BCRS Deposits and Income Tax: What IRAS Clarified on 2 September 2026

The Beverage Container Return Scheme (BCRS) launched on 1 April 2026. Since then, every pre-packaged beverage in a plastic or metal container between 150ml and 3 litres sold in Singapore carries a 10-cent refundable deposit. Consumers can return empty containers at Reverse Vending Machines across the country to get their money back.

On 2 September 2026, IRAS updated its guidance on how BCRS deposits should be treated for income tax.

The ruling is straightforward. BCRS deposits do not form part of the price for regulated beverage products. They represent amounts collected and paid by businesses solely because the Resource Sustainability Act 2019 requires it. No profit motive. No commercial intent.

That means two things:

1. BCRS deposits collected or redeemed are not business income. Not taxable.
2. BCRS deposits paid are not deductible business expenses.

IRAS also addressed the practical question most SME accountants ask: what if deposits end up in the profit and loss statement? The answer: no tax adjustments needed. IRAS expects deposits paid to be recovered over time through deposits collected from customers or refunds redeemed at RVMs. The amounts net out.

There's one exception. If regulated beverages are supplied for purposes where the related expenses aren't tax-deductible - for example, donations where the collection of BCRS deposits is waived under the RSA - the BCRS deposits paid in connection with that non-deductible expenditure must be added back in the tax computation.

That's the only scenario requiring adjustment. But it's a scenario that can easily slip through the cracks if your accounting system treats all deposit-related entries the same way.

The scheme is managed by Beverage Container Return Scheme Ltd. (BCRS Ltd.), a not-for-profit company licensed by the National Environment Agency (NEA). Producers - manufacturers and importers - pay deposits to the scheme operator. Retailers collect from customers. Customers redeem at RVMs.

Every transaction in that chain needs to be recorded correctly. When a deposit is collected from a customer, it's a liability - money owed back to the system. When a container is returned and refunded, the liability clears. When deposits go unclaimed, there are further accounting implications that IRAS hasn't fully clarified yet.

If your POS or accounting system lumps deposits into your sales line, your revenue looks inflated. If it lumps them into expenses, your deductions look wrong. Either way, your tax computation is off.

OCi System tracks BCRS deposits in a separate liability account. Deposits collected, deposits paid, and refunds redeemed are all recorded distinctly from revenue and expenses. Your P&L reflects actual business performance. Your tax computation reflects actual taxable income. And when IRAS asks, your records are clean, separated, and audit-ready.

BCRS is a new compliance layer for any SME selling regulated beverages. The deposit itself is simple - 10 cents per container. The accounting doesn't have to be complicated, but it does have to be correct.

Source: IRAS, 2 Sep 2026
https://www.iras.gov.sg/taxes/corporate-income-tax/specific-topics/income-tax-treatment-of-deposits-under-the-beverage-container-return-scheme-(bcrs