IRAS Demystified: Key Significance for Your Company 

Building a small business in Singapore is an exciting journey filled with challenges and rewards. But amongst the thrill of turning your entrepreneurial dreams into reality, it's crucial to understand the essential aspects that keep your venture running smoothly. One such element is navigating the Inland Revenue Authority of Singapore (IRAS) – an organisation that plays a pivotal role in your business's success, including the timely payment of your tax bill and avoiding potential scams. 

Think of IRAS as the guardian of Singapore's tax system. Established in 1967, it's responsible for assessing, collecting, and accounting for taxes imposed by the Singapore government. From corporate income tax to Goods and Services Tax (GST), IRAS ensures these essential funds contribute to the nation's development and infrastructure. 

Understanding IRAS and its Role in Government Administration 

As the revenue authority of Singapore, IRAS operates under the Ministry of Finance and is responsible for administering tax matters. The authority plays a crucial role in collecting taxes, ensuring compliance, and providing tax advice to the government. By overseeing tax matters, IRAS helps to maintain a fair and efficient tax system in Singapore. 

What does the IRAS Do in Singapore? 

Now that we have explored the importance of IRAS, let's delve deeper into its specific functions. The authority has two primary responsibilities: collecting taxes and enforcing tax laws, and offering tax advice to the government. 

Collecting taxes and enforcing tax laws 

One of IRAS's core functions is collecting taxes, including income tax, stamp duty, and other revenue-related payments. IRAS ensures compliance with tax laws by monitoring tax assessments, business expenses, and filing of tax returns. By enforcing tax laws, IRAS maintains tax fairness and integrity, contributing to Singapore's strong economy. 

Looking for a deep dive into the ins and outs of Singapore corporate tax? Our comprehensive guide is here to shed light on the essentials and arm yourself with the knowledge you need to steer your business towards financial efficiency and compliance. 

Giving tax advice to the government 

In addition to collecting taxes, IRAS provides valuable tax advice to the Singaporean government. The authority collaborates with the Ministry of Finance, assisting in tax matters, stamp duty, property tax, and income tax assessment. By offering expert insights, IRAS helps shape tax policies, ensuring a robust tax system that aligns with Singapore's economic objectives. 

How do you Transact with the IRAS? 

When it comes to transacting with IRAS, businesses and individuals have access to various channels, with the myTax portal being the primary platform for managing tax matters. 

Make use of myTax Portal 

The myTax portal, an online platform offered by IRAS, streamlines tax transactions and makes it convenient for taxpayers to manage their tax matters. Through the myTax portal, businesses and individuals can access a wide range of services, including income tax filing, tax matters, property tax assessment, and information on business expenses. The portal simplifies processes, provides clear guidelines, and ensures accuracy in tax reporting, including individual income tax. Make use of myTax Portal to easily file your taxes and take advantage of tax reliefs, rebates, and deductions. 

To log in to the system, ensure you have your SingPass ID (for individuals) or CorpPass ID (for businesses) at the ready. If you've engaged a tax agent, it's essential to authorise them through CorpPass before they can access and oversee your tax matters. 

Record Keeping and the IRAS 

Alongside transactional processes, IRAS emphasises the importance of proper record-keeping for tax matters. Maintaining accurate records is crucial for compliance, as it allows businesses to support their tax positions, expenses, and income in the event of any audits or reviews. 

Businesses must maintain records for the previous year, providing an overview of their financial activities, tax matters, and revenue assessments. By adhering to IRAS guidelines, businesses not only ensure compliance but also have a clearer picture of their financial standing. 

Tax Compliance of Companies 

In Singapore, companies are tasked with determining the commencement and conclusion of their financial year, also known as the Financial Year End (FYE). Following this, it is mandatory for companies to file their annual return with the Accounting and Corporate Regulatory Authority (ACRA) within seven months after the FYE. 

Two essential tax reports, the Estimated Chargeable Income (ECI) and Form C-S/C, require submission by companies. The ECI must be submitted to the Inland Revenue Authority of Singapore (IRAS) within three months of the FYE. 

The "Year of Assessment" (YA) denotes the year in which income tax calculations and charges are made, covering income earned in the preceding year. For instance, if a company's FYE is 31 December 2020, the relevant YA for tax reporting is YA 2021. Similarly, if the FYE is 30 June 2021, the corresponding YA for tax reporting is YA 2022. 

On the 30th of November of the YA, companies are obligated to submit the final tax report, commonly referred to as Form C-S/C. This declaration form necessitates accurate completion, providing a comprehensive and truthful account of the company's income. Companies should ensure meticulous attention to detail when completing the form to adhere to statutory compliance regulations. 

Tax Crime-Related Penalties 

Tax evasion and other tax-related crimes are serious offences in Singapore. IRAS takes a firm stance against such activities, and the penalties can be severe: 

• Fines: You could face hefty fines amounting to several times the evaded tax amount. 
• Imprisonment: In serious cases, imprisonment is a possibility, impacting your personal freedom. 
• Business Closure: For blatant offences, IRAS can even revoke your business license, effectively shutting down your operations. 

Things You Need To Know About Taxation In Singapore 

Understanding the tax system in Singapore is essential for businesses operating in the country. Here are a few key aspects that every business should be aware of: 

Territorial Tax System 

Singapore employs a territorial tax system, taxing only income earned within its borders. This makes it an appealing destination for global businesses, as foreign-sourced income is usually exempt. Yet, it's crucial to be aware that specific incomes, like foreign income received in Singapore, might still be taxable. A thorough understanding of this system is vital for effective tax planning and compliance. 

Low Corporate Income Tax Rates 

With a global edge, Singapore boasts one of the world's lowest corporate income tax rates at 17%. This competitive advantage allows businesses to retain a significant portion of their profits. Staying informed about the latest tax incentives, rebates, and filing requirements is crucial for businesses to optimise their tax liabilities. 

Conclusion 

Running a successful business involves juggling many responsibilities, and managing tax complexities can be overwhelming. Fortunately, you don't have to go it alone. Consider partnering with a reliable firm like Grof to ensure your tax compliance and maximise your financial position. 

By understanding IRAS's role and adhering to your tax obligations, you can navigate the tax landscape confidently and focus on growing your business with peace of mind.