What is the Enterprise Innovation Scheme?
The Enterprise Innovation Scheme (EIS) is a tax incentive that provides enhanced tax deductions or cash payouts for companies investing in innovation activities. It encourages businesses to invest in research and development (R&D), intellectual property (IP) registration, innovation projects, and training.
EIS offers up to 400% tax deduction on the first S$400,000 of qualifying expenses. Companies can also convert up to S$100,000 of qualifying expenses into a 20% cash payout, useful for startups and loss-making companies.
EIS IRAS Quick Answer
The Enterprise Innovation Scheme is claimed through IRAS tax filing, not through BGP. Use EIS for qualifying R&D, IP registration, innovation training, design work, and from YA 2027, qualifying AI expenditure. For cash-flow planning, compare it with Startup SG Tech and EDG before deciding whether you need a tax deduction or an upfront grant approval path.
Budget 2026 Update: A 5th qualifying activity — AI expenditures — is added from YA 2027. Companies get 400% deduction on up to S$50,000 of AI spending per YA (separate from R&D cap). No cash payout for AI activity. See EIS Budget 2026 AI Changes Explained for details.
Who is EIS for?
- Companies investing in R&D activities
- Businesses registering intellectual property
- Firms undertaking innovation and productivity projects
- Companies investing in employee training and development
- Startups and loss-making companies seeking cash support
Eligibility
To be eligible for EIS, your company must meet the following criteria:
- Registered and incorporated in Singapore
- Incurring qualifying innovation expenses
- Valid for Year of Assessment (YA) 2024 to YA 2028
- Either have taxable income (for tax deduction) or elect for cash payout option
Not Eligible
The following expenses are not covered:
- Non-qualifying business activities
- Expenses incurred outside the qualifying period
- Expenses not properly documented
- Activities not meeting innovation criteria
Qualifying Activities
EIS covers four main categories of innovation activities:
1. Research & Development (R&D)
400% tax deduction
Expenditure on R&D activities:
- Scientific or technological research
- Product development and testing
- Process improvement research
- Innovation in services or operations
2. IP Registration
400% tax deduction
Costs related to intellectual property:
- Patent registration fees
- Trademark registration
- Copyright registration
- IP application and legal costs
3. Innovation Projects
400% tax deduction
Innovation and productivity enhancement:
- Automation and technology adoption
- Process redesign and innovation
- Digital transformation initiatives
- Productivity improvement projects
4. Training & Development
400% tax deduction
Employee capability building:
- Skills training programs
- Professional development courses
- Capability building initiatives
- Technology and innovation training
5. AI Expenditures (Budget 2026)
400% tax deduction
Qualifying AI spending (from YA 2027 to YA 2028):
- AI software subscriptions and SaaS tools
- AI platform licensing fees
- Cloud computing costs for AI workloads
- AI training and fine-tuning costs
Cap: S$50,000 per YA (separate from R&D S$400K cap)
No cash payout option for this category — tax deduction only.
What EIS Covers vs Does NOT Cover
| Covered | Not Covered |
|---|---|
| R&D staff costs and consumables | General business operations unrelated to innovation |
| Patent, trademark, and copyright registration fees | IP maintenance and renewal fees (only registration) |
| Automation and technology adoption projects | Basic IT equipment (laptops, phones, office software) |
| SkillsFuture and innovation training costs | General staff training unrelated to innovation |
| AI software subscriptions and cloud AI costs (YA 2027+) | Hardware purchases for AI (servers, GPUs) |
| Prototype development and testing | Mass production costs |
| External R&D contractor fees | R&D conducted entirely outside Singapore |
Enhanced Deduction Structure
| First S$400,000 qualifying expenses (R&D, IP, Innovation, Training) | 400% tax deduction | | First S$50,000 AI expenditures (Budget 2026, YA 2027–2028) | 400% tax deduction | | Next S$200,000 qualifying expenses | 250% tax deduction |
Cash Payout Option
For companies with no taxable income or preferring cash:
- Convert up to S$100,000 of qualifying expenses
- Receive 20% cash payout
- Maximum cash payout: S$20,000 per YA
- Useful for startups and loss-making companies
Important Limitations
- Scheme valid from YA 2024 to YA 2028
- Cash payout capped at S$100,000 conversion (S$20,000 cash)
- Must maintain proper documentation and records
- Expenses must meet innovation criteria
- Cannot double-claim with other schemes for same expenses
Claiming Timeline (Realistic)
EIS is a tax incentive — claiming follows your tax filing cycle, not a grant application process:
| Stage | Duration | What Happens |
|---|---|---|
| Incur qualifying expenses | Ongoing (YA 2024–2028) | Invest in R&D, IP registration, innovation projects, training, or AI tools |
| Document expenses | Ongoing | Maintain detailed records: invoices, project descriptions, staff time logs |
| Year-end compilation | Jan–Feb | Compile all qualifying expenses by category for the Year of Assessment |
| File tax return | By 30 Nov (e-filing) | Claim EIS deduction on corporate tax return via myTax Portal. Elect cash payout option if preferred |
| IRAS assessment | 1–6 months | IRAS reviews your return; may request supporting documents for R&D claims |
| Benefit realized | Upon assessment | Tax deduction reduces liability; cash payout (if elected) disbursed within 3 months of assessment |
Tip: For the cash payout option (S$20,000 max), you must explicitly elect it when filing your tax return. If you do not elect, EIS defaults to the tax deduction. Startups with no taxable income should always elect the cash payout.
Common Pitfalls to Avoid
- Poor documentation: Maintain detailed records of all qualifying expenses
- Non-qualifying activities: Ensure activities truly meet innovation criteria
- Missing deadlines: File claims within the YA period
- Double claiming: Do not claim same expenses under multiple schemes
- Unclear R&D objectives: Document clear innovation goals and outcomes
Frequently Asked Questions
How much benefit will I receive from EIS?
For the first S$400,000 of qualifying expenses, you receive a 400% tax deduction. This means S$400,000 expenses = S$1,600,000 in tax deductions. Alternatively, convert up to S$100,000 to receive S$20,000 cash.
What counts as qualifying R&D?
R&D activities that seek to discover new knowledge, develop new products/processes, or significantly improve existing ones through scientific or technological methods.
Can startups with no tax liability benefit?
Yes! Startups can elect for the cash payout option, converting up to S$100,000 of qualifying expenses into a 20% cash payout.
When does the scheme end?
EIS is valid from Year of Assessment 2024 to 2028. This means qualifying expenses incurred from 2023 to 2027.
Can I claim both tax deduction and cash payout?
You must choose one option per YA. Companies can claim tax deduction for some expenses and cash payout for others, but not both for the same expense.
What changed after Budget 2026?
Budget 2026 added a 5th qualifying activity: AI expenditures. You can claim 400% deduction on up to S$50,000 of AI spending per YA (YA 2027–2028). This is separate from the existing R&D cap. See EIS Budget 2026 AI Changes Explained for full details.
Can I claim AI expenses under EIS?
Yes, from YA 2027. AI expenditures are a new 5th qualifying activity with a S$50,000 per YA cap. However, there is no cash payout option for AI — you need taxable income. If your AI work involves genuine R&D, you may also claim under the R&D category (S$400K cap) instead.
When should I NOT use EIS?
EIS may not be suitable if:
- Your company has no taxable income AND you don’t want the cash payout option
- Your innovation expenses are under S$5,000 — the documentation burden may outweigh the benefit
- Your activities are routine business operations (not genuinely innovative)
- You are already claiming the same expenses under another tax incentive
Can sole proprietors use EIS?
Yes — sole proprietors, partnerships, and companies can all claim EIS enhanced tax deductions. However, sole proprietors and partnerships are not eligible for the EIS cash payout option. To qualify for cash payout, the business must be a company or partnership that meets the 3-local-employee condition.
Can I stack EIS with EDG or PSG?
You cannot claim EIS tax deduction and a government grant (like EDG or PSG) for the exact same expense. However, you can use EDG/PSG for some project costs and EIS for others. For example, if EDG covers your consultant fees, you could still claim EIS on your internal R&D staff costs for the same project.
What documentation does IRAS require for R&D claims?
IRAS may request: project descriptions explaining the innovation objective, staff time logs, invoices for R&D materials and contractors, and evidence that the work involves genuine technological or scientific advancement (not routine engineering).
Is the AI expenditure category separate from R&D?
Yes. The AI category (YA 2027–2028) has its own S$50,000 cap, separate from the S$400,000 R&D cap. If your AI work qualifies as genuine R&D, you may choose to claim under the R&D category instead (higher cap). You cannot claim the same expense under both categories.
Related Guides
- Grant Pitfalls Guide - Common mistakes to avoid when applying for innovation grants
- Singapore Grants Glossary - Key terms and definitions
- First-Time Grant Application Checklist - Complete preparation for your first R&D grant application
- Grants for Manufacturing Businesses - R&D and innovation grants for manufacturing companies
- EIS Budget 2026 AI Changes Explained - Detailed before-and-after comparison with worked examples
- Budget 2026 AI & Innovation Grants Overview - All Budget 2026 AI and innovation changes
Related Schemes
Looking for similar funding options? These schemes complement this grant or offer alternative pathways:
- Enterprise Development Grant (EDG) - Innovation and productivity support
- Startup SG Tech - Deep tech POC/POV projects
References
Official Resources
- Enterprise Innovation Scheme - IRAS - Official scheme page
- EIS Guidelines - Detailed guidelines
- IRAS Tax Schemes - Other available tax schemes
- mytax.iras.gov.sg - File claims online