EIS AI grant offset reconciliation removes subsidised costs and ties the remaining qualifying spend to the correct Year of Assessment.
EIS AI grant: EIS AI grant offset reconciliation starts with one rule: expenditure subsidised by a Singapore Government grant or subsidy is excluded from qualifying artificial intelligence expenditure. The business should therefore calculate the tax claim from the net supported cost, not the supplier invoice total. It also needs records that connect the grant, the AI project, the accounting period and the Corporate Income Tax Return.
This review is different from splitting a mixed supplier invoice. First identify the qualifying AI amount. Then trace public funding to the same project and remove the supported portion. Finally, place the remaining cost in the correct basis period and Year of Assessment.
Confirm the expenditure qualifies before applying an offset
The IRAS Enterprise Innovation Scheme page states that the AI adoption activity applies for Year of Assessment 2027 and Year of Assessment 2028. It provides a 400 per cent deduction on the first S$50,000 of qualifying AI expenditure for each relevant year, subject to the published conditions. The cash payout option does not apply to this activity.
Qualifying expenditure may cover a subscription or licence for an AI system and a qualifying AI business service. However, physical infrastructure and hardware are excluded. The business should document the product, service, supplier, users, business purpose and period before considering any grant.
If one invoice contains qualifying and non-qualifying items, complete that apportionment first. The EIS AI mixed-invoice apportionment guide explains the separate evidence test. A grant offset should not be used to hide an unsupported invoice split.
Match the grant to the same cost
Read the Letter of Offer, approved cost schedule, claim submission and disbursement advice. Identify whether the grant supports the AI subscription, implementation service, equipment, training or another project item. Use the approved cost line, not only the grant’s project title.
In addition, compare the approved vendor, invoice number and project period. A grant may support a wider transformation project while the EIS claim concerns only one AI service. Remove only funding that relates to the qualifying expenditure, but do not leave a subsidised qualifying line in the claim.
Where the grant is paid after the company has incurred the expenditure, the timing difference does not make the support irrelevant. The file should record the expected grant and update the tax computation when the approved or received amount changes.
Use gross cost, support and net cost columns
A simple schedule reduces mistakes. Start with each qualifying invoice line. Show the gross qualifying amount, the Government grant or subsidy allocated to that line, any supplier credit and the resulting net qualifying spend. Reconcile the gross amount to the ledger and the support amount to the grant records.
For example, assume an eligible AI service costs S$40,000 and an approved grant funds 50 per cent of that same service. Subject to every other EIS condition, the reconciliation begins with S$20,000 of net qualifying AI expenditure. It does not apply the enhanced deduction to S$40,000.
If the project also contains S$10,000 of excluded hardware, keep it outside the qualifying column. A grant allocated to that hardware does not reduce the AI service amount. Conversely, a grant for the service cannot be assigned to hardware merely to preserve a larger tax claim.
Allocate support on evidence rather than convenience
The grant documents may state a support percentage for every approved cost. In that case, apply the approved basis. If the disbursement covers several costs as a single amount, trace the claim assessment or payment advice. Ask the grant administrator for clarification where the allocation remains unclear.
As a result, the tax schedule may differ from the accounting presentation. Accounts may record a grant receivable, other income or a reduction of asset cost. The EIS schedule should still show how the subsidised amount was removed from qualifying expenditure.
Do not choose a first-in-first-out method or a proportion only because it produces more relief. Record the alternatives considered and why the selected allocation follows the grant decision and project evidence.
Place the net expenditure in the correct year
The EIS conditions require the business to incur qualifying expenditure during the basis period for the relevant Year of Assessment. Use the company’s accounting treatment and tax rules to identify when the cost was incurred. Payment date alone may not decide the period for a prepaid subscription or a multi-year service.
The IRAS tax computation guidance explains how basis periods map to Years of Assessment. Split a multi-period cost where required and apply the grant support to the same periods on a supportable basis.
For this reason, record the service start and end dates, invoice date, payment date, accounting entry and basis-period allocation. The reviewer should be able to reproduce the amount for YA 2027 or YA 2028 without relying on memory.
Handle later grant changes
A final grant claim may be lower than the approved maximum because costs were rejected or the project changed. Update the offset using the amount that relates to the qualifying expenditure. Keep both the earlier estimate and the final reconciliation.
If more support is received after the tax return was prepared, assess whether the return or computation needs correction. If a supplier issues a credit note or refund, reduce the gross qualifying cost as well. Record the date, amount and action taken.
Where the project is cancelled or the grant is recovered, do not assume the full invoice automatically qualifies. Recheck whether the AI service was delivered, used in the trade and otherwise within the EIS conditions.
Keep a review-ready reconciliation
| Record | Amount or fact | Control question |
|---|---|---|
| Qualifying cost schedule | AI items after invoice review | What meets the activity definition? |
| Grant approval | Approved cost and rate | Does support relate to this item? |
| Grant claim and payment | Assessed and received support | Has the expected amount changed? |
| Credits and refunds | Supplier adjustments | Is gross cost still correct? |
| Basis-period schedule | Net cost by year | Was each amount incurred in that period? |
| Tax computation | Enhanced and base deductions | Can the return be reproduced? |
Connect the claim to the support library
The Singapore business support decision guide is the pillar cornerstone. The EIS AI adoption guide covers the activity and years. The Enterprise Support and Grants hub connects the wider support library.
A sound EIS AI grant offset reconciliation shows the original qualifying cost, the exact public support removed, the net amount by basis period and every later adjustment. That sequence prevents double support and gives the tax reviewer a calculation grounded in the commercial and grant records.