AI Grants for SMEs: EIS, EDG, and ADS Guide

Adopting AI can transform your SME, but choosing the right funding path matters. Singapore offers three main options: EIS for R&D tax deductions, EDG for project funding, and ADS for pre-approved AI solutions. This guide helps you pick the right one.

Best-Fit Grants for AI Projects

Three grants cover most AI adoption scenarios:

1. EIS (Enterprise Innovation Scheme): Tax deduction for developing AI in-house or with research partners. Best for companies doing genuine R&D with technical uncertainty.

2. EDG (Enterprise Development Grant): Project funding for AI transformation. Best for custom AI projects that improve productivity or innovation.

3. ADS (Advanced Digital Solutions): Pre-approved AI solutions with higher support rates. Best when a CFP window is open and your use case matches available solutions.

Key distinction:

• EIS = Tax incentive (reduces tax bill, requires taxable income or elect cash payout)
• EDG = Cash grant (reimburses 50% of project costs)
• ADS = Cash grant (reimburses up to 70%, but limited availability)

Quick Pick by AI Use Case

Legend: ✓ = Good fit | — = Not applicable or unlikely

Grant Comparison Table

EIS: Tax Deduction for AI R&D

What it is: EIS provides a 400% tax deduction on qualifying R&D expenses, including AI development. This means for every S$100 spent on qualifying AI R&D, you can deduct S$400 from taxable income.

Budget 2026 Update: A new AI expenditures activity (S$50K cap, 400% deduction, YA 2027–2028) is added alongside the existing R&D category. No cash payout for AI activity. See EIS Budget 2026 AI Changes for details.

Qualifying AI Activities

• Developing custom AI/ML models with technical uncertainty
• Algorithm research and experimentation
• Training AI models on proprietary datasets
• Innovation projects with polytechnics or ITE
• Staff training on AI tools (SSG-funded courses)

What Qualifies as AI R&D?

Your AI work must involve technical uncertainty to qualify. Ask yourself:

• Are you solving a problem where the technical solution is unknown?
• Are you developing novel algorithms or adapting existing ones in new ways?
• Is there genuine experimentation involved?

Qualifies: Building a custom recommendation engine where optimal algorithm is unknown.

Does NOT qualify: Implementing an off-the-shelf AI chatbot with standard configuration.

How Much Can You Save?

Loss-making companies: Elect cash payout of 20% on up to S$100K expenses = S$20K cash.

How to Claim EIS for AI R&D

1. Document R&D activities: Keep project plans, technical reports, and evidence of uncertainty
2. Track staff time: Record hours spent on qualifying AI R&D
3. Retain invoices: Keep all receipts for R&D-related expenses
4. Claim at tax filing: Include EIS claim in Form C-S or Form C (no pre-approval needed)
5. File by deadline: Submit by 30 November of the relevant Year of Assessment

EDG: Project Funding for AI Transformation

What it is: EDG reimburses up to 50% of eligible project costs for business transformation, including AI adoption projects under the Innovation and Productivity pillar.

Qualifying AI Projects Under EDG

EDG covers AI projects that improve your business operations:

• Process Redesign: Using AI to optimize workflows, reduce manual work
• Automation: Implementing AI-powered automation systems
• Product Development: Integrating AI features into your products/services
• Data Analytics: Building AI-driven business intelligence capabilities

Eligible Costs

EDG covers three types of costs for AI projects:

1. Third-party consultancy fees: AI consultants, system integrators
2. Software and equipment: AI platforms, computing infrastructure
3. Internal manpower cost: Staff time dedicated to the AI project

Application Requirements

EDG for AI: Key Considerations

• Custom projects welcome: Unlike PSG, you are not limited to a pre-approved list
• No funding cap: Support based on project scope (unlike PSG’s S$30K annual cap)
• Consultant requirements: Management consultants need TR 43 or SS 680 certification
• Processing time: 8-12 weeks typical

ADS: Pre-Approved AI Solutions

What it is: ADS supports adoption of advanced digital solutions including AI, with up to 70% funding support. Solutions are pre-qualified through a Call-for-Proposal (CFP) process.

How ADS Works

ADS operates differently from other grants:

1. CFP-driven: IMDA issues CFPs for specific technology areas (AI, sustainability, etc.)
2. Vendor pre-qualification: Solution providers apply during CFP windows
3. SME adoption: Once solutions are approved, SMEs can adopt them with grant support
4. Limited availability: Not always open; depends on CFP cycles and approved solutions

ADS for AI: What to Know

Advantages:

• Higher support rate (up to 70% vs EDG’s 50%)
• Pre-vetted solutions reduce implementation risk
• Covers advanced AI use cases (ML, computer vision, NLP)

Limitations:

• Not always available (check IMDA for current CFP status)
• Must use approved vendors/solutions
• Less flexibility than EDG for custom projects

Current ADS Availability

ADS availability changes based on IMDA’s CFP schedule. Before planning an ADS application:

1. Check IMDA’s ADS page for current status
2. Review approved solution categories
3. Confirm AI solutions are available in current cycle

Note: If no suitable ADS CFP is open, EDG is typically the better alternative for AI projects.

Common AI Project Scenarios

Scenario 1: Building a Custom AI Recommendation Engine

Situation: You want to develop a proprietary recommendation system using your customer data.

Best fit: EIS (if genuine R&D) + EDG (for implementation)

Why:

• EIS covers the R&D phase (algorithm development, experimentation)
• EDG covers the implementation phase (system integration, deployment)
• You can use both, but cannot claim the same expense twice

Scenario 2: Deploying AI Chatbot for Customer Service

Situation: You want to implement an AI chatbot to handle customer inquiries.

Best fit: EDG or ADS (if CFP open)

Why:

• Likely not R&D (no technical uncertainty in deploying existing solution)
• EDG covers custom integration and consultancy
• ADS may offer higher support if a pre-approved chatbot solution exists

Scenario 3: AI-Powered Process Automation

Situation: You want to use AI/ML to automate document processing.

Best fit: EDG (Innovation and Productivity pillar)

Why:

• Falls under Process Redesign or Automation
• EDG covers consultancy, software, and internal manpower
• No cap on funding amount

Scenario 4: Sending Staff for AI Training

Situation: You want to upskill your team on AI/ML tools and techniques.

Best fit: EIS (Training category)

Why:

• EIS covers SSG-funded or Skills Framework-aligned training
• 400% tax deduction on training expenses
• Training must be for existing employees

Scenario 5: AI Research with Local Polytechnic

Situation: You want to collaborate with a polytechnic on an AI proof-of-concept.

Best fit: EIS (Innovation Projects category)

Why:

• EIS specifically supports innovation projects with polytechnics/ITE
• 400% tax deduction on project costs
• Good for early-stage AI experimentation

AI Pitfalls to Avoid

Pitfall 1: Claiming R&D When It Is Just Implementation

The mistake: Treating standard AI tool deployment as R&D to get EIS benefits.

The problem: IRAS may reject claims or claw back deductions. R&D requires genuine technical uncertainty, not just applying known solutions.

How to avoid:

• Ask: “Is the technical approach unknown or uncertain?”
• If you are just configuring, integrating, or deploying existing AI — use EDG instead
• Document what makes your project genuinely R&D

Pitfall 2: Choosing the Wrong Grant

The mistake: Applying for ADS when no CFP is open, or using EDG when EIS would save more.

How to avoid:

Pitfall 3: Starting Before Approval

The mistake: Beginning AI project work before grant approval.

The problem: EDG and ADS require projects to NOT have started. Signing contracts, making payments, or commencing work before approval disqualifies your application.

How to avoid:

• Apply first, start later
• Do not sign vendor contracts until approval
• EIS is the exception (claim at tax filing, no pre-approval)

Pitfall 4: Double-Claiming Expenses

The mistake: Claiming the same AI expense under multiple schemes.

The problem: You cannot claim the same dollar twice. Example: If EDG covers 50% of your AI consultant fees, you can only claim EIS on the remaining 50%.

How to avoid:

• Track which expenses are covered by which scheme
• Declare all other grant support when applying

Pitfall 5: Inadequate Documentation

The mistake: Poor records for AI R&D activities.

The problem: EIS claims may be rejected without proper documentation showing technical uncertainty, project plans, and R&D effort.

How to avoid:

• Keep detailed technical logs and experiment records
• Document what you tried and what did not work
• Maintain clear time records for staff involved in R&D

Frequently Asked Questions

Which AI grant is best for a small business?

The Advanced Digital Solutions (ADS) programme is the best starting point for small businesses. It offers pre-approved AI solutions with up to 70% funding support, so you do not need to design a custom project — just pick a solution from the approved vendor list.

Can I claim EIS tax deductions for using AI tools?

Only if you are developing or adapting AI tools as part of a qualifying R&D project with genuine technical uncertainty. Simply purchasing and using off-the-shelf AI software does not qualify. The EIS provides up to 400% tax deduction on qualifying R&D expenditure.

What is the difference between EDG and ADS for AI projects?

EDG funds custom AI projects where you hire consultants or vendors to build tailored solutions, covering 50-70% of project costs. ADS covers pre-approved, ready-made AI solutions from a fixed list. EDG gives more flexibility but requires a detailed proposal; ADS is faster and simpler to apply for.

Do I need to do R&D to qualify for AI grants?

No. ADS and EDG do not require R&D — they fund implementation and adoption of AI solutions. Only the Enterprise Innovation Scheme (EIS) specifically targets R&D activities. You can adopt existing AI tools through ADS or EDG without any research component.

Can I combine multiple AI grants?

Yes, but you cannot claim the same cost under more than one grant. For example, you could use ADS for an off-the-shelf AI analytics tool while claiming EIS tax deductions for a separate in-house AI R&D project. Each grant must cover different expenses.

Related Guides

• EIS Claim Checklist — Documents and deadlines for claiming R&D tax deductions

• EIS vs DTD Decision Matrix — Compare innovation and overseas expansion incentives

• EDG Grant Explained — Full guide to EDG eligibility and application

• EDG Quick-Start Checklist — Step-by-step EDG preparation

• PSG vs EDG vs ADS Comparison — Three-way comparison for digital grants

• Grant Pitfalls Guide — Common mistakes to avoid across all grants

• Singapore Grants Glossary — Key terms and definitions

• Corppass Setup Guide — how to set up BGP access

• EIS Budget 2026 AI Changes — New AI qualifying activity details

• Budget 2026 AI & Innovation Grants Overview — All Budget 2026 AI changes

• Budget 2026 CIT Rebate & Cash Grant — 40% CIT rebate details

• [Double Tax Deduction for Internationalisation (DTDi)](/grants/double-tax-deduction-for-internationalisation/)

Official Links

• EIS: IRAS Official Guide — Enterprise Innovation Scheme details
• EDG: Enterprise Singapore — Enterprise Development Grant information
• ADS: IMDA — Advanced Digital Solutions program
• Business Grants Portal — Apply for EDG and other grants
• SkillsFuture Singapore — Verify SSG-funded AI training courses