1. Unutilised Trade Losses and Allowances
- Trade losses or allowances from EIS enhanced deductions that cannot be fully offset against income can be carried forward according to existing tax rules.
2. Enhanced Tax Deductions
- EIS allows businesses to claim enhanced deductions up to 400% of qualifying expenditure (subject to caps), on top of the base tax deduction.
3. Qualifying Activities and Capping
Qualifying Activity Deduction Cap (S$)
R&D activities conducted in Singapore 400,000
Registration of Intellectual Property (IP) and trademarks 400,000
Acquisition and licensing of Intellectual Property Rights (IPRs) 400,000
Innovation-related training funded or approved by SkillsFuture Singapore (SSG) 400,000
Innovation projects with polytechnics, ITE, or qualified partners 50,000
Overall cap on qualifying expenditure eligible for enhanced deductions and cash payout is S$500,000 per Year of Assessment (YA).
- Up to S$100,000 of qualifying expenditure per YA can be converted into a cash payout at 20% rate instead of claiming tax deductions.
4. Cash Payout Option – Purpose & Eligibility
- Designed to help businesses with insufficient taxable income to utilize deductions, providing immediate cash flow support—particularly beneficial for startups and SMEs.
- Eligibility criteria:
o Must be a company, partnership, or sole proprietorship operating in Singapore.
o Employ at least 3 full-time local employees (Singapore Citizens or PRs with CPF contributions) for 6 months or more during the basis period of the relevant YA.
- Opting for cash payout means forfeiting tax deductions on the converted expenditure.
5. Qualifying Conditions for EIS Claims
Entity Type Enhanced Tax Deductions/Allowances EIS Cash Payout Eligibility
Sole proprietorships, partnerships, companies, registered business trusts, branches, subsidiaries – Active business operations in Singapore
– Qualifying expenditure incurred in the basis period of the YA – Active business operations in Singapore
– Qualifying expenditure incurred
– Meet 3 full-time local employee condition
– File Income Tax Return before statutory deadline
6. Research & Development (R&D) Requirements and Expenditure Breakdown
- R&D must be:
o Conducted in Singapore,
o Directly related to the company’s business,
o Aimed at scientific or technological advancement by resolving uncertainties,
o Systematic, investigative, and experimental.
- Eligible R&D expenditure categories:
o Staff costs (excluding directors’ fees) directly involved,
o Consumables and materials used,
o Other prescribed expenditures.
- Documentation needed:
o Detailed project plans, progress reports, expenditure breakdowns, and supporting records.
Type of R&D Expenditure Normal Deduction Eligible? Enhanced Deduction Eligible? Notes
In-house R&D in Singapore Yes (100%) Yes (up to 400%) Staff costs, materials, consumables
Outsourced R&D in Singapore Yes (100%) Yes (up to 400%) Fees paid to qualifying R&D organizations
In-house R&D Overseas Yes (100%) No Only normal deduction allowed
Outsourced R&D Overseas Yes (100%) No Only normal deduction allowed
7. Year of Assessment (YA) Eligibility
- EIS claims must be made in the YA corresponding to the financial year in which qualifying expenditure was incurred.
- For example, expenditure incurred in the financial year ending 31 Dec 2023 is claimed in YA 2024.
8. Enhanced Deduction Rates and Extensions (YA 2024 to YA 2028)
R&D Activities in Singapore
Period Deductions & Allowances
Before YA 2024 – 100% base deduction (Section 14C) plus
– Additional 150% deduction on qualifying R&D expenditure (Section 14D)
YA 2024 to YA 2028 – 100% base deduction plus
– Additional 300% on first $400,000 qualifying R&D expenditure plus
– Additional 150% on excess
- The “related to trade or business” condition is relaxed until YA 2028, meaning R&D need not relate to existing trade/business if conducted in Singapore.
Registration of IPs
Period Deductions & Allowances
Before YA 2024 – 200% deduction on the first $100,000 IP registration costs plus
– 100% deduction on excess
YA 2024 to YA 2028 – 400% deduction on the first $400,000 IP registration costs plus
– 100% deduction on excess
- Cash payout for IP registration is on a per-registration basis with a $100,000 cap across all qualifying activities per YA.
- Must own related IPR for a minimum 1 year; claw-back applies if this is not met.
Acquisition and Licensing of IPRs
Period Deductions & Allowances
Before YA 2024 Acquisition:
– 100% write-down allowance (WDA)
Licensing:
– 100% deduction plus additional 100% on first $100k
YA 2024 to YA 2028 Acquisition & Licensing combined:
– 400% allowance/deduction on first $400,000 plus
– 100% WDA/deduction on excess
- Combined cap of $400,000 for acquisition and licensing expenditures, net of government grants.
- Eligibility limited to businesses with annual revenue under $500 million.
- Cash payout conversion for acquisition on a per-IP basis with $100,000 cap; excess forfeited.
- Minimum 1-year ownership required for acquisitions (not for licensing).
Innovation-Related Training Funded or Approved by SSG
Period Deductions & Allowances
Before YA 2024 100% deduction
YA 2024 to YA 2028 400% deduction on first $400,000 qualifying training expenditure plus 100% on excess
- Qualifying training includes SSG-funded courses aligned with Skills Framework.
- Deduction computed net of any government grants/subsidies.
- Only training invoiced and attended within the supporting period is eligible.
- No EIS benefit if training reimbursed to employee paid by individual SkillsFuture Credit.
Innovation Projects with Polytechnics, ITE, or Qualified Partners
Period Deductions & Allowances
Before YA 2024 Not deductible if capital in nature and does not meet R&D definition
YA 2024 to YA 2028 400% deduction on first $50,000 qualifying innovation expenditure
- Qualifying innovation projects involve research & experimental development, engineering/design, IP-related activities, or software/database development.
- Project must be validated and invoiced by partner institution.
- Expenditure outside collaboration is not deductible.
9. Claim Process Overview
How to Claim Enhanced Tax Deductions/ Allowances
Sole-Proprietorships/ Partnerships Companies
1. Include the enhanced tax deductions/ allowances as part of ‘Allowable Business Expenses’ in the 2-Line/ 4-Line statement in the Income Tax Return.
2. Submit details of the enhanced tax deductions/ allowances claimed in the Income Tax Return via the Submit EIS Enhanced Deduction/ Allowance Records digital service.
1. Declare the enhanced deductions/ allowances in the Corporate Income Tax Return.
2. Details of the enhanced deductions/ allowances should be completed under the ‘Enterprise Innovation Scheme’ section of the Corporate Income Tax Return.
Applying for the EIS Cash Payout
Businesses applying for the EIS cash payout must e-File the application via the Apply for EIS Cash Payout digital service after submitting their Income Tax Returns for the relevant YA, but not later than the filing due date for the relevant YA.
The Apply for EIS Cash Payout digital service will only be made available to businesses that have submitted their Income Tax Returns before the income tax filing due date.
Sole-proprietors and partners who are filing the Income Tax Returns via paper forms are reminded to submit their Income Tax Returns early as it will take up to 7 working days for the filing status to be updated. As the Apply for EIS Cash Payout digital service will only be made available after the filing status has been updated, sole proprietors/ partners are encouraged to e-File their Income Tax Returns to avoid delays in accessing the Apply for EIS Cash Payout digital service.
When Can I Apply for the EIS Cash Payout
Types of business entities that meet the qualifying conditions Opening Date for YA 2025 Due Date for YA 2025
Partnerships
1 Feb 202518 Apr 2025
Sole-proprietorships 1 Mar 2025 18 Apr 2025
Companies Follows the official opening of the Form C-S/ Form C-S (Lite)/ Form C filing digital service 30 Nov 2025
Illustration: Cash Payout Conversion Example (from IRAS guidelines)
Company A incurs S$80,000 qualifying R&D and S$30,000 qualifying training expenditure in YA 2024. It opts for the maximum S$20,000 cash payout by converting the full R&D expenditure and part of the training expenditure at 20%.
Qualifying Expenditure Calculation Cash Payout (S$)
Qualifying R&D expenditure 80,000 × 20% 16,000
Qualifying training expenditure 20,000¹ × 20% 4,000
Total cash payout received 20,000
¹ $20,000 = $100,000 cap less $80,000 R&D converted.
Company A claims enhanced deductions on the remaining S$10,000 training expenditure (S$30,000 – S$20,000). No further cash payout can be claimed for YA 2024.
Example: Enhanced Deduction Calculation for Contracted R&D (from IRAS guidelines Pg 15 , Example 2.3 )
A company contracts an R&D organisation in Singapore for qualifying activities, paying S$600,000 in the financial year ending 31 Dec 2023 (YA 2024). The company receives a government grant of S$100,000 but lacks an expenditure breakdown from the R&D organisation.
Description Calculation Amount (S$)
R&D expenditure net of grant 600,000 – 100,000 500,000
Deemed qualifying expenditure 60% × 500,000 300,000
Additional deduction Section 14C 150% × 300,000 450,000
Enhanced deduction Section 14D(1) 150% × 300,000 450,000
Explanation:
- The company claims deemed qualifying R&D expenditure at 60% of net expenditure (S$300,000).
- On this, it claims additional and enhanced deductions each at 150% (S$450,000), totalling S$900,000 enhanced claims on qualifying R&D expenditure.
This demonstrates how contracting out R&D and government grants impact EIS deduction calculations.