Tax evasion or fraud is a criminal offence, punishable under the law. In fairness to the majority of people who meet their obligations, and to maintain public confidence in the tax system, we are strongly committed to deal with tax evasion and fraud. Our investigation function swiftly and effectively detects and corrects such behaviour.
We deal with tax evasion and fraud by:
- gathering and analyzing intelligence on risks and threats to the tax system
- investigating suspected cases with a view to prosecution
- complementing our criminal investigation work with civil audit work and the application of tax penalties
- publicizing the outcomes of this work to raise community awareness
- reporting deliberate wrongdoings of tax practitioners to their respective professional bodies.
On this page:
What can I expect if I am investigated for potential tax offences?
1. How a tax investigation is conducted
An investigation may be conducted in the following manner:
- Conduct a surprise visit to your business premises to ask for your accounting records, source documents and other relevant records, both paper and electronic.
- A surprise visit may also be conducted simultaneously to your residence and to the premises of your tax agent or representative and any relevant 3rd parties.
- Searches may be conducted during the surprise visit, if necessary.
- Arrange to meet and interview you, your family members, your staff, your tax agent or representative, your suppliers and any relevant 3rd parties.
- Obtain information from or verify information with other 3rd parties such as other government agencies, banks and financial institutions, foreign tax authorities etc.
2. How to identify IRAS officers
If you are under investigation for potential tax offences, our first contact with you would usually be in person. When our officers meet with you, they will show you their authority cards bearing their name and photograph. At the same time, our officers will introduce themselves, providing their full names and their contact details so that you can contact them for further information if required. They will also present to you a letter stating the purpose of visit and the information and/or documents you need to provide. Should you require confirmation on the identity of the authority card holder, please call IRAS on 6351 2044 or 6351 2046.
IRAS will not tolerate any acts of mischief or criminal intent by any person who impersonates himself or herself as an IRAS officer.
3. Scope of Investigation
The investigation may cover issues on individual income tax, corporate income tax, GST and other tax types administered by IRAS. The investigation aims to uncover the full facts to determine whether any tax offences have been committed.
Where there is fraud, the statutory limitation provided under Section 74(1) of Income Tax Act and Section 45(5) of GST Act is not applicable. Tax assessment may be made at any time beyond the following statutory limitation:
For Income Tax
- 6 years, if the year of assessment is 2007 and earlier or
- 4 years, if the year of assessment is 2008 onwards.
- 7 years from the end of the prescribed accounting period, in the case of a prescribed accounting period ending before 1 January 2007; and
- 5 years from the end of the prescribed accounting period, in the case of a prescribed accounting period ending on or after 1 January 2007.
You have a right to the same high degree of confidentiality as all taxpayers; we will not divulge to third party any information that you have provided, except as allowed under the law for lawful purposes.
It may be necessary for us to seek information about you or your business from other people or organizations. If this is the case, we will be as discreet as possible about the reasons for our enquiries. However, when seeking information from the banks, we will need to inform them, that it is in relation to our investigation of a criminal offence, as required by the Banking Act.
5. Fairness and Professionalism
We will keep an open mind to the possibility that there may be a legitimate explanation for the suspected irregularities. We undertake to treat you fairly, professionally, courteously and in accordance with the tax laws.
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What does IRAS expect from me during an investigation?
The investigation will be undertaken with or without your voluntary cooperation. If you do cooperate, the investigation will proceed more quickly, efficiently and smoothly for both parties. Your conduct and cooperation during the course of the investigation will be taken into consideration when IRAS decides on the appropriate outcome of the investigation.
2. Access to Premises and Information
Section 65B of Income Tax Act and Section 84 of GST Act set out the powers of our officers to obtain information, specifically on the powers to have full and free access to your premises, records, data and documents. The officers may inspect, copy and take photo and possession of the books, records, data and documents, and download relevant information from all electronic storage media, where necessary.
The officers may secure, take possession and record statements from the users/owners where computers are identified. The electronic data residing in the computers may be captured and preserved as admissible evidence in court. The officers will generally aim to capture 80% of the electronic data within 2 working days and 100% within 3 working days for critical systems to minimize disruption to business operation.
It is an offence to hinder or obstruct the officers in carrying out their duties under the tax laws. If convicted, a guilty person may be fined an amount not more than $5,000 or jailed for not more than 6 months or both.
3. Providing Information
You are required to provide all the information and documents that IRAS requests. You will be given a reasonable amount of time to respond to our requests. You should ensure that any information you provide and any answers you give are correct and complete. It is important that you give us all the relevant facts even if you are unsure about the tax treatment of the particular matter. Any false statements or information provided can result in a criminal investigation with a view to prosecution.
4. Maintaining Records
Under the Income Tax Act and the GST Act, persons liable to pay income tax and GST are required to keep their business records for at least seven years, for accounting periods ending before 1 January 2007, and at least five years for accounting periods ending on or after 1 January 2007.
For businesses, we generally need all accounting and business records, source documents such as contracts, invoices, payment vouchers and receipts that substantiate all your transactions, bank statements and payment evidence. For individuals, we need all documents and records pertaining to income and assets acquired as well as expenses incurred. Please refer to the “Record Keeping Guide for GST- Registered Businesses” and “Record Keeping Guide for Non-GST Registered Businesses”.
Please make sure that you keep all existing records, including computer records, according to the requirements of the tax laws.
5. Professional Representation
You may appoint a professional adviser to represent you during our investigation. You should give your professional adviser all the facts because you are personally responsible for your tax affairs and the accuracy of any information supplied to us. You are also responsible for ensuring that your adviser complies with timelines agreed between us. If there are delays or difficulties, we may contact and deal directly with you.
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What happens at the conclusion of an investigation?
1. Length of Investigation
The length of investigation depends on the scope of investigation, complexity of the issues and the level of cooperation you and your professional adviser render during the investigation. Under normal circumstances, an investigation may take about 15 – 24 months to complete.
2. Conclusion of Investigation
We will usually meet with you and your professional adviser (if you engage one) to discuss any findings that we may uncover during the course of the investigation. Upon the conclusion of the investigation, we will meet to discuss and finalize the findings and tax assessments and also give you an opportunity to explain any tax irregularities that we have uncovered in the investigation.
Where it is established that there is wilful intent to evade tax or to assist another person to evade tax, we will consider initiating legal proceedings to prosecute you and the abettors for tax evasion.
We may also invite you to discuss an offer of settlement to resolve the investigation. The offer of settlement would comprise the total additional tax payable and a composition amount that you would like to pay to resolve the investigation. Depending on the severity of the tax offence, the composition amount can be up to 400% of the additional tax payable.
3. Offences and Penalties for Serious Fraudulent Tax Evasion
Under the Income Tax Act, any person convicted of intentionally evading tax or assisting any other person to evade tax may be penalized 4 times the amount of tax undercharged and may also be fined an amount not more than $50,000 or jailed for not more than 5 years or both.
Under the GST Act, any person convicted of intentionally evading tax or assisting any other person to evade tax may be penalized 3 times the amount of tax undercharged and may also be fined an amount of $10,000 or jailed not more than 7 years or both.
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Recent Investigation activities and results
We will not hesitate to take enforcement actions against non-compliant businesses. All these cases are publicized in the press.
For IRAS’ audit attention for years 2013 and 2014, please refer to :
- IRAS’ Focus on Compliance for Individual Income Tax
- IRAS’s Focus on Compliance for Corporate Income Tax
- IRAS’s Focus on Compliance for GST
As part of pursuing a fair tax system, and to maintain public confidence in the tax system, we will prosecute taxpayers who intentionally and fraudulently evade their tax obligations.
Read about our recent prosecution cases here.
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