Enterprise Innovation Scheme (EIS) Budget 2026 Tax Incentives for Innovation & AI Adoption
The Enterprise Innovation Scheme (EIS) is Singapore’s flagship tax incentive designed to encourage businesses to invest in innovation, digitalisation, workforce capability development, and artificial intelligence (AI). Enhanced under Singapore Budget 2026, the scheme allows companies to significantly reduce tax costs while accelerating transformation.
Key Benefits
- Up to 400% tax deduction on qualifying innovation expenditure
- Optional cash payout for eligible SMEs (non-AI expenditure)
- Support for R&D;, intellectual property, training, and digital transformation
- New AI tax incentive introduced under Budget 2026
Qualifying Activities
- Research & Development (R&D;)
- Innovation projects with approved institutions
- Intellectual property (IP) registration
- Acquisition or licensing of IP rights
- Employee training aligned with SkillsFuture frameworks
For most categories, qualifying expenditure is capped at SGD 400,000 per activity per Year of Assessment.
Budget 2026 AI Enhancement
To support enterprise AI adoption, Budget 2026 introduces AI expenditure as a new qualifying activity under the EIS:
- 400% tax deduction on qualifying AI expenditure
- Separate annual cap of SGD 50,000
- Applicable for YA 2027 and YA 2028
- No cash payout option for AI expenditure
This allows businesses to claim up to SGD 200,000 in enhanced deductions per year for AI-related investment, translating to potential tax savings of up to SGD 34,000 annually.
Who Is Eligible?
The scheme is available to Singapore-incorporated companies, partnerships, sole proprietorships, and Singapore branches of foreign companies that carry on an active business in Singapore and incur qualifying expenditure.
Why Act Now?
The Enterprise Innovation Scheme enables businesses to reduce tax exposure while building long-term competitive advantages through innovation, skills development, and AI adoption. Early planning allows companies to maximise benefits across multiple EIS categories. This brochure is for general information only and does not constitute tax advice. Actual eligibility and benefits are subject to IRAS rules and detailed guidance.
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