What Can Singapore Small Businesses Claim as Tax Deductions?

When you're running a small business in Singapore, accounting is rarely your favourite part of the job. But tax deductions are worth understanding, because most founders leave money on the table simply by not knowing what they can claim.

The short answer: more than you might think. Singapore's corporate tax system runs at a flat rate of 17% on chargeable income. The goal is to reduce that chargeable income legally through allowable deductions and reliefs, and this guide shows you exactly how.

The Golden Rule: What Qualifies as a Tax Deduction in Singapore?

Under Section 14 of the Income Tax Act, an expense is deductible if it is wholly and exclusively incurred in the production of income. In other words: if the expense directly relates to running your business and generating revenue, it's likely deductible.

The moment an expense has a personal element, or isn't directly connected to earning income, it generally falls outside the rules.

With that principle as your guide, here's what most Singapore SMEs can claim.

Operating Expenses You Can Deduct

1. Staff Costs

Salaries, bonuses, and employer CPF contributions are all deductible. This is typically one of the largest deductions for service businesses and agencies.

• Salaries and wages paid to employees
• Employer CPF contributions (at the prevailing rate, currently up to 17% for employees aged 55 and below)
• Staff bonuses (when paid in the same accounting period they relate to)
• Staff training costs (certain schemes offer enhanced deductions on top; see Other Schemes below)
• Staff welfare: reasonable costs such as team meals and staff benefits may qualify, within reason

Note: Salaries paid to sole proprietors or partners are not deductible in those business structures, as they are treated as drawings rather than expenses.

2. Rent and Office Expenses

If you rent an office or co-working space for business purposes, that rent is deductible. So are associated office expenses:

• Office rental and service charges
• Utilities (electricity, water, internet) for business premises
• Office supplies and stationery

If you are a sole proprietor or self-employed individual, a proportionate portion of home expenses such as utilities and internet may be deductible, based on floor area or usage apportionment, with careful record-keeping. For Pte Ltd companies operating from a director's home, the position is more complex: the company does not directly hold home expenses, so a formal arrangement (such as a licence or sublease) is typically required. Seek professional advice before claiming.

3. Professional and Advisory Fees

Fees paid to qualified professionals for business purposes are generally deductible:

• Accounting and bookkeeping fees
• Legal fees related to business operations (not capital transactions)
• Consulting fees
• Audit fees (if applicable)

Worth noting: outsourcing your accounting to Harvest saves you time, and the fee itself is a deductible business expense.

4. Marketing and Advertising

Most marketing expenditure directly aimed at generating revenue is deductible:

• Digital advertising (Google Ads, Meta Ads, LinkedIn)
• Website hosting and maintenance
• Graphic design and content creation
• Business cards and printed materials
• Sponsorships (if for genuine business promotion)

5. Business Travel

Travel incurred wholly and exclusively for business purposes is deductible. This includes:

• Flights and accommodation for business trips
• Transport to client meetings (Grab, taxi fares)
• Mileage if using a personal vehicle for business purposes

Personal travel mixed with business travel requires careful separation; only the business portion qualifies.

6. Insurance Premiums

Business insurance premiums are generally deductible, including:

• Public liability insurance
• Professional indemnity insurance
• Work injury compensation (WIC) insurance
• Key-man insurance in certain circumstances (rules vary; seek professional advice)

7. Interest on Business Loans

If you've taken a loan to finance your business operations (not capital assets), the interest payable on that loan is generally deductible. The principal repayment itself is not.

8. Software Subscriptions and Digital Tools

Recurring software subscriptions used for business, such as accounting platforms, project management tools, and communication software, are generally treated as revenue expenditure and are deductible in the year incurred.

Capital Allowances: Fixed Assets Are Treated Differently

Capital expenditure, meaning spending on fixed assets like computers, equipment, and machinery, is not immediately deductible as an operating expense. Instead, Singapore allows capital allowances under Sections 19 and 19A of the Income Tax Act.

These let you write off the cost of qualifying plant and machinery over time:

For renovation and refurbishment costs (fitting out an office, for example), deductions are available under Section 14N, spread equally over three years, up to a cap of S$300,000 per three-year period. From YA 2025 onwards, businesses may also elect to claim the full deduction in a single year, subject to the same cap. The election is irrevocable for that expenditure.

Common Expenses You Cannot Deduct

Understanding what you can't claim is just as important. These are frequently misunderstood:

• Personal expenses: your own meals, personal travel, gym memberships, and clothing (unless it's a uniform required for the role)
• Capital expenditure: the purchase price of fixed assets (see capital allowances above instead)
• Provisions and reserves: general provisions for bad debts do not qualify; only specific debts actually written off do
• Fines and penalties: penalties from IRAS, ACRA, or any regulatory body are not deductible
• Entertainment: client entertainment is a grey area. It may be deductible if wholly for business purposes, but the bar for substantiation is high, so document the business purpose clearly for every instance you intend to claim

Tax Reliefs Worth Knowing About

Beyond deductions, Singapore offers exemptions and a rebate that reduce the tax bill for most SMEs, especially new ones.

Startup Tax Exemption (SUTE)

For the first three Years of Assessment (YAs), newly incorporated Singapore companies that meet qualifying conditions can claim:

• 75% tax exemption on the first S$100,000 of chargeable income
• 50% tax exemption on the next S$100,000 of chargeable income

This means a qualifying startup with S$200,000 in chargeable income would have S$125,000 of it exempted, leaving only S$75,000 taxable at 17%.

Partial Tax Exemption (PTE)

After the SUTE period (or for companies that don't qualify), the Partial Tax Exemption applies:

• 75% exemption on the first S$10,000 of chargeable income
• 50% exemption on the next S$190,000 of chargeable income

Corporate Income Tax Rebate (YA 2025 and YA 2026)

On top of the exemptions above, recent Budgets have granted a corporate income tax rebate. For both YA 2025 and YA 2026, qualifying companies receive a 50% rebate on corporate tax payable, capped at S$40,000 in total benefits per YA. Companies that employed at least one local employee during the year also receive a minimum S$2,000 cash grant, even in a loss position. There is nothing to apply for: IRAS computes and applies it automatically.

These reliefs are built into Singapore's tax framework, but you need to file correctly, and with clean financials, to actually benefit from them.

Other Schemes and Enhanced Deductions

Singapore also offers enhanced deductions for certain qualifying activities. These go beyond the standard 100% deduction, so a dollar of qualifying spend can be written off at 200% or even 400%:

• Enterprise Innovation Scheme (EIS): In force from YA 2024 to YA 2028, EIS gives 400% tax deductions or allowances on qualifying spend across five innovation activities: R&D carried out in Singapore, registration of intellectual property, acquisition and licensing of IP, approved training courses, and innovation projects carried out with partner institutions. From Budget 2026, qualifying AI expenditure was added to the scheme. Eligible smaller companies can also convert a portion of their qualifying spend into a non-taxable cash payout instead of taking the deduction.
• Double Tax Deduction for Internationalisation (DTDi): A 200% deduction on qualifying expenses for overseas expansion, including market research, trade fairs, and business development trips. Administered by Enterprise Singapore.
• Research and development (R&D): Outside of EIS, businesses conducting qualifying R&D in Singapore may also claim base deductions under Sections 14C and 14D of the Income Tax Act.

Each scheme comes with specific conditions. A good accountant will know which ones apply to your situation, and flag them proactively.

Frequently Asked Questions

Can I claim GST as a tax deduction? GST (Goods and Services Tax) and corporate income tax are separate systems. If you are GST-registered, you claim input GST through your GST returns, not as a corporate tax deduction. If you're not GST-registered, the GST you pay on business expenses is generally included as part of the deductible cost.

Are meals and entertainment deductible in Singapore? They can be, if wholly and exclusively for business purposes. In practice, mixed-purpose meals are difficult to substantiate. Keep a clear record of the business reason for any meal or entertainment expense you intend to claim.

Can I deduct my own salary as a business owner? If you operate through a private limited company (Pte Ltd), the salary you draw as an employee-director is a deductible business expense for the company. If you operate as a sole proprietor or partnership, drawings are not deductible. For a detailed breakdown of how business owners can structure their own compensation, see Compensation Planning for Small Business Owners in Singapore.

What records do I need to keep? IRAS requires you to retain records and supporting documents (invoices, receipts, contracts) for at least five years from the relevant Year of Assessment. Digital records count.

When do I need to file my corporate tax return? Companies must file their Estimated Chargeable Income (ECI) with IRAS within 3 months of the end of their financial year. The corporate tax return (Form C or Form C-S) is due by 30 November of the Year of Assessment.

The Bottom Line

Singapore's tax system is business-friendly, but only if your records are clean enough to back your claims. Most small business owners miss deductions for one reason: their bookkeeping isn't organised enough to substantiate the claim when it counts.

The real fix is a system that keeps your books current. When your accounts are in order month by month, tax season becomes a formality rather than a scramble. For a practical guide to keeping your records organised year-round, see Bookkeeping for Singapore SMEs: A No-Fuss Guide.

This article is intended as general information only and does not constitute tax advice. Tax rules and rates are subject to change. Please consult a qualified accountant for advice specific to your business situation.

Harvest Accounting is a Xero Platinum Partner and 2025 Xero Partner of the Year (Singapore). We handle bookkeeping, tax compliance, and monthly reporting for Singapore small businesses, all for a fixed monthly fee, with no surprises. Talk to us about your business.