Quick answer
Singapore blocks cars out of the tax system: no capital allowances and no expense deductions for S-plated private cars or Q-plated and RU-plated business cars registered on or after 1 April 1998, regardless of business use, and regulation 27 blocks the GST too. Commercial vehicles (vans, lorries, goods vehicles, motorcycles) claim capital allowances and running costs normally. Private-hire and driving-school cars are the working exceptions.
Is a vehicle tax deductible in Singapore?
Only if it is not a car. The Income Tax Act’s prohibition covers both the capital and revenue sides for cars: the purchase earns no capital allowances, and the running costs (petrol, parking, ERP, insurance, maintenance) earn no deduction, even when the car is used wholly for business and even when the company reimburses an employee rather than paying directly. The 1 April 1998 registration date matters only for Q-plate and RU-plate business cars; in practice virtually every business car on the road today is caught.
Commercial vehicles are the other Singapore: a van, lorry, goods vehicle, or motorcycle used in the business is ordinary plant. Capital allowances run on the cost, running expenses deduct at the business share, and the input tax flows. The carve-outs prove the policy: where the car itself earns the income (private-hire cars rented out or providing chauffeured rides, driving-instruction cars), deductions and allowances are available to that operator.
How much can you claim?
Worked example: a logistics firm buys a S$78,000 lorry and a S$155,000 S-plate sedan for the managing director in the same year. The lorry claims capital allowances on its full cost and deducts its running costs; with GST claimed on the purchase, its true cost falls well below sticker. The sedan claims nothing: no allowances, no running costs, no GST, and the firm adds every sedan expense back in the tax computation. Over five years the after-tax gap between the two purchases is dramatic, which is precisely the policy intent.
| Vehicle | Capital allowances | Running costs | GST |
|---|---|---|---|
| S-plate, Q-plate, RU-plate car (post-1 Apr 1998) | No | No | Blocked |
| Van, lorry, goods vehicle, motorcycle | Yes | Business share | Claimable |
| Private-hire or driving-school car (in that trade) | Yes, for the operator | Yes | Per the operator’s rules |
Fuel for the deductible fleet is covered in the fuel guide; people-movement alternatives (public transport, taxis, allowances) are deductible through the ordinary travel rules.
GST on vehicles
Regulation 27 blocks input tax on motor cars: purchase, rental, and running expenses alike, so the 9% GST on a car is a real cost with no recovery. Commercial vehicles claim input tax on purchase and running costs from tax invoices in the ordinary way. Businesses that rent cars for staff use are inside the block too; renting a van is not. The ledger needs the car/commercial split baked in, or blocked GST leaks into the return.
Record-keeping requirements
Five years: purchase agreements, registration documents establishing plate type and date, running-cost invoices tagged per vehicle, and the capital allowance schedules for the commercial fleet. The tax computation’s add-back of car costs should be reconstructable from the ledger in minutes; that is what the per-vehicle tagging buys.
How to claim, step by step
- Classify every vehicle by plate and function: blocked car or claimable commercial vehicle.
- Post car costs to their own account so the add-back and GST block are mechanical.
- Claim capital allowances on commercial vehicles from the invoice set, and deduct their running costs at the business share.
- Claim input tax on commercial-vehicle costs only.
- Meet people-transport needs through deductible routes: fares, chauffeured services, or taxable allowances.
- Keep all records five years.
Common mistakes
- Claiming capital allowances on a Q-plate car because it is “a business car”.
- Deducting reimbursed car expenses for a director or employee.
- Input tax claimed on car rental for staff.
- Car and van costs mixed in one motor-vehicle account.
- Assuming the private-hire exception covers a normal company car with a chauffeur.
Software that helps
- Dext keeps per-vehicle cost coding so blocked and claimable spend never blend.
- ExpenseFlow reads vehicle invoices and running costs, flags spend that identifies a private passenger car (where Singapore blocks both the deduction and the input tax), and routes every document through review before syncing it to Xero or QuickBooks.
- Xero carries the fixed-asset register and capital allowance schedules for the commercial fleet.
FAQ
See the answered questions above for the car prohibition, commercial vehicles, GST, COE, and the alternatives.
From ExpenseFlow
GST coding on autopilot
ExpenseFlow reads every receipt, assigns the right GST treatment and account code, and syncs to Xero or QuickBooks Online once you approve.