SINGAPORE: Private-hire car drivers may be able to claim tax deductions for petrol, vehicle rental fees and other business expenses such as car washes and Electronic Road Pricing charges, if proposed changes to the Income Tax Act are passed.
This means private-hire drivers would be treated similarly to taxi drivers when it comes to tax-deductible expenses.
The Ministry of Finance announced on Wednesday (Jun 20) that it is seeking feedback on the proposal after reviewing the issue with the Ministry of Transport, noting that cabbies and private-hire car drivers now provide similar point-to-point transport services.
As such, the Finance Ministry proposes allowing tax deductions on car-related expenses incurred by private-hire drivers, against their driving income.
Subject to conditions, such drivers will be allowed to claim tax deductions for:
- Expenses (other than service fees paid to platform providers) incurred to earn driving income based on a deemed expense ratio prescribed in the Income Tax Act, set at “40 per cent of all driving income less service fees”;
- Service fees paid to platform providers based on the actual amount incurred under normal tax rules.
Alternatively, the private-hire car driver may opt to claim tax deduction based on the actual amount of running expenses and service fees incurred in earning driving income, said the Finance Ministry.
The proposed changes come amid calls by the National Private Hire Vehicles Association to tax drivers more fairly and in line with the tax deductibles for taxi drivers.
Second Minister for Finance Lawrence Wong had said in Parliament last month that the current tax system is "in support of our long-standing policy on car ownership". Still, he added that the Government is looking at how it can refine the tax policy given the feedback from the association and some Members of Parliament.
Said the Finance Ministry on Tuesday: "The above changes in tax treatment maintain support for our long-standing policies on car ownership, while updating our tax regime to allow deduction for car-related expenses incurred by PHC (private-hire car) drivers."
It added that capital allowance for the cost of buying cars will, however, still not be allowed for private-hire car drivers.
The proposal to allow tax deductions on business expenses for private-hire car drivers was among several changes to the Income Tax Act that the ministry wants feedback on.
Other proposed amendments include the enhancement and extension of the Corporate Income Tax rebate, and strengthening the Inland Revenue Authority of Singapore’s powers to investigate tax crimes.
Members of the public can access the detailed consultation documents for the draft Income Tax (Amendment) Bill 2018 on the Ministry of Finance's website and the REACH consultation portal. They can submit their views from Jun 20 to Jul 11.