IRAS updates business expense guidance, detailing new deductible and non-deductible items and clarifying rules for employee transport reimbursements.
The Inland Revenue Authority of Singapore (IRAS) has revised its guidance on business expenses, clarifying which costs are deductible for tax purposes and which are not.
The updated guidance adds several items as deductible expenses, including revenue-related compensation or damages, contributions to mandatory overseas pension or provident funds, software or license renewal fees, losses from theft or embezzlement (where proper controls exist), genuine business sponsorships, non-statutory fines, and contractually required withholding tax.
Items newly classified as non-deductible include capital-related compensation, contributions to non-mandatory overseas pension funds, software or license setup costs, losses from theft or embezzlement without adequate internal controls, statutory fines, and voluntarily incurred withholding tax.
The guidance also clarifies that employee transport reimbursements for business purposes, including overtime travel, are deductible, whereas commuting between home and office or personal travel is not.
The IRAS guidance emphasises that deductible expenses must be wholly and exclusively incurred in generating income and are revenue in nature. It also provides broader information on taxation, including corporate and individual income tax, GST, property tax, and international tax compliance.
