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Every year, tax season comes for every business owner in Singapore. Some sail through it smoothly, with lower tax bills and clean records. Others? They miss out on key deductions and end up overpaying.
But here’s the good news:
Singapore’s IRAS (Inland Revenue Authority of Singapore) is quite clear about what counts as tax-deductible.
If you know what to look for, you can legitimately reduce your taxable income without triggering any red flags.
We help our clients do this every year. Proper tax planning can make a big difference, from freelancers to growing SMEs. And you can do the same.
In this article, you’ll discover 5 common tax-deductible expenses that many businesses in Singapore overlook.
You’ll also see real-world examples to help you apply these deductions correctly.
Now, let’s start with the basics: what makes an expense tax-deductible in Singapore?
1. What are tax-deductible expenses?
Tax-deductible expenses are costs that a business can legally subtract from its income when calculating its tax liability.
In other words, they help reduce your taxable income and your tax bill.
But what exactly qualifies as a deductible expense in Singapore?
According to IRAS, tax-deductible expenses must be wholly and exclusively incurred in the production of income.
This means they need to be directly related to running your business, not personal or private.
Here’s what IRAS generally looks for in a valid claim:
The expense is necessary for your trade, profession, or business.
- It’s not capital in nature (i.e., not for buying long-term assets);
- It’s supported by invoices or receipts.
- It wasn’t reimbursed or subsidized.
- It’s incurred during the basis period for the relevant Year of Assessment.
- It is not prohibited under the Income Tax Act of Singapore 1947.
And here's the kicker: Incorrect or excessive claims can trigger audits, penalties, or even a rejection of your expense entirely.
That’s why it’s critical to understand what’s allowed — and what’s not.
Once you get it right, these deductions can significantly improve your cash flow and overall tax efficiency.
Let's take a look at a simple example below
| Business income | SGD 100,000 |
| Business costs |
|
Taxable income | $100,000 - $12,000 = $88,000 (That’s your business income minus the expenses IRAS allows for deductions) |
2. What is the difference between deductible vs. non-deductible expenses
Not all business expenses are created equal. Some help reduce the amount of tax payable. Others don’t. That’s the key difference between deductible and non-deductible expenses.
If the expense doesn’t help you generate income, or if it’s personal, you can’t deduct it.
According to the IRAS use of terms, deductible expenses are also known as allowable business expenses. And non-deductible expense is commonly referred to as a disallowable business expense
Let’s break it down:
| Deductible expenses | Non-deductible expenses | |
| Definition | These are costs that are directly related to earning your business income. They’re allowed by IRAS and can be subtracted from your total revenue to lower your taxable income. | These are costs that IRAS does not allow you to claim — usually because they’re personal, capital in nature, or not directly tied to income generation. |
| Examples |
|
|
Once you understand the difference, claiming the right expenses becomes much simpler.
Let’s dive into 5 common deductible expenses most freelancers and business owners in Singapore should know.
3. 5 common deductible business expenses that you can claim
Employee-related expenses are generally allowable, as long as they directly relate to hiring or maintaining staff.
For example, if you pay your staff $3,000 a month plus an annual bonus, those amounts, along with mandatory CPF contributions and insurance premiums, are deductible.
- Salaries, bonuses, and allowances for employees
- Compulsory CPF contributions (up to the legal limit)
- Insurance premiums for employee coverage
- Medical expenses within allowable caps
- Retrenchment benefits
- Staff training costs
Important note: Your salary, CPF, and medical costs as the business owner are not deductible.
In contrast, non-deductible expenses in this category are, for example:
- Personal cars’ maintenance (S-plated Vehicles)
- Interest on late CPF contributions
- Medical expenses above 1%/2% for companies participating in PMBS or
TMIS - Voluntary contributions to CPF exceeding the statutory rate
These are costs you incur to run the financial or legal side of your business.
Say you hire an accountant to prepare your taxes and also borrow money to expand your operations — the accounting fees and loan interest are tax-deductible.
Examples of allowable expenses include:
- Accounting and audit fees
- Interest on loans used for business purposes
- Hire purchase interest
- Legal fees (e.g., for recovering trade debts or lease renewal)
Important note: Avoid claiming legal fees for buying a new property — that’s considered capital in nature.
In contrast, non-deductible expenses in this category are
- Fines and penalties (statutory)
- Legal and professional fees for non-trade or capital transactions, for example, stamp duties
These are the everyday costs of keeping your business open and operating smoothly.
Imagine you're running a small design studio. Your rent, utilities, public transport to meet clients, and even printer ink are all deductible.
Examples of allowable expenses include:
- Rent, utilities, and telephone charges
- Repairs and maintenance of business equipment
- Public transport and travel for business
- Advertising and marketing fees
- Office supplies (stationery, postage)
- Upkeep of delivery vehicles like vans or motorcycles
Important note: Private car expenses are generally not allowed, unless you're a registered private-hire or taxi driver.
In contrast, non-deductible expenses in this category are
- Food, household, and entertainment for personal use
- Medical expenses for the business owner or partner
- Travel between home and work (It is treated as a private journey, not a business expense)
While most capital costs aren’t deductible, some get special treatment under capital allowances or specific tax schemes.
For instance, if you buy a computer for your business, you can’t claim the full cost at once, but you can claim it over time through capital allowances.
Examples of allowable capital-related deductions:
- Capital allowances on qualifying fixed assets (e.g., machinery, computers)
- Approved renovation works under Section 14N
- Fees for joining professional bodies
- Startup costs that qualify under certain schemes
- Renting and office upkeep
- Repairs & maintenance
- Bills for water, electricity, telephone, etc.
- Property tax (If it is used for the company’s activity)
- Press, printing & stationery
- Renovation or refurbishment (If it is used for the company’s activity)
In contrast, non-deductible charitable expenses in this category are
- Depreciation
- Fixed assets acquisition costs
- Fixed assets written off
- Interest expenses on assets that do not produce income
Important note: Always check if your expenses qualify for schemes like Section 14N or Enterprise Innovation Scheme before claiming.
Some expenses are only allowed under special government-supported tax schemes.
For example, if your business spends on R&D or volunteers under the Corporate Volunteer Scheme, those costs may be deductible.
Examples of allowable scheme-based expenses:
- R&D expenses under the Enterprise Innovation Scheme (EIS)
- Overseas marketing costs under the Double Tax Deduction for Internationalisation
- Productivity upgrades under the Productivity and Innovation Credit (PIC) Scheme
- Corporate volunteer hours under the Corporate Volunteer Scheme (CVS)
Important note: Keep documentation handy — scheme-related claims often need extra proof or approval
4. Bonus: Charitable deductions - What you can claim
If you wish to give back and save on taxes at the same time, charitable deductions can be a meaningful way to support causes and reduce your taxable income — but only if you follow the rules.
To be tax-deductible, your donation must be made to an approved Institution of a Public Character (IPC) or government-approved charity. These include registered charities in Singapore that support education, health, social services, and more.
For example, if you donate $1,000 to a registered IPC like Community Chest, you may claim 250% of that amount as a deduction — meaning $2,500 is deducted from your taxable income.
Claimable donations include:
- Cash donations to IPCs
- Gifts of shares or computers (for business use by IPCs)
- Donations under specific government-led campaigns like SG Cares Giving Week
In contrast, non-deductible charitable expenses in this category are
- Donations to non-IPC registered charities
- Club entrance fees
- Sponsorships
To learn more in-depth about charitable deductions, we have dedicated a comprehensive article so you can learn more: Singapore tax deductions for donations: How to donate wisely and save tax.
5. How can we help your Singapore company optimize for tax calculation?
If you truly want clarity and confidence when it comes to your business taxes in Singapore, the first step is to treat tax planning as a year-round strategy, not just a tax return filing deadline.
You do not need to struggle to know what costs are "allowable business expenses" and what is not.
With our expert guidance, you'll know exactly which expenses to claim, how to structure your records, and how to optimize for real savings, without crossing any lines.
Book a free consultation with our experts at Global Link Asia Consulting today if you haven’t already.
If you are thinking about expanding overseas with Singapore to be your company headquarters, we can help you:
- Register a company in Singapore;
- Open a corporate bank account in Singapore with a 99% success rate;
- Choose the right company types for tax optimization in Singapore;
- Apply for Singapore business licenses;
- Get an affordable, professional registered office address for your business;
- Support to open, authenticate, and manage Stripe Paypal Business in Singapore, Hong Kong, and the U.S;
- Handle all your tax accounting needs, timely annual filings, auditing, and more.
6. FAQs about Singapore donation tax deductions
Tax-deductible expenses are business costs that help reduce the amount of tax your company has to pay.
In Singapore, you can only deduct certain expenses from your taxable income.
To qualify, the expenses must be fully related to running your business and used to help earn income.
They must be normal business costs, not big one-time purchases like buying property or equipment.
The expense must also happen during the accounting year you're filing for.
Some common examples of tax-deductible expenses include:
- Paying your employees' salaries
- Renting office or shop space
- Spending money on marketing or advertising your business
These are all necessary costs to keep your business running, and they help reduce your tax bill.
In Singapore, some business expenses are allowed to be deducted from your taxable income.
These are called allowable business expenses.
They include things like:
- Staff salaries and bonuses
- Office rent and utility bills
- Marketing and advertising costs
- Travel expenses (only if related to work)
- Interest on business loans
- Other day-to-day business costs
According to Singapore’s tax law (the Income Tax Act), these costs must be used only for running the business.
If you're self-employed or own a company, you can claim these expenses in your tax return to IRAS.
This helps lower the amount of tax you need to pay.
A tax deduction lowers your taxable income before the tax is calculated.
For example, if your business earns $100,000 and you have $20,000 in deductible expenses, you’ll only be taxed on $80,000.
A tax credit works differently. It directly reduces the amount of tax you have to pay after the tax is calculated.
For example, if your tax bill is $10,000 and you have a $2,000 tax credit, you only need to pay $8,000.
In Singapore, most business tax relief comes as deductions, not credits.
However, there are special tax credits for things like R&D (research and development) or hiring older workers.
In Singapore, businesses can claim many employment-related expenses to reduce their tax.
These include:
- Staff salaries, bonuses, and commissions
- Employer’s CPF contributions
- Medical expenses for staff (up to certain limits)
- Training and skills development costs
- Staff welfare benefits (like team meals or gifts)
- Insurance premiums for employee coverage
To be tax deductible, these expenses must be:
- Only for business use (not personal)
- Properly recorded with documents or receipts
When you donate to an approved IPC, they’ll submit the details to IRAS using your NRIC/FIN. This means your tax deduction is processed without you lifting a finger.
Just check your Notice of Assessment to ensure it’s reflected correctly!
Some business expenses in Singapore cannot be claimed as tax deductions. These are called non-deductible expenses.
They include:
- Capital expenses, like buying equipment or property (unless they qualify for capital allowances)
- Personal or private expenses, like meals for your family or personal travel
- Expenses that are not fully for business use
- Fines and penalties, such as traffic tickets or late fees
- Income tax or GST paid by the business
- Expenses related to income that isn’t taxed in Singapore
- Donations (these have separate tax rules and benefits)
- Costs spent before starting the business or after it shuts down
Also, if you use a private car, most of the related costs (like fuel or repairs) can’t be claimed.
And for entertainment expenses, IRAS has strict rules on what you can and cannot deduct.
Capital expenses like buying machines, vehicles, or property can’t be deducted all at once from your taxable income.
But in Singapore, businesses can claim capital allowances instead.
These let you spread out the cost of fixed assets over a few years.
There are three main types of capital allowances:
- Annual Allowances: This spreads the cost over the useful life of the asset.
- Accelerated Allowances: This lets you write off the cost faster for certain items.
- Section 14Q Allowance: This is for renovation and refurbishment costs (up to $300,000 every 3 years).
If your vehicle qualifies, you may also claim capital allowances on it to help lower your taxable income.
Yes, medical expenses can be claimed as tax deductions for businesses in Singapore, but there are some limits. Companies can usually claim up to 1% of their total employee pay as medical expenses.
If the company offers flexible benefits (like health plans), this limit goes up to 2%. If you're self-employed, you can claim medical expenses only if they are fully for business reasons — like covering staff.
But if the medical costs are for you personally, they’re seen as private expenses and cannot be claimed.
To make sure your business expenses are accepted as tax deductible by IRAS, you need to keep good records.
These include:
- Original receipts and invoices
- Proof of payment, like bank statements or cancelled cheques
- Contracts with service providers or vendors
- Mileage logs if you claim travel for business
- Entertainment expense records (write down who was there and why it was for business)
- Asset registers for claiming depreciation
- Employment records to support salary and CPF claims
You must keep these documents for at least 5 years. IRAS can ask to see them during a tax audit.
Having proper records proves that your expenses were real, for business, and related to income generation.
At Global Link Asia Consulting, we use accounting software like QuickBooks and highly secure cloud storage services to keep records of our company and our clients'.
We offer a comprehensive range of accounting and tax services for Singaporean companies. Our services include:
- Tax Consulting including corporate income tax, GST tax, contractor tax, and more.
- Monthly/Annual Tax Accounting services in accordance with Singapore accounting standards (SFRS).
- QuickBooks Consulting and Licensing.
- Corporate Income Tax Return Preparation
- GST Tax Return Preparation.
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