Tax Governance Framework (“TGF”)
TGF is a voluntary compliance initiative that a company may participate in to demonstrate that it has good tax governance and tax risks management. Adopting the framework helps companies attain and maintain good standards of tax governance and raises tax governance to attention at the Board level. The framework features a set of broad principles and key practices which a company should incorporate in its tax governance policy for effective management of tax risks. In the long run, a company’s commitment to the TGF supports a collaborative and trusting relationship between the company and IRAS, leading to lower compliance costs.
Businesses suited for TGF
- Have complex structures and business models;
- Recognise the importance of tax accountability and transparency; and
- Are willing to commit to good tax governance practices.
Building blocks of TGF
The TGF sets out the principles and key practices centred around 3 essential building blocks of good tax governance. It is applicable to both Corporate Income Tax and GST.
| Building Block | Principle and Key Practices |
|---|---|
1. Compliance with Tax Laws | The Company is committed to comply with the relevant tax laws, regulations and requirements and respects the intent of the laws and regulations. Key practices include:
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2. Governance Structure for Managing Tax Risks | The Board is apprised of the company’s governance structure and policy for managing tax risks. Key practices include:
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3. Relationship with Tax Authorities | The Company supports a collaborative and transparent relationship with tax authorities based on mutual trust and respect. Key practices include:
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For the full list of key practices, please refer to the Declaration Form for Tax Governance Framework (“TGF Declaration Form”).
Applying for TGF status
You can apply for TGF status as a single company or on behalf of a group of companies (i.e. a GST Group or a corporate group) by performing the following:
- Publish your company’s tax governance policy on your corporate website or an annual report which is publicly accessible. The tax governance policy should include details of how your company manages tax risks under the 3 building blocks of TGF.
- Complete the Declaration Form for Tax Governance Framework to confirm that your company has adhered to the guiding principles and key practices outlined in the TGF. The form should be signed off by the Chief Executive Officer or Chief Financial Officer.
- Submit the TGF Application Form via FormSG:
You may refer to Tax Governance Policy Publication for an example that meets IRAS’ TGF requirements.
Your application for TGF status is subject to IRAS’ approval. IRAS will evaluate your application based on various factors, such as your company's past compliance records, and may request for additional information and/or documents in the course of reviewing your application.
If you are a GST group registrant
If you are a GST divisional registrant
If you belong to a corporate group
Approval of the TGF application will be granted to each qualifying company, regardless of whether the application is submitted as a corporate group or on individual basis.
Benefits of adopting TGF
You will enjoy the following benefits when you adopt the TGF:
Corporate Income Tax | A one-time extended grace period of 2 years for Corporate Income Tax errors# voluntarily disclosed within 2 years from the date of our approval of your TGF application. |
|---|---|
| Withholding Tax | A one-time extended grace period of 2 years for Withholding Tax errors# voluntarily disclosed within 2 years from the date of our approval of your TGF application.
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GST |
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#Disclosure of errors which meet the qualifying conditions for reduced penalties. See e-Tax Guide on IRAS’ Voluntary Disclosure Programme. Errors do not include fraudulent errors and errors discovered under IRAS’ audit or investigation.
Examples of how the extended grace period is applied
Corporate Income Tax
In the absence of the TGF benefit, these errors will attract a penalty as they are disclosed after the 1-year grace period (from 1 Dec 2020 to 30 Nov 2021). However, as the company is entitled to the TGF benefits and the errors fall within the extended grace period of 2 years (from 1 Dec 2020 to 30 Nov 2022), the errors will not attract a penalty.
Withholding Tax
If the company makes a payment to a non-resident on 1 Jan 2021, it will need to file and pay withholding tax to IRAS by 15 Mar 2021. On 31 May 2022, the company makes a voluntary disclosure of a withholding tax error in relation to this payment to a non-resident.
In the absence of the TGF benefit, this error will attract a penalty as it is disclosed after the 1-year grace period from the statutory filing deadline (from 15 Mar 2021 to 15 Mar 2022). However, as the company is entitled to the TGF benefits and the error is disclosed within the extended grace period of 2 years from the statutory filing deadline (from 15 Mar 2021 to 15 Mar 2023), the error will not attract a penalty.
GST
A GST-registered company (not under GST group or divisional registration) submits its TGF application on 1 Mar 2022 and this is approved by IRAS on 30 Apr 2022. On 30 Apr 2023, the company makes a voluntary disclosure of GST errors for the period from 1 Jan
2019 to 31 Dec 2022.
The TGF benefit applies as the GST errors are disclosed within 2 years from the date of our approval of the TGF application, i.e. 30 Apr 2022.
| Scenario | Applying TGF benefit | Without TGF benefit |
|---|---|---|
ACAP renewal Review year selected for ACAP renewal is from 1 Apr 2021 to 31 Mar 2022. | The GST errors made in the accounting periods from 1 Jan 2020 to 31 Dec 2022 fall within the one-time extended grace period of 3 years and will not attract penalty. | The GST errors made in the accounting periods from 1 Jan 2020 to 31 Mar 2021 would have attracted penalty. |
Post ACAP review
| The GST errors made in the accounting periods from 1 Jan 2020 to 31 Dec 2022 fall within the one-time extended grace period of 3 years and will not attract penalty. | The GST errors made in the accounting periods from 1 Jan 2020 to 31 Dec 2021 would have attracted penalty. |
GST review Review undertaken by a GST-registered business without ACAP status
| The GST errors made in the accounting periods from 1 Jan 2021 to 31 Dec 2022 fall within the one-time extended grace period of 2 years and will not attract penalty. | The GST errors made in the accounting periods from 1 Jan 2021 to 31 Dec 2021 would have attracted penalty. |
If you are under GST group registration: The one-time extended grace period will apply to GST errors made by the GST group members in the voluntary disclosure submitted by the GST group.
If you are under GST divisional registration: The one-time extended grace period will apply to GST errors made by the divisions in the voluntary disclosure submitted by the company. The company is required to submit the voluntary disclosure for all divisions at the same time (i.e. one-time use of TGF benefit).
Utilising the benefits under TGF
For utilisation of the benefits under TGF for your voluntary disclosure of errors, please complete the “Form to utilise benefits granted under TGF ” and submit it together with your voluntary disclosure.
FAQs
I belong to a local corporate group where my parent company has published a group tax governance policy. Do I still have to publish my own tax governance policy to apply for TGF?
Companies of a corporate group are generally expected to adhere to the same tax governance principles set by the parent company, as these should be cascaded down and applied consistently across the group.
When you apply for TGF, you can rely on the group tax governance policy that is published by your parent company if the group tax governance policy applies to you and it is clear from the group tax governance policy that it applies to all companies under the group.
I am part of a foreign multinational corporation and hence I have to adhere to the global tax governance policy that is published by my foreign parent company on the global corporate website. I am unable to publish my own local tax governance policy. Can I still apply for TGF?
You can apply for TGF if the global tax governance policy is in line with the direction of TGF.
In lieu of publishing your own tax governance policy, you should specify on your website that you adhere to the global tax governance policy and provide the source. Alternatively, the global tax governance policy may also specify that the policy applies to your company (e.g. the policy applies to all companies under the global group). As part of your application, you should provide details on how your tax governance structure and practices are in adherence to the global policy.
Do I have to renew my TGF status?
IRAS may request for confirmation on your tax governance structure periodically to ensure that you are still adhering to the TGF.
Do I have to inform IRAS of any changes in my tax governance policy?
There is no need to inform IRAS if your tax governance policy continues to adhere to the 3 building blocks of TGF. However, IRAS may request for confirmation on your tax governance structure periodically to ensure that you are still adhering to the TGF.
If your tax governance policy no longer adheres to the 3 building blocks of TGF, or if you no longer meet the requirements of the TGF, you should inform IRAS in writing.
Can I subsequently withdraw from TGF?
A request to withdraw from TGF should be made in writing.
The adoption of TGF demonstrates your willingness and commitment to establish good tax governance standards in your company.
We will assess your reasons for withdrawal from the programme and take this into account in your risk profile with IRAS.