--- title: "What Is Chargeable Income for Companies? | Singapore Tax" description: "Understand what chargeable income means for companies in Singapore. Learn how to calculate it from net profit, considering tax adjustments and deductions." url: "https://corporate.taxinfo.sg/tax-rates/chargeable-income-explained" language: "en" --- [Home](/) › [Tax Rates](/tax-rates) › Chargeable Income Explained Tax Rates & Calculations # What Is Chargeable Income for Companies Chargeable income is the number that determines how much corporate tax your company pays. Here's exactly how it's calculated and what adjustments you need to make. Who This Is For Business owners and directors who want to understand how their company's taxable income is determined — especially those preparing for their first tax filing. ## TL;DR Chargeable income is your company's **taxable profit after all adjustments**. It's not the same as your accounting profit. You start with net profit from your financial statements, add back non-deductible expenses, deduct non-taxable income, subtract capital allowances, and apply any loss offsets. The result is what gets taxed at [17%](/tax-rates/corporate-tax-rate) \(before exemptions\). ## The Formula Net Profit \(per financial statements\) A \+ Non-deductible expenses \(add back\) B – Non-taxable income \(deduct\) C = Adjusted Profit A + B – C – Capital Allowances D – Losses brought forward E – Approved donations \(× 250%\) F = Chargeable Income A+B–C–D–E–F ## Step 1: Start With Net Profit Take the **net profit before tax** from your company's profit and loss statement \(income statement\). This is your starting point — but it's not your taxable income yet because accounting rules and tax rules differ. ## Step 2: Add Back Non-Deductible Expenses Your accounts may include expenses that IRAS does not allow as tax deductions. Add these back to your profit: Expense | Why It's Non-Deductible ---|--- Accounting depreciation | Replaced by capital allowances \(tax version of depreciation\) Private/personal expenses | Not incurred for business purposes Fines and penalties | Not allowed as a matter of public policy Donations \(in accounts\) | Add back first, then claim at 250% if to approved IPC Capital expenses | Not revenue in nature \(claim capital allowances instead\) Provisions \(general\) | Not yet incurred; only actual expenses are deductible For the full list, see our guide on [tax-deductible expenses](/deductions/tax-deductible-expenses). ## Step 3: Deduct Non-Taxable Income Some income in your accounts is not taxable. Remove it: * **Singapore dividends:** Tax-exempt under the one-tier system * **Capital gains:** Singapore has no capital gains tax \(e.g., gains from selling shares or property held as investment\) * **Foreign-sourced income not remitted:** Generally not taxable unless remitted to Singapore ## Step 4: Subtract Capital Allowances Capital allowances \(CA\) are the tax equivalent of depreciation. You claim CA on qualifying capital assets like computers, furniture, equipment, and renovation. CA rates are set by IRAS, not your accounting depreciation rate. Common CA rates: * Computers and IT equipment: 1 year \(100% write-off\) * Plant and machinery: 3 years \(33.3% per year\) * Renovation/refurbishment: 3 years \(capped at S$300K\) ## Worked Example Scenario: BrightSpark Pte Ltd \(YA 2026\) A marketing consultancy in its 5th year. Here's how to get from their accounting profit to chargeable income: Revenue | S$600,000 ---|--- Less: business expenses \(per accounts\) | –S$480,000 Net profit \(per accounts\) | S$120,000 \+ Accounting depreciation | +S$15,000 \+ Entertainment \(50% disallowed\) | +S$4,000 \+ Fine from NEA | +S$500 \+ Donations in accounts | +S$3,000 – Exempt dividend income | –S$2,000 Adjusted profit | S$140,500 – Capital allowances | –S$12,000 – Donations to IPC \(S$3,000 × 250%\) | –S$7,500 Chargeable Income | S$121,000 Tax calculation \(using PTE — company is in 5th year\): 75% exempt on first S$10,000 = S$7,500 exempt → taxable S$2,500 50% exempt on next S$111,000 = S$55,500 exempt → taxable S$55,500 Total taxable after PTE: S$58,000 Tax payable: S$58,000 × 17% = S$9,860 \(effective rate: 8.1%\) ## Common Mistakes * ✗ **Using accounting profit as taxable income:** Accounting profit ≠ chargeable income. Tax adjustments are always needed. * ✗ **Claiming depreciation instead of capital allowances:** Depreciation must be added back; capital allowances must be claimed separately at IRAS-prescribed rates. * ✗ **Forgetting to add back donations before reclaiming at 250%:** Donations in your P&L must be added back first, then claimed at 250% deduction \(if to an approved IPC\). * ✗ **Not deducting exempt income:** Dividends from Singapore companies and capital gains should be excluded from chargeable income. ## Key Takeaways * ✓ Chargeable income = adjusted profit – capital allowances – losses – enhanced donations * ✓ Always add back accounting depreciation and replace with capital allowances * ✓ Non-deductible expenses \(fines, private costs, provisions\) must be added back * ✓ Non-taxable income \(exempt dividends, capital gains\) must be deducted * ✓ Tax exemptions \(SUTE/PTE\) are applied after chargeable income is determined ## What To Do Next Review your latest financial statements and identify the adjustments needed to arrive at chargeable income. Use our [corporate tax calculation guide](/tax-rates/how-to-calculate) to compute your tax payable, and check what [expenses are deductible](/deductions/tax-deductible-expenses). For tax terms and definitions, visit the [tax glossary](https://taxinfo.sg/tax-glossary). [ Related Guide How to Calculate Corporate Tax Full calculation walkthrough from chargeable income to tax payable. ](/tax-rates/how-to-calculate) [ Related Guide Tax-Deductible Expenses What you can and can't deduct from taxable income. ](/deductions/tax-deductible-expenses) [ Related Guide Partial Tax Exemption How exemptions reduce your effective tax rate. ](/exemptions/partial-tax-exemption) [ TaxInfo Hub Tax Glossary Definitions of key tax terms used in this guide. ](https://taxinfo.sg/tax-glossary)