On-time filing rates have improved for income tax and Goods and Services Tax (GST) and tax arrears is at a record low of less than 1%.

In its newly released Annual Report for Financial Year (FY) 2011/12 ^[1] , the Inland Revenue Authority of Singapore (IRAS) showcased its efforts to enhance voluntary compliance through keeping the filing process simple and helping businesses improve tax risks management. Beyond performing its role as a tax administrator effectively and efficiently, IRAS continued to support the growth of Singapore both economically and socially by engaging taxpayers, economic agencies and other stakeholders in discussions and reviews to improve the tax system for a competitive and inclusive Singapore.

Enhancing Voluntary Compliance

Income tax and GST on-time filing rates have improved (page 37 – 38). More individuals are now filing their taxes on time; the on-time filing rate is 91.6%, with almost 98% of individuals filing their returns. About 81% of companies filed their corporate tax returns on-time, an increase of 2% compared to the previous year. GST-registered businesses have also bettered their on-time filing rates to about 93%.

Of the total amount of taxes assessed for FY2011/12, the tax arrears rate is a low 0.94%. The total cumulative tax arrears have steadily decreased to S$483 million in FY2011/12, 46% lower than the S$893 million in FY2007/8 (page 37-38), despite an increase in tax collection of 32% for the same period.

The Assisted Compliance Assurance Programme (ACAP) was launched in April 2011 to help GST-registered businesses improve their tax risk management and reinforce internal GST controls (page 36). Response to ACAP has been overwhelming and our initial budget of S$5 million to help companies proactively self-manage their GST risks was taken up by 160 businesses within a few months. As part of our commitment to raise voluntary compliance amongst taxpayers, we have invested another S$5 million in ACAP, to be used between April 2012 and April 2016.

We also invest in data analytics capabilities to gain better insights into taxpayers’ behaviour and to support our taxpayer education and compliance strategies, so as to enhance our effectiveness and efficiency in auditing tax returns, tackling tax fraud, as well as in customising our enforcement actions for various taxpayer segments (page 37).

Fostering a Competitive Tax Environment

Mr Peter Ong
Chairman of IRAS Board

IRAS plays a significant role in ensuring that our tax environment remains competitive and conducive for business growth. In FY 2011/12, IRAS reviewed 28 tax policies and 308 tax rules and regulations, so that our tax rules continue to be relevant and keep pace with evolving business practices. Several existing policies were enhanced and new pro-enterprise initiatives were introduced. These included the launch of the Electronic Tourist Refund System (eTRS; page 28) - the first government system in the world that allows retailers and multiple central refund agencies to operate on a common platform - and the introduction of the simplified Form C (Form C-S; page 29) for companies with annual turnover of S$1 million or less.

As part of the national effort to build a more productive workforce, the Productivity and Innovation Credit (PIC) scheme was augmented to help businesses boost productivity levels and encourage innovation through tax deductions and cash payouts on qualifying activities (page 30). To facilitate companies restructuring for growth and consolidation and enhance Singapore’s attractiveness as a business location, companies deriving gains from disposal of equity investments will have certainty of non-taxation if they meet certain conditions (page 31). Investment-grade gold and precious metals will be exempted from GST from 1 October 2012 onwards (page 34) to encourage the development of a new refining and trading cluster in Singapore.

Supporting Individuals and Families through Tax Rate Changes, Reliefs and Rebates

All individuals now enjoy lower and more progressive personal income tax rates, as marginal tax rates for the first $120,000 of chargeable income were reduced from the Year of Assessment 2012.

Individuals are encouraged to start and raise a family, as well as care for their parents, siblings, and spouses through pro-family reliefs that have been significantly enhanced over the years. Higher quantum of tax reliefs under the Enhanced Marriage and Parenthood Package, which was introduced in 2008, has benefited more taxpayers, resulting in significant tax savings for them (pages 21 to 24).

Highlights of FY2011/12 at a Glance

• IRAS collected S$38.4 billion in tax revenue, 10.7% higher than the amount collected last year. The total cumulative tax arrears amount was S$483 million, a 20% drop compared to the previous financial year.
• The cost of collecting taxes reached a four-year low. Every dollar of tax collected now costs us 0.78 cents (0.87 cents in the previous financial year), making us one of the most cost-effective tax administrations in the world.
• IRAS served more than 3.6 million taxpayers, comprising individuals, property owners and businesses.
• We handled a total of 13.8 million payment transactions, and made 99% of tax refunds within 14 days from the date when the credit arises.
• Year of Assessment (YA) 2012 tax filing was a non-event for 740,000 individuals who were eligible for the No-Filing Service.
• 925,000 taxpayers filed their individual income tax returns electronically in YA2012, setting a new record e-filing rate of 97%.
• 1.2 million employees – an increase of 100,000 employees - enjoyed a simplified filing experience as their salary information for YA2012 was provided to IRAS by their employers under the Auto-Inclusion Scheme for Employment Income.
• 95% of respondents to the biennial Taxpayer Survey conducted in 2011 were satisfied with IRAS’ service.

The IRAS 2011/12 Annual Report is available at this link

Inland Revenue Authority of Singapore