Grants and tax deductions work differently for AI projects — how to tell them apart in Singapore, with a note on the reported enhanced AI-related tax deduction.
dgm is an independent osFoundry integration partner — not affiliated with osFoundry’s maker (OS LLC), and dgm has no completed client integrations yet.
Grants and tax deductions both lower the cost of an AI project in Singapore, but they work differently — and a reported enhanced AI-related deduction is worth understanding.
| Item | Detail |
|---|---|
| Grant | Co-funds part of the cost up front (PSG, EDG) |
| Tax deduction | Reduces taxable income after the spend |
| Reported AI deduction | Up to 400% on qualifying AI costs (confirm with IRAS) |
| Cap (reported) | S$50,000 per Year of Assessment, YA2027–YA2028 |
The two mechanisms
A grant (PSG, EDG) co-funds a share of your cost — you receive support tied to an approved purchase or project. A tax deduction instead reduces your taxable income after you incur the spend, so its value depends on your tax position. They are different levers and can sometimes be used together.
The reported enhanced AI deduction
Commentary on Budget measures reports an enhanced deduction of up to 400% on qualifying AI-related costs (such as AI tools and eligible training), capped at S$50,000 per Year of Assessment for YA2027–YA2028. These figures were not confirmed against an IRAS primary source at the time of writing — confirm with IRAS or the Budget materials before relying on them. Important: these are programmes a business applies for directly with the relevant Singapore agency. dgm is an independent AI-integration agency — not a registered or approved grant deliverer, and not a PSG pre-approved vendor or on any IMDA or Enterprise Singapore pre-approved solution list. dgm can help scope and build the AI project; eligibility, approval and any claim rest with you and the agency.
How to start
Decide whether your need is better served by a grant (co-funding up front) or a deduction (tax relief after the spend), and confirm the current deduction rules with IRAS. Support levels, caps, eligibility and round status change frequently — confirm the current details on the official programme page before relying on them.
Where dgm fits
dgm is an independent integration partner that helps Singapore businesses adopt osFoundry — scoping a first use case, handling the build, and connecting AI to the systems you already run. dgm can help you scope the AI project that a programme would fund — but you apply to the programme directly, and dgm is not a PSG pre-approved vendor or registered grant deliverer. dgm is independent of osFoundry’s maker (OS LLC) and has no completed client integrations yet, so everything described here is a service offered, not a past result. If you want to scope a practical first project, dgm can help you map it out.