Business expenses are expenses you have paid to run the business. Not all business expenses are deductible.

What is Deductible

Deductible business expenses reduce your company’s taxable income and the amount of tax you need to pay.     

Example

Computation$
Income80,000
Business Expenses 15,000
 - Deductible Business Expenses 5,000
 - Non-Deductible Business Expenses 10,000
Income Subject to Tax ('Taxable Income')80,000 - 5,000 = 75,000
(Income minus deductible expenses)

Generally, deductible business expenses are those 'wholly and exclusively incurred in the production of income'. In other words, they must satisfy all these conditions:

  • The expenses are solely incurred in the production of income.
  • The expenses are not a contingent liability i.e. they do not depend on an event that may or may not occur in the future. In other words, the expenses must be incurred. An expense is 'incurred' when the legal liability to pay the expense arises, regardless of the date of actual payment of the money. 
  • The expenses are revenue, and not capital, in nature.
  • The expenses are not prohibited from deduction under the Income Tax Act.

Learn more about the tax deductibility of expenses by watching our e-Learning video.

What is Non-Deductible

Non-deductible business expenses are activities you or your employees pay for that do not fulfil the conditions above. These include personal expenses (such as travel, or entertainment not related to the running of the business) and capital expenses (such as expenses incurred to incorporate a company and the purchase of fixed assets).

Learn how to make tax adjustments (such as adding back non-deductible business expenses) to arrive at the income that is chargeable to tax.

Examples of Deductible & Non-Deductible Business Expenses

Deductible Non-Deductible
Accounting fee

Administrative expenses

Advertisement

Auditors' remuneration
Amortisation

Bad debts (trade debtors)

Bank charges

Book-keeping services

Borrowing costs as a substitute for interest expense or to reduce interest costs

Bad debts (non-trade debtors)

Commission

CPF, skills development levy, foreign worker levy (FWL)1

CPF-related
Statutory contributions to CPF

Ad-hoc contributions to employees' MediSave Account

Topping-up Employees' CPF Retirement Accounts/ Special Accounts on Their Behalf

Voluntary cash contributions to self-employed persons' MediSave Account

Certificate of entitlement (COE) for motor vehicles2

CPF-related
Voluntary contributions to CPF (refers to CPF contributions exceeding the statutory rate)

Interest incurred on late CPF contributions

Digital taxes imposed in the form of turnover taxes (not income taxes)

Directors' fees

Directors' remuneration

Depreciation (you may instead claim capital allowances)

Digital taxes imposed as income taxes

Dividend payments made on preference shares

Donations

Employee Equity-Based Remuneration (EEBR) Scheme

Employment Assistance Payment (EAP)

Entertainment

Exchange loss (trade and revenue in nature)

Exhibition expenses

Entrance fee (country club or other clubs)

Exchange loss (non-trade or capital in nature)

Expenses incurred before commencement of business

 

Fixed assets written off

Fixed assets acquisition cost (you may instead claim capital allowances)

Fines

 Goodwill payment

Income tax of employee borne by employer (in accordance with employment contract)

Insurance premium

Insurance for underwriting bad trade debts

Interest expenses

Interest incurred on late payment of fees to a Management Corporation for a Strata Title Plan (MCST)

Interest incurred on loans to re-finance prior loans or borrowings

Intellectual property (IP) licensing expenditure

Impairment loss on non-trade debts

Singapore income tax and any tax on income in country/ territory outside Singapore

Installation of fixed assets

Interest expenses on non-income producing assets (interest adjustment)

Legal and professional fees (trade and revenue transactions) Legal and professional fees (non-trade or capital transactions)

Medical expenses (restricted to 1%/ 2% of total remuneration if company is under Portable Medical Benefits Scheme (PMBS) or Transferable Medical Insurance Scheme (TMIS))

Motor vehicle expenses (such as upkeep, maintenance, running and financing costs of goods/ commercial vehicles e.g. van, lorry and bus)

Medical expenses (amount exceeding 1%/ 2% of total remuneration if company is under PMBS or TMIS)

Motor vehicle expenses (S-plated, Q-plated and RU-plated cars)

Office upkeep  

Periodicals and newspapers

Postage

Printing and stationery

Property tax

Provision for bad and doubtful debts (specific) (note impairment loss on trade debts)

Provision for obsolete stocks (specific)

Additional Petrol Duty Rebate (Budget 2021)3

Penalties

Prepaid expenses (not relating to the relevant basis period)

Private and domestic expenses (expenses not incurred for business purpose)

Private hire car

Provision for bad and doubtful debts (general) (note impairment loss on trade debts)

Provision for obsolete stocks (general)

Reinstatement costs (expenses incurred to reinstate premises to its original condition prior to vacating it at the end of the tenancy agreement)

Rental of business premises

Registration of patents, trademarks, designs and plant varieties

Repairs and maintenance

Research and development

Road tax rebate (Budget 2021)4

Retrenchment payments
Contractual retrenchment payments

Ex-gratia retrenchment payments and outplacement support costs, where there is no complete cessation of business

 

Renovation or refurbishment works (you may claim Section 14Q deduction for qualifying expenditure)

Retrenchment payments
Ex-gratia retrenchment payments and outplacement support costs, where there is a complete cessation of business

Secretarial fees

Staff remunerations (salary, bonus and allowances)

Staff training

Staff welfare/ benefits5

Statutory and Regulatory expenses

Stock obsolescence

Supplementary Retirement Scheme (SRS)

 
 

Tax fees (service fees paid to tax agent)

Telephone bills

Transport (public transport and goods/ commercial vehicles)

Travelling

Transport (S-plated, Q-plated and RU-plated cars)

Wages

Water and electricity

Withholding tax on interest payments borne by companies on-behalf of non-residents

1 If your company has received the FWL rebate, only the reduced FWL incurred by your company (i.e. after deducting the FWL rebate for the corresponding period) is allowed tax deduction.

2 If the vehicle qualifies for capital allowances (goods/ commercial vehicle), you can include the cost of COE to the cost of vehicle and claim capital allowances.

3 Taxi operators and private-hire car (PHC) operators who disburse the additional petrol duty rebate (APDR) on behalf of the Government to active drivers of petrol and petrol-hybrid taxis and PHCs, can claim a tax deduction on such payments to the drivers. Learn more about the APDR at the Land Transport Authority’s (LTA) website.

4 Taxi operators and vehicle lessors who received the road tax rebate (RTR) for their petrol and petrol-hybrid vehicles and passed on the savings from the RTR to eligible taxi and PHC drivers, can claim a tax deduction on such payments to their drivers. Learn more about the RTR at LTA's website.

5 Expenses incurred by your company on staff welfare or benefits that are taxable in the hands of employees do not automatically qualify for tax deduction and vice versa. Such expenses must meet the tax deductibility conditions to qualify for tax deduction.

Learn more about the tax treatment of business expenses:

Further/ Enhanced/ Double Deductions

There are various tax schemes that provide for further/ enhanced/ double deductions on qualifying business expenses.

Learn about the following tax schemes: