Singapore: Cash payout controls | Research Credit Integrity Alliance

This page sets out the conditions a business must meet to convert qualifying expenditure under the Enterprise Innovation Scheme (EIS) into a cash payout instead of a tax deduction, and the controls attached to that payout. It describes the rules only and makes no recommendation.

Summary

Control	Rule	Source
Period	Expenditure incurred in the basis periods for YA 2024 to YA 2028	Section 37R(1)1
Amount	20 percent of up to S$100,000 of qualifying expenditure a year, so at most S$20,000	EIS e-Tax Guide2
Minimum	At least S$400 of selected expenditure	Section 37R(1)1
Who is eligible	A business carrying on a trade or business in Singapore with at least 3 full-time local employees for at least 6 months of the basis period	Section 37R(34)1
How to elect	Irrevocable written election through IRAS's digital service, by the return filing deadline	Section 37R(1) and (2)1
Applications	One a year, made after the return is filed	EIS e-Tax Guide2
Records	Kept for 7 years	Section 37R(24)1
Recovery	Payouts not due are recoverable as a debt due to the Government	Section 37R(30)1
Offences	Penalties of up to 4 times the payout for false information	Section 37S3

Purpose and amount

IRAS states that the cash payout option "is to help small, growing businesses defray the costs of their innovation activities".2 An eligible business may convert up to S$100,000 of its total qualifying expenditure across the EIS activities each Year of Assessment into cash at 20 percent, in place of deductions or allowances. The payout is capped at S$20,000 a year and is not taxable.2 The S$100,000 cap cannot be combined across years.2 The option is not available for the artificial intelligence adoption activity added to the EIS for YA 2027 and YA 2028.2

Once expenditure has been converted into cash, it is no longer available for a deduction.2 The Act reduces the expenditure qualifying for the relevant deduction by the amount elected.1

Who is eligible

Under section 37R, an eligible person is a company or firm, or a partner of a partnership, that:

carries on a trade or business in Singapore; and
employs, and makes Central Provident Fund contributions for, at least three full-time local employees, each earning a gross monthly salary of at least S$1,400, for at least six months (not necessarily continuous) in the basis period.1

A full-time local employee is a Singapore citizen or permanent resident whose contract requires at least 35 hours of work a week. A shareholder who is also a director of the company does not count, and nor do partners of a partnership.1 Staff deployed under centralized hiring or secondment arrangements within a group can count, subject to conditions, including that the arrangement is adopted for bona fide commercial reasons.14

IRAS lists businesses that are not eligible for the cash payout, including investment holding companies, clubs and associations, charities and variable capital companies.4 The business must also still be carrying on business when the payout is disbursed. The Comptroller may disallow the payout if satisfied that it is not.1 IRAS treats a business as having ceased if its status on the register of the Accounting and Corporate Regulatory Authority is, for example, "Struck off" or "In liquidation".4

How the election is made

The election must be made in writing to the Comptroller by the deadline for filing the return for the relevant year, or any extended time the Comptroller allows. It must be made using IRAS's electronic service and be accompanied by the information and documents the Comptroller specifies.1 The Comptroller may reject an election that does not meet these requirements.1

In practice, IRAS asks businesses to apply through its "Apply for EIS Cash Payout" digital service after filing the Income Tax Return and before the filing due date. The service is available only to businesses that have filed their return on time, and accepts one application for each year.4 For R&D expenditure, the R&D Claim Form must be submitted with the application.4 For YA 2026, the application window for companies runs from 5 May 2026 to 30 November 2026.4

Checks before and after payment

IRAS disburses the payout "after IRAS has assessed and verified the claims".2 It states that applications are generally processed within three months, and pays the business by GIRO or PayNow.4 Payment does not prevent a later audit, and IRAS will recover any payout found to have been incorrectly made.2

Under the Act, a payout is recoverable as a debt due to the Government where:

the expenditure is later found not to qualify;
the requirements of section 37R were not all met; or
the payout exceeds what the business was entitled to.1

The amount must be repaid within 30 days of the Comptroller's notice, and the normal tax recovery provisions apply.1 If the business gave false or misleading information, kept false records or used fraud in connection with the election, the Comptroller may refuse to restore the deductions that would otherwise be reinstated when a payout is recovered.1

For intellectual property, payouts are clawed back if the rights are sold, transferred or assigned within the minimum ownership periods set in the Act, and the business must notify IRAS within 30 days.1

Offences

Section 37S makes it an offence to give false information in an election, with penalties of the payout amount, double, treble or four times the payout, depending on the conduct, and fines or imprisonment in the more serious cases. The willful offences apply to anyone who acts with intent "to obtain, or to assist another person to obtain" a payout not due.3 See Penalties.

The earlier PIC cash payout

The EIS payout follows an earlier cash payout under the Productivity and Innovation Credit (PIC) scheme, which allowed an election for a cash payout in place of deductions for expenditure in YA 2011 to YA 2018.5 The PIC scheme expired after YA 2018.6

In 2014 the Act was amended to allow the Comptroller to disallow or recover PIC benefits arising from abusive arrangements, and to create an offence of promoting such arrangements.78 IRAS's news releases describe how false PIC claims were made, including the use of false employment records to meet the local employee condition and invoices for expenditure that was not incurred.910 In those releases IRAS stated that it "takes a serious view of any attempt by claimants, vendors or consultants to defraud the Government".10

Sources

Attorney-General's Chambers, Income Tax Act 1947 (Singapore Statutes Online, current version), section 37R(1), (2), (5), (20), (21), (24), (27), (29) to (33), (34) and (35). https://sso.agc.gov.sg/Act/ITA1947?ProvIds=pr37R- (accessed 11 October 2026). Back
Inland Revenue Authority of Singapore, IRAS e-Tax Guide: Enterprise Innovation Scheme (Third Edition, published 31 August 2026), paragraphs 3.1, 3.2, 4.5, 5.8 to 5.11, 6.3, 6.4, 6.9 and 6.10. https://www.iras.gov.sg/docs/default-source/e-tax/etaxguide_cit_enterprise-innovation-scheme.pdf?sfvrsn=3a36afd3_12 (accessed 11 October 2026). Back
Attorney-General's Chambers, Income Tax Act 1947 (Singapore Statutes Online, current version), section 37S(1) to (4). https://sso.agc.gov.sg/Act/ITA1947?ProvIds=pr37S- (accessed 11 October 2026). Back
Inland Revenue Authority of Singapore, Enterprise Innovation Scheme (EIS) (last updated 23 September 2026), sections "Qualifying Conditions", "Details on the Qualifying Conditions for the EIS Cash Payout", "Applying for the EIS Cash Payout", "When Can I Apply for the EIS Cash Payout", "How to Apply for the EIS Cash Payout" and "When will I receive the EIS Cash Payout". https://www.iras.gov.sg/schemes/disbursement-schemes/enterprise-innovation-scheme-(eis) (accessed 11 October 2026). Back
Attorney-General's Chambers, Income Tax Act 1947 (Singapore Statutes Online, current version), section 37G(1). https://sso.agc.gov.sg/Act/ITA1947?ProvIds=pr37G- (accessed 11 October 2026). Back
Inland Revenue Authority of Singapore, IRAS e-Tax Guide: Research and Development Tax Measures (Eighth Edition, published 30 January 2026), Annex A, paragraph 7. https://www.iras.gov.sg/docs/default-source/e-tax/research-and-development-tax-measures-etax-guide_6th-edition.pdf?sfvrsn=1f38a2e8_27 (accessed 11 October 2026). Back
Attorney-General's Chambers, Income Tax Act 1947 (Singapore Statutes Online, current version), section 37K(1), (9) and (11). https://sso.agc.gov.sg/Act/ITA1947?ProvIds=pr37K- (accessed 11 October 2026). Back
Attorney-General's Chambers, Income Tax Act 1947 (Singapore Statutes Online, current version), section 37L(1). https://sso.agc.gov.sg/Act/ITA1947?ProvIds=pr37L- (accessed 11 October 2026). Back
Inland Revenue Authority of Singapore, news release on the conviction of a promoter of fraudulent PIC claims (12 February 2018), section "PIC Promoters Abusing the PIC Scheme". IRAS news release, 12 February 2018 (accessed 11 October 2026). Back
Inland Revenue Authority of Singapore, Business and Management Consultancy Owner Convicted of PIC Fraud (news release, 15 July 2016), sections "Backdating of Documents" and "Severe Penalties for Abusing PIC Scheme". https://www.iras.gov.sg/news-events/newsroom/business-and-management-consultancy-owner-convicted-of-pic-fraud (accessed 11 October 2026). Back