Singapore - Corporate - Deductions - Worldwide Tax Summaries

A 100% depreciation allowance is available on capital expenditure incurred on computers, robots, standby generators, and prescribed automation ... Success!Yourmessagehasbeensent. × Error!Yourmessagewasnotsent.Pleasetryagain. × CW ChrisWooley WWTSOperationsDirector PleasecontactforgeneralWWTSinquiriesandwebsitesupport. Name Email Subject Message Bysubmittingyouremailaddress,youacknowledgethatyouhavereadthePrivacyStatementandthatyouconsenttoourprocessingdatainaccordancewiththePrivacyStatement. 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Taxdepreciationisavailableonmachineryandequipmentonastraight-linebasisovertheirspecifiedworkinglifeforalltypesofbusiness.Inlieuofthestraight-linebasis,acceleratedtaxdepreciationallowancescanbeclaimedbyallbusinessesonallmachineryandequipmentinequalinstalmentsoverthreeyears. Fortheyearsofassessment2021and2022,depreciationallowanceclaimsmaybemadeovertwoyears,with75%ofthecostwrittenoffinthefirstyearofassessment,andtheremaining25%inthefollowingyear.  A100%depreciationallowanceisavailableoncapitalexpenditureincurredoncomputers,robots,standbygenerators,andprescribedautomationequipment. Writingdownallowancesonastraight-linebasisoverfiveyearsareallowableonthecostofacquisitionofintellectualproperty(IP),subjecttocertainconditions.Taxpayersmaymakeanirrevocableelectiontoclaimthewritingdownallowancesover10or15yearsinsteadoffive. Gainsontaxdepreciableproperty(i.e.theexcessofproceedsovertaxbase)aretaxedasincometotheextentthattaxdepreciationhasbeenallowed;thatis,thereisaclawbackoftaxdepreciationonthedisposaloftheasset. Goodwill Paymentsfortheacquisitionofgoodwillaregenerallycapitalinnatureandnotdeductible. Start-upexpenses Generally,expensesincurredpriortothecommencementofbusinessarenottaxdeductible.However,mostbusinessesareallowedtodeductexpensesincurredinthe12monthsimmediatelyprecedingtheaccountingyearinwhichthebusinessearneditsfirstdollaroftradingincome.Deductibleexpensesarethosethatwouldhavebeenallowedadeductionhadtheybeenincurredafterthebusinesscommencedoperations. Inaddition,deductionsandwritingdownallowancesareavailableforcertaintypesofpre-commencementexpenditure(acquisitionofplantandmachinery,R&D,etc.)thataredeemedtobeincurredonthefirstdayonwhichthetaxpayercarriesonbusiness. Interestexpenses Interestincurredoncapitalemployedintheproductionofincome,andprescribedborrowingcoststhatareincurredasasubstituteforinterestortoreduceinterestcosts,willbeallowedasataxdeduction. Researchanddevelopment(R&D)expenses Fortheyearsofassessment2019to2025,enhancedtaxdeductionof250%ofqualifyingexpenditureisavailableforR&DcarriedoutinSingapore,subjecttoconditions.WheretheR&Discarriedoutoverseas,adeductionof100%ofqualifyingexpenditureisallowed. ExpenditureincurredinrelationtoR&Dcost-sharingarrangementsareaccordedthesametaxtreatmentasR&Dexpenses. Intellectualproperty(IP)acquisitionexpenses Fortheyearsofassessment2019to2025,enhancedtaxdeductionof200%isavailableforeachofthefollowing: thefirstSGD100,000ofqualifyingexpenditureincurredtoregisterqualifyingIP,and thefirstSGD100,000ofexpenditureincurredtolicensequalifyingIP. Baddebts Badtradedebtsandprovisionsfortradedebtsaredeductibletotheextentthattheyareincurredinthebusinessandpreviouslyincludedastradingreceipts.Doubtfuldebtsaredeductibleiftheyareproperlyestimatedandspecific.Generalprovisionsforbaddebtsarenotdeductible. BusinessesthathaveelectedtoaligntheirtaxtreatmentoffinancialinstrumentswiththeaccountingtreatmentprescribedbySFRS 109 (FinancialInstruments) willbeallowedataxdeductionforimpairmentlossesontradedebtswhenrecognisedintheprofitandlossaccount,totheextentthatthedebtsarecreditimpaired.Correspondingly,anyreversalofthecreditimpairedlosseswillbetaxed. Charitablecontributions Donationsaredeductibleonlyiftheyaremadeincashoranotherprescribedformandtoanapprovedrecipient.Thedeductionallowedforqualifyingdonationsisgenerally250%ofthevalueofthedonation.Businessesthatsendemployeestovolunteerandprovideservicestoapprovedcharitableinstitutionsfrom1July2016to31December2023willbeallowedtodeduct250%ofthewagesandincidentalexpensesincurred,subjecttocertaincapsandconditions. Finesandpenalties Finesandpenaltiesimposedforviolationsofthelawarenotdeductible. Taxes Incometaxesaregenerallynotdeductibleindeterminingcorporateincome.However,irrecoverableGSTisdeductibleundercertaincircumstances.TheFWLandpropertytaxesaredeductibletotheextenttheyareincurredwhollyandexclusivelyintheproductionofincome. Othersignificantitems Privateautomobileexpensesarenotdeductible. Thetaxdeductionformedicalexpensesislimitedto2%oftotalpayrolliftheemployerimplementscertainportablemedicalinsuranceorbenefitschemes.Otherwise,theamountdeductiblewillbelimitedto1%oftotalpayroll.Wherethecompanyisexemptortaxedatareducedrate,theexcessexpenseswillbetaxedattheprevailingcorporaterate. Ataxdeductionforemployeeshare-basedremuneration(stockawardsorstockoptionschemes)isallowedonlyiftreasurysharesinthecompanyoritsholdingcompanyarepurchasedtofulfilsuchobligations.Acompanymayalsoclaimataxdeductionwhentheshare-basedremunerationschemeisadministeredbyaspecialpurposevehicle(SPV).Thedeductionisrestrictedgenerallytothelowestoftheactualoutlayincurredbythecompany,itsholdingcompany,ortheSPV. Netoperatinglosses Losscarryover,includingunutilisedtaxdepreciationallowance,isunlimited,providedshareholdingsintheloss-makingcorporationhavenotchangedbeyond50%ofthetotalnumberofissuedshares.Additionally,fortaxdepreciationallowancestobecarriedforward,thesametradeneedstobecontinued.Thetaxauthoritiesmayexercisediscretiontoallowcarryoveroftaxlossesandunutilisedtaxdepreciationevenwhentherehasbeenachangeinshareholdingbeyond50%,absentanytaxavoidancemotives.LossesandtaxdepreciationofuptoSGD100,000incurredbythecompanyinthecurrentyearcanbecarriedbackforoneyear.Thecarrybackoflossesandtaxdepreciationissubjecttothecontinuityofshareholdingtest,andadditionallythesametradetestappliesforthe carrybackoftaxdepreciation. Paymentstoforeignaffiliates Paymentstonon-residents,includingforeignaffiliates,aredeductible,providedtheyarefairandreasonable,arerevenueinnature,andcanbeseentoberelevanttoearningthepayer’sincome. 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