Another taxpayer was penalized for making GST errors


 

 

Dear Valued Clients and Friends

It is reported in the Inland Revenue Authority of Singapore’s (“IRAS‘”) website today that a local company that is in the business of promoting and organizing shows and other entertainment acts failed to state the correct amount of Goods and Services Tax (“GST“) output tax in its GST returns during 2005 and 2006, resulting in an underpayment of GST amounting to some S$503,000.

The error was uncovered by IRAS investigators who found that sales figures submitted by the taxpayer for income tax purposes did not tally with the sales figures reported for GST output tax for the years concerned. It was also found that the taxpayer had not included the GST collected on the ticket sales for both years as output tax in its GST returns.

Although the taxpayer was aware that it was required to account for the GST on the ticket sales, it failed to check the GST returns prepared by its tax agent.  The taxpayer pleaded guilty to charges of under-declaration of GST without reasonable excuse and was ordered to pay a penalty of S$602K and a fine of S$10K. During the investigations, it was found that the taxpayer also made similar under-declaration of output tax in other years and the amount of tax and penalty involved was approximately S$984K.

What does this mean to our clients?

We are aware that many clients outsource the preparation of tax returns to their tax agents. Having said that, the clients must understand that they have the final responsibility to make sure that these tax returns are accurately prepared and submitted within the prescribed time-frame.  They cannot rely on the fact that the tax returns prepared by their tax agents must be correct and thus, they do not need to undertake any further review.  As you have seen in this particular instance, it would not be accepted by IRAS as an excuse.

We trust that the above information is useful to you.

As always, we are pleased to assist you or your company in resolving any potential tax issues.  Please contact us at jack.wong@whm-consulting.com if you would like to discuss any of your/ your company’s concern on tax issues.

Best regards
Jack HM Wong
Founder and Lead Business & Tax Advisor
WHM Consulting Pte Ltd
E-mail: jack.wong@whm-consulting.com

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Merry Christmas 2011


 

 

Dear Valued Clients and Friends

On behalf of WHM Consulting Pte Ltd, I wish all of our readers a Merry Christmas.   Christmas calls for celebration with our loved ones!  So, let’s take this time to express our gratitude to those who have made our Christmas so special.

Best regards
Jack HM Wong
Founder and Lead Business & Tax Advisor
WHM Consulting Pte Ltd
E-mail: jack.wong@whm-consulting.com

Double Tax Agreement between Singapore and Panama came into force on 19 December 2011


 

 

Dear Valued Clients and Friends

Singapore has now 68 Double Taxation Agreement (“DTA“) with the rest of the world after the DTA with Panama came into force on 19 December 2011.  This DTA includes the internationally agreed Standard for the exchange of information for tax purposes upon request.  Other salient features of this DTA include the following:

Article 5 – Permanent Establishment (“PE”)

  • A building site, a construction, assembly or installation project, or supervisory activities in connection therewith will be deemed to be PE if they last for more than 9 months
  • The furnishing of services, including consultancy services, by an enterprise of a Contracting State through employees or other personnel engaged by the enterprise for such purpose will be deemed to be PE  such activities continue within the other Contracting State for a period or periods aggregating more than 270 days in any 12-month period.
Article 8 – Shipping and Air Transport
  • Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic is taxable only in that State.
  • Scope of income under this article includes the following:
    • Interest on funds connected with the operations of ships or aircraft in international traffic
    • profits from bareboat charter
    • Profits from the use, maintenance or rental of containers if they are incidental to operation of ships or aircraft in international traffic.
Article 10 – Dividends
  • 4% Withholding tax (if shareholder is the beneficial owner holding directly at least 10% of capital of the dividend paying company).
  • 5% withholding for all other cases

 

Article 11 – Interest

  • Maximum withholding tax rate of 5%

Article 12 – Royalties 

  • Maximum withholding tax rate of 5%

We trust that the above information is useful to you.

As always, we are pleased to assist you or your company in resolving any potential tax issues.  Please contact us at jack.wong@whm-consulting.com if you would like to discuss any of your/ your company’s concern on tax issues.

Best regards
Jack HM Wong
Founder and Lead Business & Tax Advisor
WHM Consulting Pte Ltd
E-mail: jack.wong@whm-consulting.com

Amendment to Income Tax, GST and Stamp Duties Legislation


Dear Valued Clients and Friends

The following Acts that were passed by the Parliament on 22 November 2011 had been assented to by the President on 8th December 2011:

  • Income Tax (Amendment) Act 2011
  • Goods & Services Tax (Amendment) Act 2011
  • Stamp Duties (Amendment) Act 2011

They were all first published electronically via egazette on 20 December 2011.

We trust that the above information is useful to you.

As always, we are pleased to assist you or your company in resolving any potential tax issues.  Please contact us at jack.wong@whm-consulting.com if you would like to discuss any of your/ your company’s concern on tax issues.

Best regards
Jack HM Wong
Founder and Lead Business & Tax Advisor
WHM Consulting Pte Ltd
E-mail: jack.wong@whm-consulting.com

A Growing Trend in IRAS’ Audit and Investigation: What Should Taxpayers Do?


 

Dear Valued Clients and Friends

2011 will be coming to an end in a fortnight’s time.  As most of our clients will be closing their financial year end this month, we believe that it may be worth to reiterate the growing trend in the Inland Revenue Authority of Singapore’s (IRAS’)’ audit and investigation activities.

By now, most (if not all) companies should have already filed their income tax return and computation for the Year of Assessment  (“YA“) 2011.   On 21 December 2011, I will be conducting the final run in this year for the Institute of Certified Public Accountants of Singapore (“ICPAS“) on the subject regarding common pitfalls of the Singapore income tax compliance process and the aim of this course is to highlight certain common risks associated with incorrect preparation of income tax returns and computations by some companies and at the same time, emphasize the importance of maintaining proper records and documents in the event of IRAS’ investigation.  This is one of the more popular tax courses in ICPAS and the good news is that you are still in time to sign up for this course.  Simply go to our Page “Upcoming Seminars and Workshops” for details.

Some of you are aware that in 2009, IRAS issued an e-Tax Guide concerning the Voluntary Disclosure Programme (“VDP”).  The purpose is to help some taxpayers who might be ignorant or negligent in terms of their tax reporting obligations by encouraging to come forward in a timely manner to disclose errors and/or omissions made in their tax returns. Penalties due to incorrect tax returns may be reduced on a discretionary basis by IRAS.  It should also be noted that this programme applies to both income tax (including withholding tax) and Goods and Services Tax but  does not apply to tax evasion cases,which is a criminal offence punishable under the law.

According to IRAS, the following will become the area of focus in compliance:

  • Classification of income and expenses by companies enjoying tax incentives
  • Related-party transactions and allocation of development cost by real estate developers
  • Income declaration by companies whose principal activities are that of tutoring services or tuition agencies.

As part of its efforts in educating the public and encouraging more taxpayers to participate in the VDP, IRAS has also taken active steps in publishing landmark cases on its website to highlight the manner in which certain taxpayers had attempted to evade taxes and the penalties imposed on such taxpayers after successful prosecution by IRAS.

We trust that the above information is useful to you.

As always, we are pleased to assist you or your company in resolving any potential tax issues.  Please contact us at jack.wong@whm-consulting.com if you would like to discuss any of your/ your company’s concern on tax issues.

Best regards
Jack HM Wong
Founder and Lead Business & Tax Advisor
WHM Consulting Pte Ltd
E-mail: jack.wong@whm-consulting.com

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