Encouraging Companies That Tap On Tax Deductions for AI Spending to Retrain Workers

Parliamentary Question by Mr Lee Hong Chuang:

To ask the Prime Minister and Minister for Finance in respect of tax deductions on spending on AI tools (a) whether requirements can be placed on companies participating in AI transformation initiatives to prioritise retraining over retrenchment for workers whose roles are affected; and (b) whether the Government will track the impact of AI transformation initiatives on local headcount and median wage growth in firms receiving incentives under the scheme.

Parliamentary Reply by Senior Minister of State for Finance, Mr Jeffrey Siow:

Companies taking up AI transformation initiatives will receive tax deductions through the Enterprise Innovation Scheme. We do not impose workforce-related requirements or require companies to report the impact on their headcount or workers’ wages, as we do not want to make the scheme requirements or disbursement processes too onerous for such companies.

There are however other initiatives that support the reskilling of workers, including with AI. For example, the Enterprise Workforce Transformation Package (EWTP) supports companies to redesign job roles, reskill workers and adopt AI-powered technology solutions. These schemes require companies to meet certain objectives to receive grants or other financial support.