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EIS AI mixed-invoice apportionment needs a supportable cost split when one supplier invoice includes qualifying and excluded items.
EIS AI mixed-invoice apportionment is needed when one supplier invoice contains a qualifying artificial intelligence subscription or service and other items that do not qualify. For Year of Assessment 2027 and Year of Assessment 2028, the Enterprise Innovation Scheme includes qualifying expenditure on prescribed AI solutions. The company must still identify the qualifying amount and retain evidence for its claim.
A neat invoice total is not enough. The review should connect the contract, invoice, users, period, actual business use and payment to a reasoned split. The method must reflect the facts. It should not be a percentage selected only because it produces a convenient tax deduction.
Confirm the AI activity before splitting cost
The IRAS Enterprise Innovation Scheme page describes the additional qualifying activity for AI adoption. It applies for YA 2027 and YA 2028, subject to the published conditions. The enhanced deduction is 400 per cent on the first S$50,000 of qualifying expenditure for the activity.
Begin with the prescribed AI solution or AI-enabled business service. Match the product name, supplier and subscription period to the current official description. Record how the company uses it in its trade or business. A sales label that says AI does not prove that every charge on the invoice is within the activity.
Keep the tax computation separate from the commercial approval. Management may approve a useful project even when part of the cost is outside the enhanced deduction. The tax file should show the eligible portion without rewriting the business decision.
Identify excluded invoice lines
The IRAS guidance excludes physical infrastructure and hardware from the prescribed AI activity. A bundle may include laptops, servers, cameras, sensors or other equipment. It may also contain ordinary consulting, custom development, data migration, training, support, travel or unrelated licences.
Do not assume that implementation work follows the treatment of the AI subscription. Read the supplier scope and identify what each service delivers. If a service is necessary to configure the prescribed solution, keep the evidence and analyse it against the published conditions. If it creates a separate system or business process, treat it as a distinct item.
Check grants and subsidies as well. Expenditure funded by a grant or subsidy may be excluded from the qualifying amount. Reconcile the invoice to grant approval, claim and receipt records before computing the tax benefit.
Ask the supplier for a direct breakdown
The strongest EIS AI mixed-invoice apportionment starts with a supplier breakdown. Request the price of the AI subscription, non-AI modules, equipment, implementation, training and recurring support. Ask the supplier to explain discounts that apply across the bundle.
Retain the request and response. A revised schedule may support the original invoice without replacing it. The supplier should not alter the commercial history or relabel an excluded item as qualifying.
Compare the breakdown with the contract, order form and product catalogue. If the supplier provides a total only, ask whether separate list prices or usage records exist. Direct evidence usually produces a more reliable result than an internal estimate.
Use a reasonable basis when direct evidence is unavailable
The IRAS EIS e-Tax Guide allows a reasonable apportionment where the company has made reasonable efforts but cannot obtain evidence for the exact qualifying part of a single expenditure. The file should show those efforts and why the selected basis is reasonable.
Possible evidence may include separate list prices, active user counts, licence tiers, measured usage, supplier time records or another contract for comparable items. Choose the factor that follows how the supplier earned the fee. Headcount may work for a per-user subscription, but it may be unsuitable for a fixed platform charge.
Avoid using revenue, profit or an unsupported management estimate merely because the information is available. Explain alternative methods considered and why they were rejected. Apply the chosen basis consistently unless the facts change.
Work through a mixed subscription example
Assume a company pays S$30,000 for an annual package. The supplier confirms that S$18,000 is for the prescribed AI service, S$7,000 is for a general workflow module and S$5,000 is for hardware. Subject to all other conditions, the review begins with the S$18,000 amount. It does not apply the enhanced deduction to S$30,000.
If a S$3,000 bundle discount is already reflected in the total, allocate the discount on the same supportable basis used in the contract or supplier schedule. Do not allocate all of it to excluded items to maximise the claim.
Then deduct any grant-funded amount that relates to the qualifying service. Reconcile the final figure to the general ledger and tax computation. Label the example as an internal calculation, not an IRAS approval of the claim.
Build an evidence schedule
| Record | Purpose | Reviewer question |
|---|---|---|
| Official product check | Identifies the prescribed AI solution | Was it current for the claim period? |
| Contract and invoice | Shows scope, price and period | Do the descriptions agree? |
| Supplier breakdown | Separates qualifying and other items | Is the split direct and credible? |
| Usage evidence | Supports business use and allocation | Does it match the selected basis? |
| Grant reconciliation | Removes subsidised expenditure | Was funding allocated correctly? |
| Tax schedule | Connects evidence to the return | Can another person reproduce it? |
Review the claim by year of assessment
Check the company’s financial year, the date expenditure was incurred and the relevant basis period. A multi-year contract may cross more than one basis period. Payment timing alone may not determine the amount for a year.
Track the S$50,000 activity cap and other EIS expenditure claimed by the entity. The prescribed AI activity does not offer the EIS cash payout option. Do not move the expenditure into another category merely to seek a payout.
Document any related-party supplier, credit note, refund, cancellation or scope change. Update the schedule when the commercial amount changes. The final tax computation should use the corrected net amount.
Connect the analysis to the wider support decision
The Singapore business support decision guide is the pillar cornerstone. The EIS AI adoption guide covers the broader activity. The EIS cash payout and deduction guide explains a separate choice, while the Enterprise Support and Grants hub connects the library.
A defensible EIS AI mixed-invoice apportionment can be explained without guesswork. It names the qualifying solution, removes excluded items and funding, shows reasonable efforts to obtain direct evidence, and lets a reviewer reproduce the amount from the commercial records.