Guide to Understanding the Inland Revenue Authority of Singapore (IRAS)
Wanting to know more about taxes and how it is being governed in Singapore? This article will give you an introduction to IRAS, on Singapore’s taxation system, how businesses can stay compliant with IRAS regulations and how to contact them.
What is the IRAS?
The Inland Revenue Authority of Singapore (IRAS) is the country’s agency in taxes administration.
A brief history of IRAS Singapore
The Singapore Income Tax Department was established in 1947 to handle the Income Tax Ordinance. However, it wasn’t until November 1948 that the actual assessment of taxes began.
In 1960, a number of distinct revenue administration and collection entities merged to establish the Inland Revenue Department (IRD). To save space and simplify file handling, microfilming was increased in 1972 to allow the billing and collection of property taxes to be computerized.
Singapore’s taxation system
Singapore’s taxation system is based on a territorial concept. This means that corporations and individuals are primarily taxed on the money they earn in Singapore.
Unless the total amount has already been subjected to taxes in a jurisdiction that has headline taxes rates of at least 15%, foreign-sourced income (such as branch earnings, dividends, service income, etc.) is taxed when repatriated or considered remitted into Singapore.
Although the concept of the source of income locality appears straightforward, its implementation can sometimes be complicated.
Therefore, there is no universal rule that can be applied to every situation. Whether profits are generated in or derived from Singapore is based on the nature of the profits and the transactions that generate those profits.
Structure of IRAS
The Inland Revenue Authority of Singapore is organized into different divisions; individuals (personal tax) and companies (corporate tax).
Here’s the structure:
Roles and responsibilities of IRAS
The IRAS handles all direct and indirect taxes-related queries that an individual, company, or even a country may have. However, the body’s two major functions can be summarized as (1) collecting all forms of taxes and (2) functioning as a taxes advisor to the government.
IRAS is in charge of:
- Income tax, which is levied on both persons and companies.
- GST (Products and Services Tax) is related to consumption and applies to all goods and services, including imports.
- Property tax – levied on property owners based on the predicted rental values of their assets.
- Stamp duty on real estate.
- Property-holding entities are subject to stamp duty.
- Shareholders’ stamp duty.
- Withholding taxes on trusted estates.
- Duty betting and sweepstakes duties in private lotteries.
- Clubs and associations for casino tax.
- Dividends, capital gains, and inheritance are all exempt from taxation.
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IRAS is the principal tax advisor in Singapore.
It drafts taxation policy, assists the Ministry of Finance (MOF) in the drafting of taxation law, and handles any related treaties.
Thanks to the IRAS, Singapore has roughly a hundred double taxation treaties with foreign nations, allowing people to avoid paying taxes twice on their earnings.
How do I stay compliant with IRAS?
You and your business can stay compliant with the IRAS by meeting the following requirements.
- Estimated Chargeable Income is the projection of a company’s chargeable income for a given assessment year (YA). Within three months of the financial year conclusion, each company must submit an ECI for the YA.
- According to the Singapore Financial Reporting Standard, all Singapore companies must create accounting records that include a Profit and Loss statement, Balance Sheet, Cash Flow Statement, and Equity Statement (SFRS).
- Tax returns must also be submitted. The deadline for filing a corporate income tax return is November 30. Audited or unaudited reports, as well as tax computations, must be submitted (Form C).
- Every company is required to file a financial report.
- If a company has a corporate shareholder, a sales turnover of more than S$5 million, or more than 20 shareholders, it must present an audited report.
Rules to staying compliant with IRAS
An individual will receive a notification to file a tax return in the form of a letter, a form, or an SMS. To file your IRAS tax return, one can either choose to e-file via the myTax Portal or fill out the paper form.
If you choose to file your IRAS return online at myTax Portal, you must do so between the 1st of March and the 18th of April each year; if you choose to file via paper form, you must do so by the 15th of April each year.
Enforcement proceedings will be taken if you don’t file your IRAS Income Tax return on time or if you make errors in your filing.
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How do I contact IRAS?
Regardless of whether you’re an individual or a corporation, one may find out their tax status by signing in to their IRAS personal account, known as myTax Portal.
You’ll need your SingPass ID to access your personal account. For companies, this is your CorpPass ID. To contact the organization, visit their official website.
IRAS is the official revenue and tax authority of Singapore. As an entrepreneur operating in Singapore, you need to remain compliant and cooperate with IRAS.
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