Most Singapore SMEs looking at AI automation already know to ask about the Enterprise Development Grant or the Productivity Solutions Grant. Fewer know that the Enterprise Innovation Scheme (EIS) — a tax scheme run by IRAS, not a grant run by Enterprise Singapore — can now hand back up to 400% tax deduction on AI adoption costs, on top of whatever grant co-funding a project already receives. Because EIS works through your company’s tax return rather than a grant application, it stacks with EDG, PSG, and TSS rather than competing with them.
This guide explains what EIS is, what changed for AI in Budget 2026, who qualifies, and how it fits alongside the grant schemes already covered in Stack AI’s grant guides.
“EIS isn’t a grant you apply for before the project starts — it’s a deduction you claim after, through your tax filing. That makes it the easiest funding mechanism to miss, and the easiest one to combine with everything else.”
What is the Enterprise Innovation Scheme?
The Enterprise Innovation Scheme is a Singapore corporate tax scheme, administered by IRAS, that lets businesses claim enhanced tax deductions or allowances — up to 400% — on qualifying spending across research and development, intellectual property, staff training, and (from Budget 2026) AI adoption. It runs from Year of Assessment (YA) 2024 to YA 2028. Unlike EDG, PSG, or TSS, there is no pre-approval step and no vendor pre-qualification list — the deduction is simply claimed when the company files its tax return (Form C-S or Form C), based on expenditure the business already incurred.
Since its introduction, EIS has covered five qualifying activities: R&D undertaken in Singapore; registration of intellectual property (patents, trademarks, designs, plant varieties); acquisition and licensing of IP rights; training via SkillsFuture Singapore-approved courses or courses run with ITE and other approved partners; and innovation projects carried out with a polytechnic, ITE, or other approved partner.
What changed in Budget 2026: AI adoption is now a qualifying activity
Budget 2026 added a sixth qualifying activity specifically for AI adoption, available for YA 2027 and YA 2028. A business can claim 400% tax deduction on up to S$50,000 of qualifying AI expenditure per YA — meaning S$50,000 spent on qualifying AI adoption can generate up to S$200,000 in tax deductions for that year. For a company with a December financial year end, YA 2027 covers the financial year ending 31 December 2026 — so AI automation spend incurred now is very likely the spend that counts.
| Detail | AI adoption category (new, Budget 2026) |
|---|---|
| Deduction rate | 400% (100% base deduction/allowance + 300% enhanced, or a full 400% where the expenditure isn’t otherwise deductible under Section 14) |
| Expenditure cap | S$50,000 per Year of Assessment |
| Years available | YA 2027 and YA 2028 only |
| Cash payout option | Not available for this category (cash conversion applies only to the five original categories) |
| Qualifying spend (expected) | Costs directly tied to adopting AI — system subscriptions/licensing, implementation and integration, and related capability-building. IRAS said a detailed list would follow; businesses should confirm the current list on IRAS’s EIS page before filing, since the exact boundaries of “qualifying AI expenditure” were still being finalised as this guide was written. |
This is the category most directly relevant to a Stack AI engagement: a WhatsApp AI agent, an invoice-processing system, or a workflow-automation build all sit squarely inside “adopting AI,” as distinct from buying generic software.
Who is eligible
| Requirement | Detail |
|---|---|
| Entity type | Singapore-incorporated companies carrying on a trade or business (sole proprietorships and partnerships can access some categories via the cash payout route) |
| Activity | Must fall under one of the six qualifying activities and be incurred in the relevant YA |
| Application | None required for the tax deduction — claimed directly in the tax return with supporting records kept for IRAS’s request |
| Cash payout (legacy categories only) | Optional: convert up to S$100,000 of combined qualifying expenditure per YA (excluding AI adoption) into cash at a 20% conversion rate, capped at S$20,000 cash per YA, and the payout is not taxable |
How EIS fits with EDG, PSG, and TSS
The most common mistake is treating EIS as competing with the grant schemes rather than sitting on top of them. A grant reduces the upfront cost of a project; EIS then lets the business deduct the remaining self-funded portion at up to 400% at tax time. They’re claimed at different points in the process, from different agencies, and are not mutually exclusive.
| Scheme | Run by | What it does | When you claim |
|---|---|---|---|
| EDG | Enterprise Singapore | Up to 50% co-funding on eligible project costs | Applied for before the project starts |
| PSG | Enterprise Singapore | 50% funding on pre-approved solutions (Tech Depot) | Applied for before purchase |
| TSS | NCSS | Up to 80% co-funding for social service agencies | Applied for before the project starts |
| ASME-UOB package | ASME + UOB | Access/bridging layer on top of PSG/EDG for micro and small firms | Alongside the underlying grant application |
| EIS | IRAS | Up to 400% tax deduction on qualifying spend, incl. AI adoption from YA 2027 | Claimed after the fact, in the company’s tax return |
In practice: a clinic that gets 50% EDG co-funding on a S$20,000 automation project pays S$10,000 out of pocket. If that S$10,000 of AI-adoption spend qualifies under the new EIS category, the clinic can also claim up to S$40,000 in tax deductions against that S$10,000 — on top of the grant, not instead of it.
How to claim EIS on a Stack AI project
- Scope the project and identify the AI-adoption component. Not every line item in an automation build necessarily counts — the AI-specific elements (the agent, the model usage, the integration work that makes the system “AI”, as distinct from generic hosting or hardware) are what IRAS’s guidance is expected to target.
- Keep the invoice and project documentation itemised. IRAS doesn’t pre-approve EIS claims, but it can request supporting records, so a vendor invoice that clearly separates AI-adoption costs from other costs makes a later claim far easier to support.
- Confirm the current qualifying-expenditure list with IRAS or your tax agent before filing. Because the detailed criteria for the AI category were still being finalised, this is the one step in the whole EIS process that genuinely needs a check against the live IRAS page or a conversation with an accountant, not assumption.
- Combine with any grant already received. If the project also received EDG, PSG, or TSS co-funding, only the self-funded portion is typically what’s left to claim under EIS — your tax agent applies the deduction to the actual out-of-pocket expenditure.
- Claim in the tax return for the relevant YA. No separate EIS application form for the deduction itself — it’s reported as part of Form C-S or Form C when the company files.
Frequently asked questions
Is EIS a grant or a tax scheme?
A tax scheme, not a grant. It’s administered by IRAS and delivered as a deduction or allowance against taxable income (or a cash conversion for the five original categories), not as a co-funding cheque before a project starts.
Does EIS require pre-approval like PSG’s Tech Depot?
No. There’s no pre-approved vendor list and no application before spending. The claim is made when the business files its tax return for the relevant Year of Assessment.
Can I get a cash payout for AI adoption spending under EIS?
No. The cash conversion option (up to S$100,000 of expenditure at a 20% rate, capped at S$20,000 cash per YA) applies only to the five original qualifying activities. The new AI-adoption category is deduction-only.
Can EIS be combined with EDG, PSG, or TSS on the same project?
Yes — they operate independently. A grant reduces the upfront cost; EIS is then claimed against whatever the business still spent out of pocket, at tax-filing time.
What counts as “qualifying AI expenditure”?
IRAS indicated the detailed list would be published separately from the initial Budget 2026 announcement. Based on public commentary so far, it’s expected to cover AI system subscriptions and licensing, implementation/integration costs, and related capability-building — but businesses should check IRAS’s EIS page directly, or ask their tax agent, before relying on this for a specific claim.
Do I need a Singapore-registered company to claim EIS?
Yes, for the tax deduction route. The scheme is built around Singapore corporate tax filing, so it applies to Singapore-incorporated businesses carrying on a trade or business here.
