (i.e., Support End Date). The list of expired EIS eligible courses is available on go.gov.sg/expired-eis-courses. 

No EIS benefits will be granted on qualifying training expenditure reimbursed by an employer to an employee if the amount reimbursed relates to that part of the qualifying training expenditure paid by the employee using his individual SkillsFuture Credit.

To encourage businesses to kickstart their innovation journey by tapping on existing technical and innovation capabilities within the polytechnics, the ITE or other qualified partners (collectively known as partner institutions³), a 400% tax deduction will be granted on up to $50,000 of qualifying innovation expenditure  incurred by businesses for each YA on qualifying innovation projects carried out with the partner institutions. These expenses are currently not allowable as a deduction under Section 14 or Section 14C of the ITA, on the basis that they are capital in nature and does not meet the definition of R&D under Section 2 of the ITA.

To qualify for the tax deduction, the business must be the beneficiary of the qualifying innovation project. The deduction is computed based on the amount of qualifying innovation expenditure incurred by the business net of any Government grant or subsidy received by the business in respect of the qualifying innovation project.

For the purpose of the EIS, qualifying innovation projects refer to projects that predominantly involve one or more of the following innovation activities defined within the Oslo Manual 2018⁴:

1. Research and experimental development activities;
2. Engineering, design and other creative work activities;
3. IP-related activities; and
4. Software development and database activities.

This scheme will be administered by the partner institutions. The partner institutions will validate the project as a qualifying innovation project and issue the innovation project invoice. Expenditure incurred outside of the collaboration with the partner institutions will not qualify for this tax deduction. 

Businesses seeking to undertake qualifying innovation projects may contact the respective partner institutions for more information.

Centres of Innovation

Polytechnics

The Institute of Technical Education

For more information on Centres of Innovation, please visit Enterprise Singapore's webpage.

Yes, if your company meets the conditions under EIS and tax exemption scheme for new start-up company respectively.

No, all eligible person can claim qualifying EIS expenditure incurred for the purpose of their trade or business.

An association is defined as a Body of Persons (BOP). A BOP is eligible to claim EIS EDA if it is carrying a trade or business and has incurred qualifying EIS expenditure for the purpose of that trade or business. However, a BOP is not eligible for EIS cash payout as the definition of "eligible person" for purpose of EIS cash payout only includes a company, firm or partner of a partnership.

Yes, company in the business of making investments, subject to the provisions of S10E will qualify for EIS.

Investment holding company does not qualify for EIS as they do not carry on a trade or business for tax purposes. This company owns investments such as properties and shares for long-term investment and derive investment income such as dividend, interest or rental.

A service company renders services to/ on behalf of its related companies. Service company that derived arm's length fees and is assessed under the normal tax rules will qualify for EIS. If a service company elects to use the cost-plus mark-up basis of assessment, it will not qualify for EIS.

Currently, there is no option to do so. The correspondences relating to EIS cash payout application are sent via physical mode with a copy deposited in myTax Portal, which is viewable by authorised personnel.

No, the same qualifying expenditure amount will not be available for tax deduction/allowance once cash payout option is elected.

The qualifying expenditure for EIS enhanced deduction is capped at $400,000 for R&D. You are required to enter $400,000 for EIS enhanced deductions even though you have incurred $1 million.

The company is allowed to claim EIS benefits on its qualifying EIS expenditure incurred during basis period of YA 2024 in YA 2025 when it is deemed to have commenced business.

An expenditure that is the subject of an EIS cash payout is no longer eligible for base deduction under S14 of the ITA.

Example: Company incurred net qualifying expenditure of $2,000 on EIS approved training. If the company elects for cash payout on the net qualifying expenditure of $2,000, this same amount must not be claimed as a base deduction in the company’s tax computation.

A business/ company can apply for EIS cash payout on the net qualifying expenditure after deducting the grant received.

Example: EIS eligible training cost was $20,000, the company received SkillsFuture Singapore (SSG) funding of $15,000 and Skills Future Enterprise Credit (SFEC) of $3,000 from Enterprise Singapore. The company can only claim the net qualifying expenditure after deducting the government grants as follows:

A business/ company must submit their EIS cash payout application before the official deadlines, which align with the income tax return filing due dates:

• 18 Apr for Sole proprietorships and Partnerships
• 30 Nov for Corporates

No, the cash payout can only be paid to the eligible person which incurred the qualifying expenditure.

Yes, you may do so as the company/ business has incurred the cost on the EIS eligible course for its employees.

Absentee payroll funding is not a grant or subsidy to subsidise training expenditure hence the amount received need not be deducted from the company’s EIS claim.

You do not need to provide additional documents to IRAS when submitting the claim.

However, your claims should be restricted to training fees which are separately identifiable from the charges that are billed to related parties within a group of companies. You should maintain documents on the recharging of employment costs – including itemised invoices and the training costs recharged. These documents would have to be provided to IRAS when requested.

You can still submit an EIS claim on the training cost for expired EIS eligible course if you have indeed incurred the expense during the support funding period for the basis periods of Years of Assessment 2024 to 2028. Please refer to the list of expired EIS eligible courses from this hyperlink at https://go.gov.sg/expired-eis-courses. If you can't locate the course from the listing, please contact [email protected].

You can only submit an EIS claim on Registration of IP when the registration has been completed i.e., Approved or Rejected status.

The acquisition of IPRs for existing products used in a trade or business qualifies for EIS deductions if the legal and economic ownership of the IPRs belong to the business in Singapore.

Legal ownership means that the legal assignment of the IPR is granted to the owner. Economic ownership means the future economic benefits attributable to the IPR will accrue to the beneficiary.  For purpose of EIS, the claimant must have both legal and economic ownership for the subject. Therefore, purely having an economic ownership will not satisfy the requirement for EIS.

The sole-proprietorship business has to fulfil the 3-local-employee condition in order to qualify for EIS cash payout. This is because the sole-proprietorship has incurred the EIS qualifying expenditure.

No, you are self-employed and owner of the business. Thus, you cannot be considered as an employee of the business for the purpose of EIS scheme. The eligibility of a business to claim EIS cash payout is based on the number of employees who are not business owners.

Part-time employees do not count towards headcount for claiming EIS cash payout. Only full-time employees who are Singapore Citizens or Permanent Residents, earning a gross monthly salary of at least $1,400, and required under a contract of service to work for at least 35 hours a week, are considered eligible. As a general rule, an employee will not be considered a full-time local employee of more than two employers during the same period. Sole proprietors, partners of partnerships, and shareholders who are directors of the company are not considered as employees of the business.

No, EIS cash payout is given on the qualifying expenditure incurred during basis period of the YA and your business must fulfil the 3-local-employee condition for at least 6 months during the basis period of the qualifying YA.