At the annual Budget Seminar organized by the Tax Academy of Singapore, Moses Lee, the Commissioner of Inland Revenue, has disclosed that the Inland Revenue Authority of Singapore (IRAS) is to introduce a further simplification of tax filing for small companies.
“We recognize that small companies face greater challenges in managing their tax obligations,” he said. “Their resources are already highly stretched, as they struggle just to keep up with their day-to-day operations and focus on business viability.”
IRAS is, therefore, simplifying the reporting requirements for Estimated Chargeable Income (ECI) and the filing of the Income Tax Return (Form C) for small companies so as to reduce their compliance burden.
Currently, all companies have to report their ECI within three months of their financial year-end. Even companies without any taxable profit and no ECI are also required to do so. IRAS intends to reduce compliance requirements for small companies with turnover not exceeding SGD1m (USD797,000) and with no ECI, as they will no longer need to file under the ECI system.
The waiver will take effect from the 2013 assessment year for companies with an accounting year ending in October 2012, or thereafter. “With this change,” Lee confirmed, “67,000 companies, or about 42% of all companies, would not need to file their ECI, saving them one step in the overall corporate tax filing requirements.”
He added that IRAS has set a threshold of SGD1m of turnover so as to manage the revenue-at-risk, in that larger companies will continue to report their ECI and pay their taxes within the current time-frame.
Furthermore, he continued, compared to larger companies, small companies have less complex transactions, fewer tax claims and fewer tax adjustments. From this 2012 assessment year, he explained, small companies with an annual turnover not exceeding SGD1m will find tax filing faster and easier with a new simplified income tax return for small companies, known as Form C-S,.
About 110,000 small companies, constituting 70% of all companies, will benefit from the Form C-S as only essential tax and financial information that are most relevant to them are required to be included. “They will now spend only 10 minutes to complete Form C-S, or half the average time taken to complete Form C,” he commented. “Companies that electronically file the Form C-S will also enjoy a later e-Filing due date of December 15, instead of November 30 for paper filing.”
Lee concluded that “IRAS firmly believes that the two initiatives will result in a significant reduction in time and effort spent on tax filing for smaller companies, thereby helping to improve their productivity and leading to greater efficiency for the tax system as a whole. We will continue to seek innovative ways to help more companies minimize their compliance costs and enjoy a better overall filing experience.”.
TAGS: individuals | compliance | tax | small business | business | tax compliance | individuals in business | corporation tax | Singapore | tax authority | small and medium-sized enterprises (SME) | micro business
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