IRAS Late Filing or Non Filing

Singapore’s tax laws require individuals and organisations to duly file their tax returns in order to help maintain transparency and prevent instances of financial fraud. IRAS- the nodal agency that regulates tax provisions in Singapore and also prosecutes individuals or organisations guilty of non-payment of taxes against income, also takes seriously instances of late filing of tax returns. As a responsible Singaporean citizen, it is extremely essential that you file your tax returns on time, and avoid unnecessary trouble.

Let’s look at (IRAS) Inland Revenue Authority of Singapore's tax system in brief and look at the penalties involved in late filing of taxes, while also looking at the importance of filing taxes on time and avoid penalties and prosecution (in extreme cases where late filing most often coincides with tax fraud).

Late filing of tax returns as well as non-filing can result in penal action in select cases. Singapore’s tax laws require every individual and business organisation undertaking income-oriented activities in Singapore to file their tax returns on a per-annum basis. For instance, all businesses that are registered under the GST tax system are required to file their GST returns and also make payments towards their tax amounts within one month following the end of the GST accounting period. For businesses that do not have any activity during this time, a nil return is required to be filed under existing Singapore tax laws.

In Singapore, individuals need to fill out and submit Form B1 while organisations need to fill out and submit form C-S/C.

Penalties for not Filing your Tax Returns on Time?

Well, individuals, or organisations for that matter, primarily fall under two categories as far as filing tax returns are concerned – those who file their returns late and those who don’t file their returns at all. The following are some situations that you can expect to encounter upon failing to duly file your tax returns on time:

Late Filing Penalty:

The IRAS, in most cases, will levy a late submission penalty in case there has been a delay in filing tax returns. This is true with respect to both individuals as well as organisations doing business in Singapore. The penalty is dependent on the taxable amount in question and the period of delay.

Failure to file tax returns for two years or more

Any instance where an individual or an organisation hasn’t filed returns for over a 2-year period, in the absence of reasonable grounds, will face the following consequences

  • A penalty amounting to two times the tax amount (this is done by considering one year at a time)
  • Fine that can go up to S$1,000.
  • Failure to pay penal charges will result in imprisonment for a period of six months  or more.
  • In the case of businesses, penal action, as mentioned earlier, will be far more impactful.

Estimated Notice of Assessment:

In case there has been a delay in filing of returns, an estimated Notice of Assessment will be sent, along with a penalty of 5% of the estimated tax amount. This is usually the most common occurrence in the case of late filing of returns in Singapore. Again, the IRAS takes charge of the proceedings.

What should you do if you receive an Estimated Notice of Assessment?

As mentioned earlier, the Estimated Notice of Assessment is usually the first step implemented by IRAS to take action against individuals and businesses that fail to file their GST returns on time. In this case, a 5% penalty on the estimated tax amount is imposed on the organisation in question. Here is what you should be doing if you receive an Estimated Notice of Assessment, or NOA, in short:

  • Immediately pay the amount you are liable to pay, along with the 5% penalty imposed for failure to file returns within the stipulated time period.
  • Know your actual liability under the current GST tax framework and immediately file your GST returns without further delay.

Court Order:

This is in rare cases where the individual or the organisation fails to respond to notices sent by IRAS. In such a case, the IRAS will issue a court notice to the individual or the organisation, asking them to appear before a court of law in order to resolve late or non-filing of returns.

How to Appeal Against the Imposed Penalty and Charges

The Singapore legal structure allows individuals as well as organisations to appeal the imposition of penal charges. Here is what you need to know if you wish to appeal an order issued by the IRAS regarding late or non-filing of tax returns:

  • IRAS will consider your appeal only in select cases – i.e. if you’ve been served a notice for late-filing of returns consistently over the years, your appeal will not be considered.    
  • For IRAS to consider your appeal, you shouldn’t have tax related offences for the last two years (this is particularly in the case of individuals). Also, you need to intimate the IRAS that you will file your returns on time in future.
  • In the case of businesses, if there is inconsistency of evaluation and imposition of penalty on the part of the IRAS, an appeal can be raised at a Singaporean court. Again, there should be no stinging history of tax offences, which will go on to work against the organisation in such a case.

Arrest Warrant:

The IRAS prosecutes offenders and obtains an arrest warrant from a court of law in case none of the above solutions bear fruit. This is the final resort as far as taking action against individuals who fail to file their returns on time.  

An arrest warrant will be issued under the following circumstances:

  • Failure to file GST F5/F8 return.
  • Non-payment of summons fee.
  • Failure to attend court proceedings.

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