250% Tax Deduction Under the Business and IPC Partnership Scheme

30 Jun 2016

From 1 July 2016 to 31 December 2018, businesses will enjoy a total of 250% tax deduction on wages and related expenses when they send their employees to volunteer and provide services, including secondments, to Institutions of a Public Character (IPCs) under the Business and IPC Partnership Scheme (BIPS), subject to receiving IPCs’ agreements. These services include:

a. Professional services in various areas, such as legal, human resources, and accounting; or

b. General voluntary services for IPCs.

The BIPS was introduced in Budget 2016 to encourage employee volunteerism through businesses, and forms part of the Government’s efforts to promote philanthropy and volunteerism.

The scheme aims to spur more businesses to provide services to IPCs, as it will defray the cost of doing so. Through volunteering activities or secondments, businesses and IPCs can build enduring and sustained partnerships, benefiting both parties. Employees will also have more opportunities to use their skills to give back to the community. In the long run, the Government hopes to foster a widespread culture of caring in Singapore, where businesses and employees can play a greater role in meeting social needs and building a caring and cohesive society.

The guidelines and FAQs for IPCs interested in participating in the BIPS can be found on the Ministry of Finance and the Charity Portal websites. The FAQs for businesses can be found here. See Annex A for the step-by-step guide.

For further queries, interested IPCs may contact the Charities Hotline at 6337 6597 or email MCCY_Charities@mccy.gov.sg.

Issued by the Ministry of Finance, Inland Revenue Authority of Singapore and Ministry of Culture, Community and Youth.


Annex A

5 Quick Steps: How do businesses and IPCs participate in BIPS?

Step 1

Business establishes interest; IPC identifies areas of need

As the BIPS does not discriminate the types of services that are supportable, IPCs can decide the services most valuable to them. 

Step 2

IPC and business form partnership and keep track of their caps

Both IPCs and businesses have to track their respective caps. This is because an IPC can only endorse up to $50,000 of qualifying expenditure to be provided with 250% tax deduction in every calendar year, and each business is subject to a qualifying expenditure cap of $250,000 each year of assessment. Any unutilised cap cannot be carried forward to the following year.

Step 3

IPC and business reach an agreement before provision of services

Before the voluntary service takes place, both IPC and business should agree on the type(s) of services and/or secondment to be provided, duration of services, and estimated (qualifying) expenditure. This information would be provided by the business in the BIPS Service Giving Declaration Form (Form A), found on the Charities Unit’s website . The completed Form A has to be endorsed by the IPC.

Step 4

IPC and business can consider longer term partnership

Upon the completion of services, the business is to update the Declaration Form (Form B) with the actual expenditure, to be endorsed by the IPC. The IPC can request to verify the expenditure incurred prior to endorsement. Both parties can consider if there are prospects for long term partnership.

Step 5

IPC to submit BIPS Declaration Forms to IRAS and business to claim BIPS tax deduction

For services completed in a calendar year, the IPC is to submit the completed Forms A and B to IRAS by end of January of the following calendar year. The business is to include the BIPS tax deduction in its tax computation, based on the amount endorsed by the IPC in Form B, and file its income tax return to IRAS.