Short answer: Buying an S-plated car through your Singapore company does not save tax. Section 15(1)(k) of the Income Tax Act 1947 blocks deductions for the car’s running costs, IRAS allows no capital allowances on its cost, and GST on it cannot be claimed. Separately, the director who uses the car is taxed on a benefit-in-kind.
Many owner-directors assume a car bought by the company becomes a business expense. For company car tax in Singapore, the opposite is usually true: the company pays the full price with no tax relief or GST credit, and the director is taxed on the private use. Vans, lorries and a few car businesses are treated differently. This guide sets out the rules, the benefit-in-kind formula and a worked example.
Key facts at a glance
- Income Tax Act 1947 s 15(1)(k) disallows expenses on a motor car built to carry no more than 7 passengers (excluding the driver) with an unladen weight of 3,000 kg or less, whether the company pays directly or by reimbursement.
- IRAS allows no capital allowances on S-plated cars or on Q-plated and RU-plated business cars. The exceptions are private hire cars that are hired out and cars used to give driving instruction.
- GST on buying and running a motor car is blocked under Regulation 27 of the GST (General) Regulations, even if the car is used wholly for business.
- Vans, lorries and other goods vehicles qualify for capital allowances (a 6-year working life, or a 3-year write-off under s 19A), and the GST on them is claimable.
- The taxable car benefit for a new car is 3/7 x [(car cost – PARF rebate) / 10 + running costs borne by the employer].
- Car benefits go into Appendix 8A. For income earned in 2026, Form IR8A and Appendix 8A are due by 1 March 2027 under s 68(2) of the Income Tax Act 1947.
Raffles Corporate Services works with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice. This article is general information only and is not legal advice.
Can my company claim tax deductions for a company car in Singapore?
No, not for a normal passenger car. Section 15(1)(k) of the Income Tax Act 1947 prohibits deductions for expenses on a motor car designed to carry no more than 7 passengers (excluding the driver) with an unladen weight of 3,000 kg or less.
The rule applies whoever owns the car, whether the company pays directly or reimburses an employee, and even when the car is used for business. It also covers the cost of renewing a Certificate of Entitlement (COE, the permit needed to own a vehicle) incurred on or after 1 April 1998. So petrol, parking, ERP charges, road tax, insurance, servicing and mileage claims on an S-plated car are all non-deductible. The test turns on seating and weight, not fuel, so an electric car is caught too.
For the general rules on what a company can and cannot deduct, see our guide to tax-deductible and non-deductible business expenses.
Are Q-plated cars or other car types exempt from the rule?
No. Q-plated and RU-plated business cars registered on or after 1 April 1998 are disallowed like S-plated cars. Section 15(1)(k) excludes only:
- a taxi;
- a car registered outside Singapore and used exclusively outside Singapore;
- a private hire car, if the business hires out cars and uses that car principally for hiring;
- a car registered before 1 April 1998 as a business service passenger vehicle (IRAS caps the deduction for these at S$35,000 divided by the cost of the vehicle, multiplied by the car’s expenses);
- a car registered on or after 1 April 1998 that is used principally for driving instruction, where the business holds a driving school licence or driving instructor’s licence;
- chauffeured private hire cars, in the limited situations set out in sub-paragraphs (vi) and (vii).
A consultancy or trading company buying a car for its director fits none of these.
Can my company claim capital allowances on the car’s cost?
No. Capital allowances are the tax version of depreciation, and IRAS guidance states that they cannot be claimed on private cars (S-plated) or business cars (Q-plated and RU-plated). The only exceptions are cars registered as private hire cars or as cars for instructional purposes, and only where they are hired out or used for driving instruction in the company’s business.
The whole price, including COE, is paid from after-tax profits. At the 17% corporate tax rate, S$200,000 of qualifying equipment could save up to S$34,000 in tax over its life; a car of the same cost saves nothing. IRAS also allows them on a foreign-registered car used only outside Singapore for business.
Can a GST-registered company claim GST on a company car?
No. IRAS states that input tax on buying and running a motor car is disallowed under Regulation 27 of the GST (General) Regulations, however much the car is used for business.
A “motor car” for GST uses the same 7-passenger and 3,000 kg test. Regulation 25(1) excludes taxis, dealer and rental stock, and licensed driving-school cars. Since 1 January 2023, narrow exceptions also cover cars used by third parties (such as customer parking at your premises) and car costs recovered from a connected company. Your own staff and directors are never third parties.
GST on vans, lorries and motorcycles is claimable in the normal way because they are not “motor cars”. Our article on input tax claims under Singapore GST covers the general conditions.
What about a company van or lorry?
Goods vehicles are fully within the tax system: running costs are deductible, the purchase cost qualifies for capital allowances, and GST on both is claimable if the company is GST-registered.
IRAS treats vans, pick-ups, lorries and buses as plant and machinery, so the cost including COE can be claimed over the 6-year working life or written off over 3 years under s 19A(1). An employee driving the van home also creates no taxable benefit, as IRAS does not tax that incidental use.
If you are looking at a used van, our walkthrough on claiming capital allowances and GST on a used delivery van shows how the two claims work.
How is the director’s company car benefit-in-kind calculated?
Private use of a company car is a taxable benefit-in-kind (a non-cash benefit received because of the employment or office). IRAS values it by formula, not by mileage logs.
For a new car (where the company is the first owner), the IRAS formula is:
3/7 x [(car cost – PARF rebate) / 10 + actual running and maintenance costs borne by the employer]
- 3/7 reflects IRAS’s estimate that the car is used privately on 3 days out of 7.
- Car cost is the purchase price including COE.
- PARF rebate is the Preferential Additional Registration Fee rebate payable if the car is deregistered when it is more than 9 but not more than 10 years old.
- Running costs include road tax, petrol, parking, ERP charges, insurance, repairs and maintenance, including amounts the company reimburses.
The formula changes in some situations:
| Situation | IRAS formula |
|---|---|
| New car | 3/7 x [(car cost – PARF rebate) / 10 + running costs] |
| Second-hand car | 3/7 x [(car cost – PARF rebate) / B + running costs], where B is the remaining COE period from the date of purchase, rounded up to whole years (no PARF deduction for a car over 10 years old at purchase) |
| Car with renewed COE | 3/7 x [(COE renewal amount + PARF rebate forgone) / remaining renewed COE period + running costs] |
| Leased car | 3/7 x (rental cost + running costs not borne by the leasing company) |
If the car is provided for only part of the year, the cost portion is pro-rated by the number of days. Car allowances are different: they are not valued using the formula and must be declared in full as income.
Worked example: what a company car costs in tax
Hypothetical figures, for arithmetic only: your company buys a new S-plated car for S$200,000 including COE and provides it to the director for the whole of 2026. The PARF rebate on deregistration at 9 to 10 years would be S$20,000. In 2026 the company pays S$12,000 for road tax, insurance, petrol, parking, ERP and servicing.
- Company deductions: S$0. The S$200,000 cost qualifies for no capital allowances, and the S$12,000 of running costs is disallowed under s 15(1)(k).
- Company GST: none of the GST on the purchase or running costs can be claimed under Regulation 27.
- Annualised car cost: (S$200,000 – S$20,000) / 10 = S$18,000.
- Add running costs: S$18,000 + S$12,000 = S$30,000.
- Apply 3/7: S$30,000 x 3/7 = S$12,857 (rounded). This amount is reported in Appendix 8A and taxed at the director’s personal income tax rates.
The company spends S$212,000 with no tax relief, and the director is taxed on S$12,857. A higher salary or director’s fee would at least be deductible. We compare those options in director fees vs salary vs dividends.
Company car tax in Singapore: personal car, company car or company van?
For most owner-managed companies, the choice is between the three options below.
| Item | Director owns the car personally | Company owns an S-plated car | Company owns a van |
|---|---|---|---|
| Capital allowances on cost | Not applicable (personal asset) | Not allowed | Allowed (6 years, or 3 years under s 19A) |
| Running costs paid by company | Mileage reimbursement for business trips is not deductible to the company | Not deductible (s 15(1)(k)) | Deductible |
| GST on purchase and running costs | Not applicable | Blocked (Reg 27) | Claimable if GST-registered |
| Tax for the director or employee | Reasonable business mileage reimbursement not taxable; a fixed car allowance is taxable in full | Taxable benefit using the 3/7 formula | Incidental home-to-work use not taxable |
| Reporting | Car allowance in Form IR8A | Appendix 8A | None for incidental use |
A transport allowance is deductible for the company but fully taxable for the employee. Owning a car through the company only makes sense for non-tax reasons such as financing or convenience.
How do I report the car benefit on IR8A and Appendix 8A?
The car benefit goes on Appendix 8A (car benefits are item 4i), and the total value of benefits-in-kind is carried to item d8 of Form IR8A. For income earned in 2026, the forms are due by 1 March 2027.
IRAS requires the forms for company directors, including non-resident directors. Employers in the Auto-Inclusion Scheme (AIS), mandatory for those with 5 or more employees in 2026, submit electronically; others give hardcopy forms to employees. Missing the deadline can lead to a fine on conviction under s 94 of the Income Tax Act 1947. Our guide to the Appendix 8A benefits-in-kind rules covers the other benefits on the same form.
Common mistakes we see:
- Claiming capital allowances on an S-plated car, or not adding back its depreciation.
- Deducting the car’s petrol, parking and ERP as general “transport”.
- Claiming GST on the car’s purchase, servicing or petrol.
- Leaving the car benefit off Appendix 8A because the director is a shareholder or the only employee.
- Using the new-car formula for a second-hand or leased car, or forgetting to pro-rate for part of the year.
- Assuming that a Q-plated registration makes the car deductible.
Frequently asked questions
Does registering the car in the company’s name save tax?
No. The company gets no capital allowances, running-cost deductions or GST credit on an S-plated or Q-plated car, and the director is taxed on private use.
Can the company reimburse my business mileage on my own car?
Yes. IRAS does not tax a reasonable mileage reimbursement for business use. However, the company cannot deduct mileage paid on a private car, so the reimbursement is a cost with no tax relief for the company.
Is a car allowance better than a company car?
For the company, a car allowance is deductible as a transport allowance, while the costs of a company car are not. For the director, the whole allowance is taxable, while a company car is taxed only on the 3/7 value. Compare both sides.
Can my company claim GST on ride-hailing or limousine trips for business?
Yes. Since 1 April 2022, GST on pay-per-trip chauffeured private hire services is claimable with a valid tax invoice or simplified tax invoice, subject to the usual input tax conditions.
Where can I check my own numbers?
IRAS publishes a Car Benefit Tax Calculator on its car benefits page. To estimate the company’s overall tax bill, try the corporate tax calculator on our free tools page. For company secretarial support, see our sister site Singapore Secretary Services.
Need help with this?
Raffles Corporate Services can handle the ACRA filings, compliance documentation and records for you, and where court proceedings or legal advice are needed, we work with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice.
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Last reviewed: 19 October 2026. The Editorial Team, Raffles Corporate Services.