Good morning, Ladies and Gentlemen.

It is my pleasure to join you here at the Budget Seminar 2011.

The Tax Academy of Singapore has organized this annual event to bring together tax administrators from IRAS and policy makers from the Ministry for Finance to provide you more insights and details on the tax changes announced by the Minister for Finance in his Budget Statement.

The Singapore economy has done exceptionally well in 2010, when GDP grew by a record 14.5%. To further strengthen our economy and create better jobs for our people, the Government has introduced a slew of tax measures in Budget 2011 to help businesses increase their efficiency and productivity and to upgrade the competencies and skills of our workforce.

IRAS has also been looking for innovative ways to ensure that our tax system encourages enterprise and supports economic growth. We work with our stakeholders to achieve a high level of voluntary tax compliance and keep compliance cost low. IRAS helps taxpayers understand their tax obligations, makes it as easy as possible for them to comply, and takes strong action against non-compliance by a minority of taxpayers. Over the years, we have introduced specific programmes to help taxpayers comply with their tax obligations.

In 2009, we partnered with IDA to introduce the Accounting Software Assistance Scheme that provides up to 50% subsidy for SMEs to acquire their first accounting software. This scheme aims to improve SMEs’ record-keeping practices and makes tax reporting easier for them.

In April last year, we also launched an Assisted Self-Help Kit to help businesses review accuracy of their GST returns before they file, and to report their past GST errors early to qualify for IRAS’ Voluntary Disclosure Programme.

More recently, we have introduced a Multiphase Record-Keeping Programme to help the smaller businesses systematically improve their overall record keeping standards for income tax and GST purposes. We also reach out to newly-formed companies to help them better understand their tax reporting requirements.

Come 2012, smaller companies with annual turnover of not more than $500,000 can also look forward to filing a simplified tax form. For them, their tax filing process will be made simpler and easier.

Today, I am pleased to announce a new self-compliance programme named “Assisted Compliance Assurance Programme” or ACAP in short.

What is ACAP?

ACAP provides a holistic solution for businesses to self-manage their GST risks. It enables businesses to treat tax risk management as part of their corporate governance framework. ACAP can assist businesses in building a sustainable infrastructure to avoid GST errors and reduce GST compliance costs in the long run.

How does ACAP work?

Designed as a self-assessment package, the ACAP provides step-by step guidance for businesses to independently assess the effectiveness of their GST internal controls at three levels: the entity, transaction and GST reporting levels. IRAS will accord an ACAP status to businesses whose GST controls have met our standard guidance. Businesses accorded with ACAP status can enjoy benefits such as exemption from GST audits for 3 to 5 years, and automatic renewal of GST schemes.

Adopting ACAP represents a strategic shift in businesses’ attitude towards tax compliance. We hope to motivate businesses to be pro-active and committed to ensure that internal controls are robust on an ongoing basis even as the businesses grow.

To encourage businesses to undertake ACAP, IRAS will co-fund 50% of the fees, subject to a cap of $50,000 per ACAP applicant. IRAS will also grant one-time waiver of penalties for past GST errors disclosed voluntarily in the course of the first ACAP Review undertaken by the Applicant.

The co-payment incentive signals IRAS’ commitment to partner the business community to enhance tax risk management, while recognizing businesses’ responsibilities for their own tax compliance. IRAS has set aside a budget of $5 million for a five-year period, and we hope to attract at least 100 businesses to undertake ACAP within the next few years.

Before finalizing the standard guidance for ACAP, we conducted several consultation sessions involving ICPAS, CPA firms and a cross-section of businesses to design and develop this initiative.

I am pleased to announce that PT. Trakindo Utama, Cold Storage and Singtel have stepped forward to be amongst the first to undertake ACAP. We applaud their strong show of commitment, and IRAS will work closely with them as they undergo ACAP to improve and validate their GST control framework.

We see the tax practitioners as our strategic partners in this initiative as they also play an important role in facilitating tax compliance by the businesses. We hope to see a stronger culture of voluntary compliance, that helps sustain the integrity of our tax system, ensures that tax revenue is adequate for nation-building and keeps our economy competitive.

Thank you once again for joining us here today. I wish you a pleasant day ahead.

About Assisted Compliance Assurance Programme (ACAP)