What is Net Trade Income (NTI)? How to calculate Net Trade Income?

Singapore IRAS Net Trade Income Calculation
A simple illustration of what is Net Trade Income (NTI) and how to calculate Net Trade Income (NTI). When in doubt, always consult your accounting specialists or tax authority.

What is Net Trade Income (NTI)?

Net Trade Income is defined as gross trade income minus all allowable business expenses, capital allowances and trade losses.

Net Trade Income = Gross Trade Income – allowable business expenses – capital allowances – trade losses

where Gross Trade Income = Total Revenue – Cost of Goods Sold (COGS)

How to calculate Net Trade Income (NTI)?

To calculate yearly Net Trade Income from 1 January 2023 to 31 December 2023, you will need to calculate

  • Revenue: Total amount of sales you have made to your clients or customers in the year, regardless of whether you have received the money from the sales
  • Cost of Goods Sold (COGS): The cost involved in producing the goods or services. If you are in F&B business, COGS refers to the raw materials you have bought to prepare the food in the year.
  • Allowable business expenses: The expenses that your business has incurred and consumed within the year. For example, your business may have pre-paid for the expenses consumed in 2024 in the preceding year of 2023. However, your expenses should still be booked in 2024.
    • Only expenses related to the business are allowed.
    • Example of allowable expenses: Employee salary, rent and utility, accounting fee, advertising fee, business renewal fee, etc.
    • Refer here for a full list of allowable and dis-allowable business expenses by the Inland Revenue Authority of Singapore (IRAS). Tax authorities of each country may have a different definition for allowable business expenses.
  • Capital allowances: Some wear and tear of fixed assets may qualify for tax deductions. These tax deductions are known as capital allowances. Example: office furniture, electrical equipment, plant and machinery, etc.
  • Trade losses: Losses that your business may have accumulated over the previous years that are carried forward to this year.

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