Even though their tax system is paperless and open to scrutiny, the Singaporean government nonetheless puts a premium on taxpayer honesty. You should never, ever disregard the seriousness of the penalties for tax evasion. The primary motivation for this is the desire to eradicate corruption and create an even playing field. We may breathe a sigh of relief since preventing tax evasion is a very straightforward process provided the necessary infrastructure is in place. Keeping the above in mind, let’s go over the basics of what you should and should not do to satisfy your tax responsibilities in Singapore.
What Does Tax Avoidance in Singapore Entail Exactly?
Tax evasion is defined as the deliberate avoidance of one’s entire tax obligations as required by law in Singapore. The majority of other countries also employ a definition quite close to this one. When it comes to the Penalties for Tax Evasion in Singapore then the options are wide.
The following are examples of such unlawful actions, but are not exhaustive:
- Lost profits from either underreporting or not reporting full income
- Falsifying information in tax returns
- Lack of reason for profit shifting
- Comprehensive expense coverage
Tax evasion can only be shown if the Inland Revenue Authority of Singapore (IRAS) can show that the activity in issue was undertaken with the specific intent of avoiding tax obligations. If it can be shown that the taxpayer had no desire to pay less tax than necessary, the situation will be seen as carelessness rather than tax avoidance.
Can You Please Explain the Difference Between Tax Evasion and Tax Avoidance in Singapore?
Although both tax evasion and tax avoidance attempt to minimise a person’s tax liability, they are quite different practises with very different outcomes. While it is illegal to evade taxes, this does not apply to legitimate tax planning strategies.
To commit tax evasion in Singapore is to lower one’s taxable income by dishonest methods, for as by providing false information on one’s tax return.
Instead, tax avoidance is doing everything within the law to minimise your taxable income in Singapore by maximising all deductions and exclusions to which you are eligible. To do this, you might pursue legally permissible strategies like filing for deductions and exemptions (while staying within the Singapore Income Tax Act). You can choose the Bookkeeping Services here for all the calculations.
What are the penalties in Singapore for failing to pay your taxes?
As was said before, Singapore is quite serious about getting its tax money’s worth, hence the consequences for underpayment are severe. In Singapore, those who are found guilty of tax evasion face potential penalties including:
300% of the under collected tax as a penalty
As much as 300% of the value-added tax that should have been collected but wasn’t because of the undercharged penalty.
A fine of $10,000 or three years in jail, or both, may be imposed
Forged documents would result in a penalty of 400% of the amount of tax that had been undercharged. Convicted offenders may be subject to a fine of up to S$50,000, a prison term of up to five years, or both, depending on the severity of the offence.Companies might be fined up to $10,000 SGD, and individuals could go to prison for up to seven years if proven guilty.
