Top Tax Deductions for SMEs in Singapore (2025 Edition)
Small and medium-sized enterprises (SMEs) play a key role in Singapore’s economy. To support their growth, the government offers a range of tax reliefs and deductions. These incentives help reduce tax bills, improve cash flow, and encourage innovation.
This 2025 guide highlights the most common and useful tax deductions for SMEs in Singapore, so your business can stay efficient, compliant, and tax-smart.
1. Staff Training and Development Costs
You can claim up to 100% tax deduction for training costs if the training improves your team’s skills. In many cases, courses supported by SkillsFuture or Workforce Singapore offer extra funding as well.
What’s Covered:
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Training by approved providers
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Courses in areas like finance, IT, or compliance
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Certified in-house training
Why it matters:
Training improves productivity and also helps reduce taxes — a double benefit for any business.
2. Capital Allowances for Business Equipment
When you buy items like computers, furniture, or tools, you can’t deduct the full cost in one year. Instead, you claim capital allowances over time.
How It Works:
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Year 1: 75% of cost
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Year 2: 25% of cost
If the item costs less than SGD 5,000, you may claim it fully in the year of purchase under the Low-Value Asset Scheme.
Tip:
Keep records like invoices and photos of equipment to support your claim if reviewed by IRAS.
3. Renovation and Refurbishment (R&R) Deduction
If you spend money to update your business space, you may qualify for the SGD 300,000 R&R deduction spread across three years.
What You Can Claim:
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Air-conditioning, flooring, and lighting
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Partitions, ceilings, and wiring
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Painting and minor upgrades
What’s Not Allowed:
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Structural changes or extensions
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Office equipment like laptops or printers
Important:
The space must be used for your business operations. Always separate personal and business use.
4. Daily Business Operating Expenses
Most normal running costs are fully deductible as long as they are related to your business.
Examples Include:
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Rent and utilities
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Phone and internet bills
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Digital marketing and advertising
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Business transport and delivery fees
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Accounting, audit, and legal fees
Pro tip:
Always ask for official invoices and keep clear descriptions of what each payment is for.
5. Research & Development (R&D) Tax Deductions
If your business is building something new — like a product, software, or a more efficient process — you may qualify for up to 250% deduction on R&D costs done in Singapore.
What Qualifies:
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Developing a new recipe, system, or product
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Solving technical problems with trial and error
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Hiring experts or outsourcing part of the work
Why it matters:
Even if you’re not in tech, you might still qualify if your work involves improvement or testing.
6. Donations to IPCs
Donations to registered Institutions of a Public Character (IPCs) are tax-deductible at 2.5 times the donation value.
Example:
A SGD 2,000 donation gives you a SGD 5,000 deduction in your tax filing.
Note:
Make sure the charity is IRAS-approved and keep all receipts.
7. Start-Up Tax Exemption Scheme (SUTE)
If your business is newly incorporated, you may be eligible for the Start-Up Tax Exemption — a key incentive in Singapore.
For YA 2025:
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First SGD 100,000 of income: 75% tax exemption
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Next SGD 100,000 of income: 50% tax exemption
To Qualify:
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Company is based in Singapore
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Must be tax resident
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Not more than 20 shareholders, with at least one holding 10% or more
Why it helps:
Start-ups get tax breathing space to focus on growth.
8. Past Schemes and Alternatives
While the Productivity and Innovation Credit (PIC) scheme ended in 2018, many businesses still refer to it. Today, similar benefits exist through:
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Enterprise Development Grant (EDG)
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Productivity Solutions Grant (PSG)
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R&D deduction schemes
Note:
You can’t claim a tax deduction on expenses already funded by a grant.
How USAFE Can Help SMEs
Managing tax claims can be complex — especially when your business is scaling or applying for grants. At USAFE, we support SMEs through:
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Tax computation and Form C-S/C preparation
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Capital allowance tracking
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Review of deductible expenses
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IRAS correspondence and queries
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Year-round tax planning
We also assist with voluntary audits, internal control reviews, and grant-aligned advisory — all of which can strengthen your tax position.
Final Thoughts
Singapore offers generous tax reliefs to support SME growth. But to benefit fully, you need to know what’s allowed, keep good records, and plan ahead. Tax planning is not just for saving money — it shows strong business discipline and readiness for growth.
Need help claiming deductions or reviewing your tax setup?
Talk to our advisors at USAFE today and take the next step toward better tax efficiency and business confidence.
Disclaimer: This article is for informational purposes only and does not constitute any professional advice. Feel free to contact us to consult with our professional advisors team for personalized advice and guidance.
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