Angel Investors Tax Deduction (AITD) Scheme in Singapore: Why It Lapsed and What Applies Instead

Singapore’s Angel Investors Tax Deduction (AITD) scheme is one of the most frequently searched, and most frequently misunderstood, tax incentives in the local startup ecosystem. Many articles still describe it as though an investor could apply today, sink at least S$100,000 into a promising young company, and claim a 50 percent tax deduction on the following year’s return. That description was accurate for a decade. It has not been accurate since 31 March 2020.

This matters because getting the status of a scheme wrong is not a harmless slip. An individual who structures an investment around a deduction that no longer exists ends up with an unpleasant surprise at Year of Assessment time, and a company that markets itself to investors on the strength of a lapsed incentive risks misleading the very people it is trying to attract. This article sets out exactly what the AITD scheme was, confirms its current status with reference to the Inland Revenue Authority of Singapore (IRAS), and walks through what angel investors and qualifying startups should be looking at instead in 2026.

If you are an angel investor structuring a stake in a Singapore startup, or a founder trying to understand what tax-related incentives you can genuinely offer prospective backers, the sections below should give you a clear and current picture rather than a repeat of outdated marketing copy.

What the AITD Scheme Was

The Angel Investors Tax Deduction scheme was introduced at Budget 2010 to encourage experienced individuals to back early-stage Singapore companies with capital, not just money but also mentorship and networks. Under the scheme, an individual who obtained “approved angel investor” status from Enterprise Singapore and who invested at least S$100,000 of qualifying investment in a qualifying startup within a 12-month window could claim a tax deduction equal to 50 percent of the cost of that qualifying investment, subject to a cap of S$500,000 of investment costs per Year of Assessment.

The deduction was not immediate. An approved angel investor had to hold the investment for a continuous period of two years from the date of the last qualifying investment before the deduction could be claimed, and the deduction was granted for the Year of Assessment relating to the basis period in which the last day of that two-year holding period fell. The scheme applied only to investments made between 1 March 2010 and 31 March 2020, and it carried a built-in sunset clause from the outset rather than being an open-ended incentive.

Current Status: The Scheme Has Lapsed

The AITD scheme has lapsed. IRAS is explicit that no new approvals of “angel investor” status, and no renewal of that status, will be granted for any period commencing after 31 March 2020. This was confirmed as part of Budget 2020 and the scheme has not accepted new applicants for six years as at the date of this article. Anyone marketing an investment opportunity, or planning their own tax position, on the basis that the AITD scheme is currently open to new participants is working from outdated information.

There is a narrow exception worth noting: investors who were already approved and who made qualifying investments before the cut-off may still be working through the two-year holding period and subsequent claim for investments made near the tail end of the eligible window. If you believe you fall into this category, the appropriate course is to write directly to Enterprise Singapore or refer to the IRAS guidance on the scheme, rather than relying on secondary commentary, including this article, for a live claim.

For everyone else, meaning any investor considering a fresh angel investment in a Singapore startup today, the AITD deduction is simply not available. That does not mean there is nothing left in the toolkit, but it does mean the toolkit looks different from what a decade of blog posts about AITD might suggest.

What Applies Instead in 2026

No Capital Gains Tax on Qualifying Share Disposals

Singapore does not impose a general capital gains tax, and this remains one of the more significant, if less publicised, advantages available to angel investors today. Where an individual holds shares in a startup as a capital asset rather than as part of a trade of buying and selling securities, gains realised on an eventual exit, whether through a trade sale, buyback, or IPO, are typically not taxable. This is not a scheme with an application process or an approval requirement; it flows from the general structure of the Income Tax Act 1947 and the distinction the Comptroller of Income Tax draws between capital gains and income. Investors should still document the capital nature of their holding carefully, since IRAS looks at the substance of the investor’s activity, including frequency of transactions and holding period, rather than accepting a bare assertion.

Startup SG Equity: Co-Investment Rather Than a Personal Deduction

The government’s current flagship support for early-stage investment is Startup SG Equity, administered under the broader Startup SG suite. Rather than giving the individual investor a personal tax deduction, Startup SG Equity has the government co-invest alongside independent, qualified third-party investors into eligible startups, particularly in deep-tech sectors, at an agreed co-investment ratio. Budget 2026 added a further S$1 billion to this scheme, reflecting continued policy emphasis on deep-tech and frontier sectors. This is a materially different mechanism from AITD: it benefits the startup’s capital raise and can improve terms for the investor, but it is not a personal income tax deduction claimed on the investor’s own return.

Enterprise Innovation Scheme: A Company-Level Incentive, Not an Investor Deduction

Some commentary conflates AITD with the Enterprise Innovation Scheme (EIS), which offers Singapore companies enhanced tax deductions of up to 400 percent on qualifying innovation activities such as research and development, IP registration, and the acquisition of qualifying IP rights. EIS is a real and current incentive, but it sits at the company level, rewarding the startup itself for innovation spend, not the individual who invests personal capital into that startup. Our companion guide on the Enterprise Innovation Scheme and its 400 percent tax deductions sets out the mechanics for founders who want to understand what their company itself can claim.

Structuring the Investment Itself

With a personal tax deduction off the table, angel investors increasingly focus on how the investment is structured rather than on chasing a tax break that no longer exists. Convertible instruments, preferred equity with defined exit terms, and redeemable preference shares are all commonly used to give an investor a clearer route to a return without depending on IRAS approval. We cover the mechanics of one of the more flexible structures in our guide to redeemable preference shares under section 70 of the Companies Act 1967, which explains why investors sometimes prefer a built-in redemption mechanism over ordinary equity. Founders issuing new shares to bring an angel investor onto the cap table should also be comfortable with the underlying allotment mechanics, covered in our FAQ on share issuances, allotments and pre-emption rights.

Comparing AITD Against What Is Currently Available

A Practical Example

Consider an individual who in 2026 invests S$150,000 in a qualifying Singapore-incorporated startup in exchange for ordinary shares. Under the old AITD rules, this investor might have expected a 50 percent deduction, S$75,000, against personal income after a two-year holding period. That deduction is not available for an investment made in 2026, regardless of how closely the investment resembles the kind of bet AITD was designed to encourage.

What the investor can still expect is that, provided the shares are genuinely held as a capital asset and the eventual disposal is not characterised as a trade, any gain realised when the company is later sold or lists will generally fall outside the scope of Singapore income tax. If the startup itself is investing in qualifying research and development or intellectual property registration, it may separately be able to claim EIS deductions at the company level, which can improve the company’s own cash position and, indirectly, its prospects, but this is a benefit to the company’s tax computation, not a personal deduction for the investor’s own Form B or Form P filing.

Why This Confusion Persists

A large volume of older content describing AITD as a live scheme remains indexed and circulating online, much of it written while the scheme was still active between 2010 and 2020, and some of it simply never updated after the 2020 sunset. Because the scheme’s name and mechanics were genuinely useful and well understood, they continue to be referenced in investor pitch decks and startup FAQs years after the underlying benefit disappeared. Before relying on any secondary source, including this one, always confirm current scheme status directly against iras.gov.sg, since IRAS updates its special tax schemes pages when a scheme’s status changes.

Practical Steps for Investors and Founders

Angel investors evaluating a Singapore startup investment in 2026 should treat the tax position as a secondary consideration behind the commercial merits of the deal, confirm the capital versus trading character of their holding with their own tax adviser before assuming capital gains treatment will apply, and check whether Startup SG Equity co-investment is relevant if the target company is deep-tech and raising from qualified third-party investors. Founders should avoid referencing AITD in investor materials at all, since doing so signals that the company’s own research is out of date, and should instead focus pitch materials on the company-level incentives, such as the Enterprise Innovation Scheme, that remain genuinely available. Startups preparing their annual filings around the same time as fundraising should also keep their Estimated Chargeable Income (ECI) filing and Form C, C-S or C-S Lite filing current, since incoming investors will often ask to see up-to-date compliance records as part of due diligence.

Investors who are actively building a portfolio approach to early-stage Singapore companies, rather than making a single one-off bet, may also find it useful to think about how investment decisions across a portfolio interact with the capital-versus-trade distinction described above, since a pattern of frequent buying and selling across many companies can shift the tax characterisation of gains even where each individual holding looks like a long-term stake.

Conclusion

The Angel Investors Tax Deduction scheme was a genuinely useful incentive for a decade, but it lapsed on 31 March 2020 and has not been revived. Individuals investing in Singapore startups today should plan around the incentives that are actually available, principally the absence of capital gains tax on qualifying disposals, Startup SG Equity co-investment for eligible deep-tech companies, and company-level incentives such as the Enterprise Innovation Scheme, rather than a personal deduction that no longer exists. Getting this distinction right protects both investors, who should not expect a deduction IRAS will not grant, and founders, whose credibility with sophisticated investors depends on citing current schemes accurately.

To speak with the team at Raffles Corporate Services, you can email [email protected] or call, SMS, or WhatsApp +65 8501 7133. We are happy to assist with any queries.

The Editorial Team, Raffles Corporate Services