On or about 13 December 2019, the Inland Revenue Authority of Singapore (IRAS) has updated on its website regarding Business and IPC Partnership Scheme (BIPS), a scheme to encourage corporate volunteerism, under which businesses may claim 250% tax deduction on qualifying expenditure incurred from 1 July 2016 to 31 December 2021 when they send their employees to volunteer and provide services, including secondments, to Institutions of a Public Character (IPCs).
All businesses carrying out a trade or business in Singapore are eligible for BIPS when they send their employees (but exclude owners of businesses i.e. sole-proprietors, partners and shareholders who are also directors of the company) to volunteer and provide services at IPCs.
The qualifying Conditions for BIPS are:
- companies, sole proprietorships, partnerships (including limited partnerships and limited liability partnerships) and registered business trusts, and
- bodies of persons that are deemed to be carrying on a business.
IRAS further clarifies on what qualifying expenditure includes:
- Basic wages
- Other related expenses incurred by the business that were necessary for the provision of services to IPC
All qualifying expenditure must meet the following requirements:
- not reimbursed by the IPCs at anytime;
- incurred only because of the volunteer services;
- not considered as personal, living, or family expenses; and
- not capital expenditure
From 2 December 2019, the following enhancements have been made for the ease of claiming BIPS tax deduction:
- tax deduction on wage of part-time employees who volunteer with IPCs under BIPS, and
- an option for businesses to claim tax deduction on wage expenditure based on fixed hourly rates in lieu of actual salary: at $10 per hour for general volunteering and $20 per hour for skills-based volunteering. Skills-based volunteering refers to services which necessitate a qualifying employee to apply work-related expertise, as required by the IPC.
- businesses can claim tax deduction on wage expenditure based on fixed hourly rates instead of actual salary at $10 per hour for general volunteering and $20 per hour for skills-based volunteering.
For more information, please visit the IRAS website.
Source: IRAS website, 13 December 2019