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Singapore's High Compliance Level Sustains Tax Collections

by Mary Swire,, Hong Kong

30 August 2014

In its 2013/14 Annual Report, the Inland Revenue Authority of Singapore (IRAS) disclosed that its efforts to achieve a high level of voluntary compliance continued to pay off, as on-time filing rates improved across all tax types and tax arrears continued to decline.

Dr Tan Kim Siew, the Commissioner of Inland Revenue, confirmed that IRAS is committed to ensuring that Singapore's tax policies and rules are clear and easy to comply with. To this end, he pointed out that "Singapore scored well in the 2014 Deloitte Asia Pacific Tax Complexity Survey, with a high number of respondents indicating that Singapore's tax environment has good or high level of consistency and predictability."

As part of its efforts to achieve the high level of voluntary compliance, IRAS introduced the Simplified Record-Keeping initiative to lower compliance costs for small businesses by eliminating the need for eligible businesses to keep physical invoices and receipts.

In addition, the agency launched a mobile-friendly version of the myTax Portal, to enable users of mobile devices to use selected services without having to download any applications. The myTax website also reminds businesses of non-deductible business expenses during the filing process, thereby minimizing filing errors and saving them time, and the online Wage Credit Scheme calculator was set up to help employers estimate the Wage Credit they will receive.

To provide greater convenience for taxpayers, IRAS expanded the No-Filing Service (NFS) to 1.23m taxpayers, including 15,000 first-time taxpayers, for the 2014 tax filing season. Since its launch in 2007 benefitting 45,000 taxpayers, the NFS has grown significantly over the years to benefit 27 times as many taxpayers this year.

It has also, however, continue to deter non-compliance, and, for example, in fiscal year (FY) 2013/14, uncovered a total of 15,233 non-compliant cases and recovered about SGD387m (USD310m) in taxes and penalties through coordinated audit and investigation programs. At 0.77 percent, current year tax arrears were reduced to a record low.

IRAS Chairman Peter Ong looked at how IRAS has concluded additional double taxation agreements (DTAs) to facilitate cross-border trade and investment. Singapore now has 79 comprehensive DTAs, of which 74 have been ratified. IRAS has also concluded 11 Advanced Pricing Arrangements and resolved two cases through Mutual Agreement Procedure (MAP) discussions. These, he said, have provided greater tax certainty and eliminated the prospect of double taxation faced by businesses engaging in cross-border trade.

IRAS collected SGD41.6bn in tax revenue in FY2013/14, up by 0.5 percent from the previous year, and producing a low cost of tax collection at 0.86 cents per dollar of tax received.

Income tax (corporate income tax, individual income tax and withholding tax) revenue made up 52 percent of IRAS' collection in FY2013/14, but, at SGD21.6bn, was 1.6 percent lower than that for FY2012/13. The decrease was due to corporate income tax rebates given for the 2013 and 2014 assessment years (YAs), the one-off individual income tax rebate given in YA2013, and lower collections from withholding tax.

On the other hand, goods and services tax revenue of SGD9.5bn in FY2013/14 was 5.3 percent higher than the previous year, due to private consumption expenditure growth in 2013; while property tax collected was SGD4.2bn, 10.6 percent higher than in FY2012/13 because of higher annual values and an increase in the number of properties.

Compared to FY2012/13, stamp duty collection decreased by SGD0.4bn, or 8.8 percent, to SGD3.9bn in FY2013/14, largely due to a lower volume of property transactions following the last round of property market cooling measures introduced in January 2013; and betting taxes rose to SGD2.4bn, up by 3.2 percent over the previous year.

TAGS: compliance | Asia Pacific | tax | small business | business | double tax agreement (DTA) | tax compliance | property tax | gambling tax | corporation tax | goods and services tax (GST) | Singapore | tax authority | agreements | internet | gambling | advance pricing agreement (APA) | withholding tax | stamp duty | revenue statistics | individual income tax | services | Tax

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