§ 14EB — Deduction for payment under innovation cost-sharing agreement

14EB.—(1) Subject to this section, where a company carrying on a trade or business has made, in the period specified under subsection (2)(b) for that agreement, any payment under an innovation cost-sharing agreement approved by the Minister or an authorised body on or after 19 February 2025 in respect of one or more qualifying innovation activities carried out under that agreement, there is allowed a deduction of the amount of such payment for the purpose of ascertaining the income of the company.(2) The Minister or authorised body may —(a)

impose such conditions as the Minister or authorised body thinks fit when approving an innovation cost-sharing agreement; and

(b)

specify the period during which any payment made under the innovation cost-sharing agreement is allowed a deduction under this section.

(3) The Minister or authorised body may approve an innovation cost-sharing agreement only if —(a)

the agreement provides that any benefit arising from the agreement accrues (whether wholly or partly) to the company;

(b)

there is an undertaking by the company that at least one of the qualifying innovation activities is to be carried out by or on behalf of the company (whether wholly or partly) in Singapore; and

(c)

such other requirements as the Minister or authorised body specifies, are satisfied.

(4) A deduction is not allowed under subsection (1) if —(a)

benefit arising from the approved innovation cost-sharing agreement (if any) does not accrue (whether wholly or partly) to the company; or

(b)

no qualifying innovation activity is carried out in Singapore by or on behalf of the company.

(5) No approval under this section may be granted after 31 December 2030.

(6) If any benefit that arose from an approved innovation cost-sharing agreement during the period specified for it under subsection (2)(b) is sold, assigned or otherwise disposed of at any time by the company to which a deduction has been allowed under subsection (1), the lower of the following is treated as a trading receipt of the company’s trade or business for the year of assessment which relates to the basis period in which the sale, assignment or disposal occurs:(a)

the amount of deduction that has been allowed under subsection (1) that is attributable to the benefit, to the extent that this amount of deduction has not been previously treated as a trading receipt under this subsection;

(b)

the amount or value of the consideration received by the company from the sale, assignment or disposal.

(7) If, for any reason, the deduction cannot be attributed to that benefit, the full amount of the deduction that has been allowed under subsection (1) is treated as being attributable to that benefit.

(8) A sale, assignment or disposal of any benefit that occurs after the date on which the company permanently ceases its trade or business is treated as having occurred immediately before the cessation.

(9) The payment mentioned in subsection (1) does not include any payment to the extent that it is or is to be subsidised by grants or subsidies from the Government or a statutory board.

(10) Where a company to which a deduction has been allowed for any payment made under this section becomes entitled to any royalty or other payments (in one lump sum or otherwise) for the use of or right to use any technology, know‑how or intellectual property developed from a qualifying innovation activity carried out under the approved innovation cost-sharing agreement, such royalty or payments are treated as income of that company that is derived from Singapore for the year of assessment which relates to the basis period in which that company becomes entitled to the royalty or payments, as the case may be.

(11) Where an innovation cost-sharing agreement has been approved by the Minister or authorised body for the purposes of this section, then during the period specified under subsection (2)(b) for the agreement —(a)

a company is only allowed a deduction under this section in respect of any payment made under the agreement; and

(b)

no deduction or allowance is allowed under section 14A, 14C, 14D, 14EA, 14U or 19B in respect of such payment despite anything in that section.

(12) For the purposes of this section, any payment made by a company prior to the commencement of that company’s trade or business is treated as having been made by that company on the first day that the company carries on that trade or business, but a deduction for such payment is subject to section 14X.

(13) In this section —(a)

a reference to a payment made by a company under an innovation cost-sharing agreement is a reference to the expenditure that is allocated to the company to bear under the agreement, and the time the payment for any part of the expenditure becomes payable by the company or (if no such payment is needed) the time of the allocation, is treated as the time the payment is made; and

(b)

a reference to a payment made by a company under an innovation cost-sharing agreement excludes any payment for the right to be a party to the agreement.

(14) In this section —“benefit”, in relation to an innovation cost-sharing agreement, means —(a)

any right arising from the agreement;

(b)

any technology, know-how, intellectual property or software developed from any qualifying innovation activity carried out under the agreement; or

(c)

any asset acquired under the agreement;

“innovation cost-sharing agreement” means any agreement or arrangement made by 2 or more related parties to share the expenditure of qualifying innovation activities to be carried out under the agreement or arrangement (and no other expenditure);

“qualifying innovation activity” means an activity falling within any of the following categories of activities, being categories specified in the document entitled “Oslo Manual 2018 — Guidelines for Collecting, Reporting and Using Data on Innovation” that is published by the Organisation for Economic Co-operation and Development on 22 October 2018:(a)

research and experimental development activities;

(b)

engineering, design and other creative work activities;

(c)

intellectual property-related activities;

(d)

software development and database activities;

(e)

marketing and brand equity activities;

(f)

employee training activities;

(g)

activities related to the acquisition or lease of tangible assets;

(h)

innovation management activities.[Act 25 of 2025 wef 19/02/2025]

—(1) Subject to this section, where a company carrying on a trade or business has made, in the period specified under subsection (2)(b) for that agreement, any payment under an innovation cost-sharing agreement approved by the Minister or an authorised body on or after 19 February 2025 in respect of one or more qualifying innovation activities carried out under that agreement, there is allowed a deduction of the amount of such payment for the purpose of ascertaining the income of the company.

(2) The Minister or authorised body may —(a)

impose such conditions as the Minister or authorised body thinks fit when approving an innovation cost-sharing agreement; and

(b)

specify the period during which any payment made under the innovation cost-sharing agreement is allowed a deduction under this section.

(3) The Minister or authorised body may approve an innovation cost-sharing agreement only if —(a)

the agreement provides that any benefit arising from the agreement accrues (whether wholly or partly) to the company;

(b)

there is an undertaking by the company that at least one of the qualifying innovation activities is to be carried out by or on behalf of the company (whether wholly or partly) in Singapore; and

(c)

such other requirements as the Minister or authorised body specifies, are satisfied.

(4) A deduction is not allowed under subsection (1) if —(a)

benefit arising from the approved innovation cost-sharing agreement (if any) does not accrue (whether wholly or partly) to the company; or

(b)

no qualifying innovation activity is carried out in Singapore by or on behalf of the company.

(5) No approval under this section may be granted after 31 December 2030.

(6) If any benefit that arose from an approved innovation cost-sharing agreement during the period specified for it under subsection (2)(b) is sold, assigned or otherwise disposed of at any time by the company to which a deduction has been allowed under subsection (1), the lower of the following is treated as a trading receipt of the company’s trade or business for the year of assessment which relates to the basis period in which the sale, assignment or disposal occurs:(a)

the amount of deduction that has been allowed under subsection (1) that is attributable to the benefit, to the extent that this amount of deduction has not been previously treated as a trading receipt under this subsection;

(b)

the amount or value of the consideration received by the company from the sale, assignment or disposal.

(7) If, for any reason, the deduction cannot be attributed to that benefit, the full amount of the deduction that has been allowed under subsection (1) is treated as being attributable to that benefit.

(8) A sale, assignment or disposal of any benefit that occurs after the date on which the company permanently ceases its trade or business is treated as having occurred immediately before the cessation.

(9) The payment mentioned in subsection (1) does not include any payment to the extent that it is or is to be subsidised by grants or subsidies from the Government or a statutory board.

(10) Where a company to which a deduction has been allowed for any payment made under this section becomes entitled to any royalty or other payments (in one lump sum or otherwise) for the use of or right to use any technology, know‑how or intellectual property developed from a qualifying innovation activity carried out under the approved innovation cost-sharing agreement, such royalty or payments are treated as income of that company that is derived from Singapore for the year of assessment which relates to the basis period in which that company becomes entitled to the royalty or payments, as the case may be.

(11) Where an innovation cost-sharing agreement has been approved by the Minister or authorised body for the purposes of this section, then during the period specified under subsection (2)(b) for the agreement —(a)

a company is only allowed a deduction under this section in respect of any payment made under the agreement; and

(b)

no deduction or allowance is allowed under section 14A, 14C, 14D, 14EA, 14U or 19B in respect of such payment despite anything in that section.

(12) For the purposes of this section, any payment made by a company prior to the commencement of that company’s trade or business is treated as having been made by that company on the first day that the company carries on that trade or business, but a deduction for such payment is subject to section 14X.

(13) In this section —(a)

a reference to a payment made by a company under an innovation cost-sharing agreement is a reference to the expenditure that is allocated to the company to bear under the agreement, and the time the payment for any part of the expenditure becomes payable by the company or (if no such payment is needed) the time of the allocation, is treated as the time the payment is made; and

(b)

a reference to a payment made by a company under an innovation cost-sharing agreement excludes any payment for the right to be a party to the agreement.

(14) In this section —“benefit”, in relation to an innovation cost-sharing agreement, means —(a)

any right arising from the agreement;

(b)

any technology, know-how, intellectual property or software developed from any qualifying innovation activity carried out under the agreement; or

(c)

any asset acquired under the agreement;

“innovation cost-sharing agreement” means any agreement or arrangement made by 2 or more related parties to share the expenditure of qualifying innovation activities to be carried out under the agreement or arrangement (and no other expenditure);

“qualifying innovation activity” means an activity falling within any of the following categories of activities, being categories specified in the document entitled “Oslo Manual 2018 — Guidelines for Collecting, Reporting and Using Data on Innovation” that is published by the Organisation for Economic Co-operation and Development on 22 October 2018:(a)

research and experimental development activities;

(b)

engineering, design and other creative work activities;

(c)

intellectual property-related activities;

(d)

software development and database activities;

(e)

marketing and brand equity activities;

(f)

employee training activities;

(g)

activities related to the acquisition or lease of tangible assets;

(h)

innovation management activities.[Act 25 of 2025 wef 19/02/2025]