- Not all business expenses are deductible. They must be incurred wholly and exclusively for business purposes and not be capital in nature.
- Employee-related expenses are generally deductible, but some (like medical costs and CPF contributions) are subject to specific IRAS limits and conditions.
- Singapore offers enhanced tax deductions under schemes like EIS, including recent updates for AI-related expenditure from YA 2027.
- Certain expenses (e.g., renovation & refurbishment) are deductible but capped and structured over fixed periods, so timing and planning matter.
Allowable business expenses IRAS accepts are what help you lower your tax bill and keep more of your profits. But many business owners in Singapore still ask the same questions every year: “Can I claim client meals?”, “What about my office rent or staff bonuses?”, etc.
In this guide, you’ll learn:
- What expenses are deductible
- Which ones does IRAS disallow
- How the latest updates affect your claims
What are allowable business expenses in Singapore?
When you start a business in Singapore, you’ll spend money on many things, from paying salaries to renting an office or buying supplies.
But not every expense can reduce your tax bill. The Inland Revenue Authority of Singapore (IRAS) only allows you to claim certain costs, known as allowable business expenses.
Allowable business expenses are the day-to-day costs that are wholly and exclusively incurred to earn your income. In other words, the expense must directly help you run your business or generate revenue.
IRAS looks at four main conditions before an expense is considered deductible:
- Wholly and exclusively for business – The expense must relate entirely to your business activities, not personal use.
- Incurred (not just planned) – You must already be legally liable to pay it, even if payment hasn’t been made yet.
- Revenue in nature – It should be a running cost (like rent or salaries), not a one-off investment (like buying machinery).
- Not prohibited by law – Some expenses are specifically disallowed under the Income Tax Act 1947 (for example, private car costs).
Why IRAS business expenses matter
Claiming allowable business expenses correctly helps to:
- Reduce your taxable income (and therefore your corporate tax payable).
- Stay compliant with IRAS rules.
- Avoid penalties or adjustments during corporate tax filing.
Let’s say your company earned S$80,000 this year and spent S$15,000 in total expenses.
Out of this amount, only S$5,000 qualify as allowable business expenses (the rest are personal or capital in nature).
Taxable income = S$80,000 − S$5,000 = S$75,000
That’s how business expenses directly lower the income that IRAS taxes.
In short, if an expense is necessary for running your business, incurred, revenue in nature, and not on IRAS’s disallowed list, you can usually claim it as an allowable business expense.
Allowable business expenses in IRAS in Singapore
Now that you know what allowable business expenses mean, let’s look at the types of costs that IRAS usually allows you to deduct.
These are the everyday expenses your company incurs to run operations, pay staff, and generate income. Claiming them correctly helps reduce your taxable profit and keeps your business tax-efficient.
1. Staff and employee costs
Employee-related costs are some of the most common deductible expenses. These include:
- Salaries, bonuses, and allowances paid to employees
- Employer CPF contributions (up to the statutory limit)
- Skills Development Levy (SDL) and Foreign Worker Levy (FWL)
- Staff welfare, such as company meals, team-building activities, or staff transport (as long as it’s for business purposes
2. Office and business operating expenses
Day-to-day running costs are fully deductible as long as they are business-related. This includes:
- Office rent and utilities
- Internet, telephone, and postage charges
- Printing and stationery
- Maintenance and cleaning services
- Insurance for business premises or operations
For rent, claim the actual contractual payments, not straight-line accounting amounts.
3. Marketing, advertising, and promotion
Expenses to promote your business and attract customers are also deductible. Examples:
- Online ads, social media promotions, and campaigns
- Sponsorships done as part of genuine business marketing
- Participation in exhibitions or trade shows
4. Professional and statutory fees
Professional fees are deductible if they’re related to running your business. These include:
- Accounting and audit fees
- Tax agent fees
- Legal fees for trade matters (like recovering debts or renewing leases)
- Statutory and regulatory fees required by government agencies
5. Repairs and maintenance
You can claim the cost of routine repairs and maintenance for assets or property used in your business. For example, fixing air-conditioning, painting walls, or servicing equipment.
However, major upgrades or improvements that increase the value of an asset are considered capital expenses (not deductible, but may qualify for capital allowances).
6. Bad trade debts
If your business has issued invoices that cannot be collected, you can deduct bad trade debts as long as:
- The income was previously recognised, and
- The debt has been written off in your books.
Bad debts from non-trade sources (like personal loans) are not deductible.
7. Research & Development (R&D) expenses
Singapore offers enhanced tax deductions under the Enterprise Innovation Scheme (EIS) to encourage businesses to invest in innovation and capability building.
From YA 2024 to YA 2028, businesses can claim 400% tax deductions or allowances on up to S$400,000 of qualifying expenditure per year for the following activities:
- Research and development (R&D)
- Registration of intellectual property (IP)
- Acquisition and licensing of IP rights
- Training of employees
From YA 2027 to YA 2028, this scheme is extended to include qualifying AI-related expenditure, capped at S$50,000 per year.
Are entertainment expenses tax-deductible in Singapore?
Yes, if they are incurred to earn income and are not personal in nature. IRAS allows business entertainment when there is a clear business purpose, proper documentation, and the cost is reasonable.
- Deductible examples: Client meals, coffee with prospects, event hospitality at trade shows, modest staff appreciation tied to business outcomes.
- Not deductible: Purely social or private gatherings, lavish personal celebrations, family events, or entertainment with no business agenda.
- Staff vs client entertainment: The expense can be deductible to the company, but certain staff benefits may be taxable to the employee.
- No fixed IRAS % cap for entertainment: Apply the “wholly and exclusively” test and keep receipts with who/what/when/why noted.
Non-deductible business expenses in Singapore
Not every cost you pay as a business owner can reduce your tax bill. IRAS clearly defines what counts as non-deductible business expenses. These are expenses that are personal, capital in nature, or specifically disallowed under the Income Tax Act.
Understanding these helps you avoid claiming the wrong deductions and stay compliant during tax filing.
1. Personal and private expenses
Any expense that is personal in nature or not directly related to earning business income is non-deductible. Examples include:
- Your own salary, CPF, or MediSave contributions (if you’re self-employed or a sole proprietor)
- Travel between home and office (ordinary commuting)
- Personal meals, gifts, or entertainment not tied to business meetings
- Club memberships and recreational expenses
Tip: Even if a cost benefits both business and personal use, you can only claim the business-related portion.
2. Capital expenses and depreciation
Capital expenses are long-term investments, not day-to-day running costs. These are not deductible because they are considered assets that bring future benefits, not immediate expenses.
Common examples:
- Purchase of fixed assets (e.g., laptops, office furniture, machinery)
- Renovation or refurbishment that affects the building’s structure
- Incorporation and registration costs
- Legal fees for setting up a company or acquiring assets
3. Fines, penalties, and donations
IRAS does not allow deductions for:
- Fines or penalties (including parking or late filing penalties)
- Non-statutory penalties imposed by authorities
- Donations that are not made to approved Institutions of a Public Character (IPCs)
(If donations are made to approved IPCs, they may qualify separately for a 250% deduction under IRAS’ donation scheme.)
4. Private car and transport costs
Private car expenses are one of the most common disallowed claims. IRAS specifically blocks deductions for S-plated, Q-plated, and RU-plated private cars, even if they’re used for business purposes.
These include:
- Petrol, parking, and maintenance for private cars
- Car hire or mileage reimbursements for private car use
However, running costs for goods and commercial vehicles (vans, lorries, buses) remain deductible.
5. Excess or voluntary CPF and MediSave contributions
Employee-related expenses are generally tax-deductible, provided they are incurred wholly and exclusively for business purposes. These include:
- Salaries, wages, bonuses, and allowances
- Employer CPF contributions (up to statutory limits)
- Recruitment and training costs
CPF contributions made above the statutory requirement are not deductible.
From 1 January 2026, employers may also claim tax deductions on qualifying top-ups to employees’ CPF MediSave Accounts, subject to IRAS conditions.
6. Medical expenses above the IRAS cap
Medical expenses are deductible only up to 1% of total employee remuneration, or 2% if you provide portable medical benefits or use AMCS.
Any amount above these limits is non-deductible.
Important expense updates for 2026
IRAS made a few key clarifications and changes in 2025. Here’s what businesses should pay attention to this year:
Medical expenses cap
You can only claim medical expenses up to 1% of your total employee pay. This limit goes up to 2% if your company gives portable medical benefits (like PMBS, TMIS, or MediShield Life plans) or makes MediSave contributions under AMCS.
Anything above the 1% or 2% cap is not deductible.
Motor vehicle and transport costs
- Allowed: Costs for commercial vehicles (vans, lorries, buses), including COE as part of the vehicle cost for capital allowances.
- Not allowed: Expenses for private cars (S-, Q-, and RU-plate), even if used for business.
- Reimbursements: Taxi or Grab fares for work trips are fine. Daily travel between home and office is not.
Renovation & Refurbishment (R&R) deductions
Businesses can claim tax deductions on qualifying Renovation and Refurbishment (R&R) expenses, such as office renovations, electrical works, and installation of partitions or flooring.
The deduction is capped at S$300,000 over a 3-year period.
From YA 2025, the cap applies to fixed 3-year blocks (e.g., YA 2025–2027, YA 2028–2030), regardless of when the costs are incurred.
You can either:
- Claim the deduction over 3 years, or
- Opt for a 1-year write-off (irrevocable).
Employee training (Enterprise Innovation Scheme)
From YA 2024 to YA 2028, businesses can get an extra 300% tax deduction on the first $400,000 of qualifying training expenses each year.
Courses must be funded by SkillsFuture Singapore (SSG) and aligned with the Skills Framework.
Alternatively, you can convert up to $100,000 of total EIS spend into a cash payout (20%, capped at $20,000 per year).
Intellectual Property (IP) registration
Registration costs for patents, trademarks, designs, and plant varieties are tax-deductible until YA 2028.
They also qualify for an extra 300% deduction under the EIS or a cash payout.
If the IP is sold or transferred within a year, IRAS may claw back the benefit.
Rules for self-employed and partnerships (FEDR option)
If you’re self-employed (sole-proprietor/partner), you can reduce tax in two ways:
A) Claim actual allowable expenses
Deduct the business part of costs like phone, rent, supplies, marketing, staff, and transport (not private car costs). Capital items don’t get deducted directly. Claim capital allowances instead of depreciation.
B) Use the Fixed Expense Deduction Ratio (FEDR)
Instead of tracking every receipt, some trades can claim a deemed % of gross income as expenses.
Commonly used by private-hire/taxi drivers, delivery workers, commission agents, etc. Pick either FEDR or actual expenses for the year. Choose the one that gives the lower taxable income.
Important reminders
Private car expenses (S/Q/RU plates) are not deductible, even if used for business.
Keep basic records to support whichever method you choose.
How Sleek helps with allowable business expenses IRAS
Managing allowable business expenses in Singapore can often feel complicated, especially with frequent IRAS updates and detailed tax rules. Getting it right is important because proper expense claims not only reduce your taxable income but also keep your company fully compliant.
Sleek helps businesses simplify this entire process. Our accounting and tax experts make sure you claim every expense you are entitled to, while staying within IRAS guidelines. At Sleek, we provide:
- Corporate e-Filing using Form C or Form C-S (as required by IRAS)
- Timely and error-free filing before the 30 November deadline
- Dedicated accountants who review your allowable business expenses and optimise your deductions
- All-in-one support for bookkeeping, expense management, and corporate tax return preparation
With Sleek, you’ll file on time, stay compliant with IRAS, and make the most of every eligible expense.
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FAQs: Allowable business expenses in Singapore
Are taxi, Grab, or Gojek fares tax-deductible for companies in Singapore?
Yes, these fares are tax-deductible if the travel is incurred wholly for business purposes, such as attending client meetings or providing transport under an overtime policy available to all staff. However, daily commuting between home and office is not deductible, and expenses related to private car use remain disallowed under IRAS rules.
Can I deduct private car expenses (S/Q/RU plates) in Singapore?
No, private car expenses are not tax-deductible in Singapore, even if the vehicle is used for business or the costs are reimbursed by the company. IRAS specifically disallows such claims. However, expenses for commercial vehicles like vans, lorries, and buses are deductible, and COE may be included in the asset cost for capital allowance purposes.
Can I claim depreciation on laptops and equipment in Singapore?
No, accounting depreciation is not tax-deductible for corporate tax purposes in Singapore. Instead, businesses should claim capital allowances on qualifying plant and machinery, such as laptops and office equipment. This allows the cost of the asset to be written off over time according to IRAS-prescribed rules, providing tax relief in place of depreciation.
Are cash MediSave top-ups deductible for employers in Singapore?
Cash MediSave top-ups are only tax-deductible if they are made under approved schemes such as the Additional MediSave Contribution Scheme (AMCS) and within IRAS limits. Voluntary CPF contributions above statutory requirements are generally not deductible. However, statutory employer CPF contributions remain fully deductible as a business expense.
How should companies claim office rent for tax in Singapore?
Companies should claim office rent based on the actual contractual amount incurred for each Year of Assessment, rather than using straight-line accounting treatment. This means factoring in rent-free periods or stepped rent arrangements as they occur. If only part of the premises is used for business purposes, the expense must be reasonably apportioned.
