Singapore Boosts Large Business Audits, Focuses on GST

Bloomberg BNA’s Premier International Tax Library is a comprehensive global tax resource. Trust Bloomberg BNA's Premier International Tax Library for the guidance you need on...

By Ben Stupples

Oct. 18 — Singapore’s tax authority has said it will increase the number of the audits it carries out on large companies over the next two years to improve their compliance with the country’s goods and services tax.

The Inland Revenue Authority of Singapore will focus on how large businesses implement the consumption tax through their display of prices to the public, including plans for on-site inspections.

“In the next two years, IRAS will step up audits on large businesses and checks on businesses’ display of GST-inclusive prices to the public,” IRAS said in an Oct. 14 web post. Most cases of non-compliance with GST “arise from negligence or insufficient understanding of tax matters,” it added.

Receipts from GST—a self-assessed tax levied on the import of goods, as well as nearly all supplies of goods and services in Singapore—make up almost a quarter of the Singapore government’s total tax collection, according to data compiled by Bloomberg BNA. Large businesses form just 2 percent of Singapore’s GST tax base, but they contribute more than 50 percent of the total GST paid to IRAS.

GST Receipts

For the year ending March 31, 2016, the IRAS received more than S$10.3 billion ($7.2 billion) from Singapore businesses, with most of the receipts for the tax coming from the country’s wholesale and retail, real estate and construction sectors, according to data published by the IRAS.

Any GST errors or omissions discovered through the IRAS’s audits of Singapore’s large businesses will result in penalties of up to double the tax owed and a 5 percent penalty late payment, IRAS said Oct. 14. The high value and size of large businesses’ transactions contribute to an increased risk of GST errors, especially if their methods for tax classification and capturing GST are not “robust,” it added.

Since April last year, Singapore businesses have had to display prices that include the 7 percent GST tax as prominently as any prices that exclude it. Displaying only prices that exclude GST can result in a fine of 5,000 Singapore dollars and imprisonment for as long as six months, according to the IRAS.

Over the past three years, the IRAS has penalized or issued letters of warning to more than 85 businesses for failing to display prices that include GST, which was introduced in April 1994.

Any Singapore businesses with a taxable turnover of more than 1 million Singapore dollars over the past 12 months, or any businesses that expects to make the same amount in the same 12-month time frame, must register with the IRAS for GST. An IRAS spokesperson was unavailable for comment.

To contact the reporter on this story: Ben Stupples in London at bstupples@bna.com

To contact the editor responsible for this story: Rita McWilliams at rmcwilliams@bna.com

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.