Tax Treatment of Business Expenses (S-Z)

Your company can claim tax deduction for qualifying statutory and regulatory expenses under Section 14V of the Income Tax Act 1947.

To qualify for tax deduction, the statutory and regulatory expenses must be incurred by your company to:

• Comply with any written law of Singapore or another country/ territory
• Comply with any code, standard, rule, requirement or other document issued by any government or public authority or by a securities exchange
• Study the impact of any proposed law¹/ document²
• Prevent or detect any non-compliance with any law¹/ document²
• Voluntarily comply with any law¹/ document²

Examples of tax-deductible expenses:

• Accounting fees
• Annual listing fees
• Audit fees (including audit fees incurred by a company that is eligible for audit exemption under the Companies Act 1967)
• Income tax service fees (e.g. preparation of tax computation, lodging objection to Notices of Assessment)
• Secretarial fees

Examples of non-deductible expenses, being capital in nature:

• Incorporation fees
• Striking-off fees
• Liquidation fees
• Property valuation fees (where the property is held on capital account)
• Initial Public Offering (IPO) fees

Learn more about the deductibility of statutory and regulatory expenses (PDF, 267KB).

Where your company contributes to its employees' SRS accounts on the employees' behalf, these contributions are tax-deductible as staff costs, subject to the annual SRS contribution cap for each employee.

Cash top-ups made to your employees’ CPF Retirement Accounts/ Special Accounts, on the employees’ behalf under the Retirement Sum Topping-Up Scheme, are tax-deductible.

^New! However, cash top-ups made to your employees’ CPF MediSave Accounts, on the employees’ behalf, are not tax deductible. This is because you are encouraged to make voluntary employer contributions to your employees’ MediSave Accounts via CPF Board’s Additional MediSave Contribution Scheme.

The cash top-ups made to an employee's CPF Retirement Account/ Special Account/ MediSave Account on his/ her behalf, are considered the employee's taxable income which the employee contributed into his/ her CPF Retirement Account/ Special Account/ MediSave Account. The employee can, subject to conditions, enjoy CPF cash top-up relief.

Eligible companies can claim tax deduction for voluntary cash contributions to the CPF MediSave Accounts of self-employed persons (SEP). The tax-deductible amount is capped at $2,730 per SEP per year since 1 Jan 2018.

Learn more about the qualifying conditions for voluntary contributions to MediSave Account by companies.

Generally, your company ('payer') is required to withhold tax on interest paid to a non-resident, unless tax exemption or waiver of withholding tax obligation is granted. In some cases, the withholding tax on the interest may be borne by the payer on behalf of a non-resident.

Where the loan agreement provides that the lender receives the gross amount of interest (without any deduction of withholding tax), the withholding tax borne is treated as part of the interest paid. The interest expense is tax-deductible if the loan is taken up to finance income producing assets.

The payer may be required, upon request by the Comptroller of Income Tax, to provide documents to substantiate that the lender is to receive the gross amount of interest.

Where the loan agreement does not provide that the lender receives the gross amount of interest (without any deduction of withholding tax), the withholding tax borne by the payer is not treated as part of the interest paid. It is also not a prescribed borrowing cost that is specifically deductible under the Income Tax Act 1947. Whether the withholding tax borne on behalf of the non-resident is tax-deductible depends on the purpose of the loan:

• If the loan is taken up for revenue purposes (e.g. to finance the purchase of trading stock), the withholding tax expense is deductible in the hands of the payer as it is a revenue expense.
• If the loan is taken up for capital purpose (e.g. to finance capital assets), the payer is not able to claim a tax deduction on the withholding tax expense. 

The payer may be required, upon request by the Comptroller of Income Tax, to provide documents to substantiate the purpose of the loan.