As businesses increasingly incorporate Artificial Intelligence (AI) into their operations, Singapore has introduced a new tax incentive designed to encourage AI adoption across the economy.
As part of the enhancements announced in Budget 2026, the Enterprise Innovation Scheme (EIS) now includes a new qualifying activity for the adoption of AI. Businesses may claim enhanced tax deductions on qualifying AI expenditure incurred in YA 2027 and YA 2028. The new provisions are set out in Section 14ZK of the Income Tax Act and further clarified in IRAS’ updated EIS e-Tax Guide published on 31 August 2026.
The introduction of an AI-specific tax incentive reflects the Government’s broader objective of encouraging businesses to harness AI technologies to improve productivity, strengthen competitiveness and support workforce transformation.
Read on to understand in detail the support Singapore is providing for AI Investment, what the Tax Benefit constitutes and the clarification of AI expenditure types that qualify, the potential challenges brought about by Software Bundles and how businesses should prepare to qualify for the Tax Benefit – along with how CLA Global TS’ expertise can assist with said preparations.
Contact our Tax Advisory Specialists if you would like to discuss how the new AI adoption incentive may apply to your business.
View the full article in PDF here.
CONTACT US
CLA Global TS Tax Advisory Specialists
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Edwin Leow Co- Advisory Leader Director, Head of Tax edwinleow@sg.cla-ts.com |
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John Chua Associate Director, Tax johnchua@sg.cla-ts.com |
