Tax Assessment Process

IRAS adopts a risk-based approach in reviewing the Income Tax Returns of companies. 

Risk-Based Approach to Tax Assessments

IRAS adopts a risk-based approach in reviewing the Income Tax Returns of companies. Companies are profiled based on the complexity of their businesses and tax matters, and risk to revenue. This flowchart (PDF, 81KB) illustrates the return review process for companies.

The assessment process begins when the Income Tax Returns are received by IRAS. The Income Tax Returns are then segregated according to the complexities of their tax affairs.

  1. Companies with Straightforward Tax Affairs
    Companies with straightforward tax affairs generally do not require detailed reviews of their Income Tax Returns on a year-to-year basis. The companies' tax declarations in Income Tax Returns are accepted upfront by IRAS with little or no adjustment.

    The assessments are completed based on the companies' declarations in the Income Tax Returns and Notices of Assessment (NOA Type 4) are issued to the companies by 31 May of the following year.

    To complement our risk-based approach, IRAS conducts review on a small percentage of companies with straightforward tax affairs by reviewing selected returns under its various compliance programmes. If your company has been selected, you can expect to receive an enquiry letter from IRAS by 30 Sep of the following year. For example, if your company's Income Tax Return for the Year of Assessment (YA) 2020 has been selected for review, you can expect to receive an enquiry letter by 30 Sep 2021.

    The objectives of such checks are to ensure that the Income Tax Returns submitted are complete and accurate and that the assessments are in order. Where necessary, IRAS may request for supporting documents from companies to substantiate their declarations. Amended/ additional Notices of Assessment (NOA Type 4) may also be issued to the companies if tax adjustments are made in the course of such compliance reviews.

     

  2. Companies with More Complex Tax Affairs

    On the other hand, companies with more complex tax affairs are subject to more in-depth reviews of their yearly Income Tax Returns. Pending the reviews of the Income Tax Returns, estimated assessments may be raised based on the companies' declaration in their Income Tax Returns. Notices of Estimated Assessment (NOA Type 3) may first be issued to the companies. Such companies can expect to receive the NOA by 28 Feb of the following year. For example, a company with more complex tax affairs, whose Income Tax Return is subject to an in-depth review, can expect to receive a Notice of Estimated Assessment (NOA Type 3) relating to YA 2020, if any, by 28 Feb 2021.

    Enquiries and tax adjustments may be made when IRAS reviews the Income Tax Returns subsequently. Notices of Assessment (NOA Type 4) will be issued to the companies after IRAS has reviewed the returns. Companies can expect to receive the NOA by 30 Nov of the second year. For example, the company can expect to receive the Notice of Assessment (NOA Type 4) for YA 2020 by 30 Nov 2022. Prior to receiving the NOA , the company should submit the Income Tax Return for the current YA (i.e. YA 2021) based on the YA 2020 tax position filed with IRAS*. The YA 2021 Income Tax Return should be e-Filed by the filing due date on 30 Nov 2021.

    *The unutilised loss items and tax written down values of assets (for the purposes of computing capital allowances) to be carried forward to YA 2021, for setoff against the taxable income of YA 2021, should be based on the YA 2020 tax computation prepared by the company.

    From YA 2018, to improve companies' e-Filing experience, the following amounts will be pre-filled:
    - Unutilised Capital Allowances brought forward
    - Unutilised Losses brought forward
    - Unutilised Donations brought forward
    - Current year Approved Donations
    - Unutilised Investment Allowances brought forward (applicable to Form C only)

    The pre-filling is based on the carried forward amounts in the last assessment raised by IRAS for the immediate preceding YA. This will apply even if the assessment for the immediate preceding YA is under objection or query.

    If the return for the immediate preceding YA is under review, the pre-filling will be based on the carried forward amounts declared in the Form C-S/ C of the immediate preceding YA.
Regardless of whether a company has straightforward or complex tax affairs and whether a NOA Type 4 (completed assessment) has been issued, IRAS may review the company's Income Tax Return(s) should there be new information brought to IRAS' attention. This is subject to the time limit imposed on IRAS with regard to the revision of tax assessments.

Types of Notices of Assessment

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