2 January 2013

On 1 January 2013, the Inland Revenue Authority of Singapore (IRAS) issued an updated edition of the e-Tax Guide, “IRAS’s Voluntary Disclosure Programme (VDP)”.

This e-Tax Guide provides guidance on the conditions for a voluntary disclosure to qualify under the VDP and also contains guidelines on what would be considered as an action involving wilful intent to evade taxes and the reduced penalty applicable to a qualifying voluntary disclosure of such an action.

The VDP is applicable to Income Tax, Goods and Services Tax (GST), Withholding Tax and Stamp Duty.

A taxpayer may qualify for the reduced penalty treatment if the voluntary disclosure is timely, accurate, complete and self-initiated. The taxpayer must also:

• Cooperate fully with IRAS to correct the errors made, and
• Pay or make arrangements with IRAS to pay additional taxes and penalties imposed (if any), and honour such arrangements till all payments are made.

The reduced penalties for voluntary disclosures that meet the qualifying conditions are as follows:

• Where disclosure is made within the one-year ‘grace period’, no penalty will be imposed

• For disclosures made after the one-year ‘grace period’:

– Individual and Corporate Income Tax: Reduced penalty is 5% of tax undercharged for each year that income was late in being brought to tax,
– GST and Withholding Tax: Reduced penalty is a flat 5%.

For a voluntary disclosure pertaining to late stamping or underpayment of stamp duties that meets the qualifying conditions, the reduced penalty is 5% per annum computed on a daily basis on the stamp duty payable. There is no grace period applicable to stamp duties.

In this edition, the VDP has been updated with a revised penalty treatment.

Source: This article was extracted from the Inland Revenue Authority of Singapore (IRAS) website. Visit http://www.iras.gov.sg for more information.