Investigation by IRAS

Details on why IRAS carries out investigations, what happens during these investigations and what you should do if being investigated.

Severity of Tax Evasion

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 ensure that public confidence is maintained in the tax system, we are strongly committed to deterring, detecting and dealing with tax evasion and fraud.

Tax Evasion Investigation Programme

Our investigation programme swiftly and effectively detects and corrects such behaviour. We deal with tax evasion and fraud by:

  • Gathering and analysing 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;
  • Publicising the outcomes of this work to raise community awareness; and
  • Reporting deliberate wrongdoings of tax practitioners to their respective professional bodies.

Fraud and Statutory Limits

Where there is fraud, the statutory limitation provided under Section 74(1) of the Income Tax Act and Section 45(5) of the GST Act is not applicable.  Tax assessment may be made at any time beyond the following statutory limitation:

Income Tax Fraud

  • Six years, if the year of assessment is 2007 and earlier; or
  • Four years, if the year of assessment is 2008 onwards.

GST Fraud

  • Seven years, from the end of the prescribed accounting period, in the case of a prescribed accounting period ending before 1 Jan 2007; and
  • Five years, from the end of the prescribed accounting period, in the case of a prescribed accounting period ending on or after 1 Jan 2007.

Conduct of Tax Investigations

Scope of Investigation

The investigation may cover issues on Individual Income tax, Corporate Company Income Tax, and 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.

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 to 24 months to complete.

Investigation Activities

An investigation may be conducted in the following manner:

  1. A surprise visit to your business premises to ask for your accounting records, source documents and other relevant records, both paper and electronic;
  2. A surprise visit may also be conducted simultaneously to your residence and to the premises of your tax agent or representative and any relevant third parties;
  3. Searches may be conducted during the surprise visit, if necessary;
  4. Interviews with you, your family members, your staff, your tax agent or representative, your suppliers and any relevant third parties; and
  5. Obtaining information from or verifying information with other third parties such as other government agencies, banks and financial institutions, foreign tax authorities etc.

Investigation 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 same time, our officers will introduce themselves, provide their full names and give you their contact details so that you can contact them if you need further information. 

They will also give you a letter stating the purpose of visit and what is required of you. 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.

Confidentiality of Taxpayers

You have a right to the same high degree of confidentiality as all taxpayers- we will not divulge any information you have provided to third parties, except as allowed under the law. It may be necessary for us to seek information about you or your business from other people or organisations. If this is the case, we will be as discreet as possible about the reasons for our enquiries. 

However, in the case of seeking information from the banks, we will need to inform them, as required by the Banking Act, that it is in relation to our investigation of a criminal offence.

Principle of Fairness

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 tax laws.

Expectations of Taxpayers Under Investigation

1. Cooperation

The investigation will be undertaken with or without your voluntary cooperation. If you do cooperate, the investigation will proceed more quickly, efficiently and advantageously for both parties than if you refuse to cooperate.

Your conduct and cooperation during the course of the investigation will be taken into consideration when IRAS determines 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 the power to have full and free access to your premises, records, data and documents.

The officers may inspect, copy and take 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, photograph 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 two working days and 100% within three working days for critical systems to minimise disruption to business operation.

It is an offence to hinder or obstruct the officers in carrying out their duties under the tax laws. A person guilty of such offence, shall be liable on conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding six months or both.

3. Provide Information

You are required to provide any 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 of the tax consequences of a particular matter.

False statements or information provided can result in a criminal investigation with a view to prosecution.

4. Maintain 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:

  1. At least seven years, for accounting periods ending before 1 Jan 2007; and
  2. At least five years for accounting periods ending on or after 1 Jan 2007.

Businesses
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.

Please refer to:

  1. Record Keeping Guide for GST- Registered Businesses (232KB)
  2. Record Keeping Guide for Non-GST Registered Businesses (246KB)

Individuals
For individuals, we need all documents and records pertaining to income and assets acquired as well as expenses incurred.

Please make sure that you keep all existing records, including computer records, in accordance with the records retention requirements as provided in the tax laws.

5. Professional Representation (optional)

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 timetables agreed between us. If there are delays or difficulties, we may deal directly with you.

Conclusion of Investigations

Explanation of Irregularities

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.

However, upon the conclusion of the investigation, we will meet to discuss and finalise the findings and tax assessments and also give you an opportunity to explain any tax irregularities that we have uncovered in the investigation.

Offer of Settlement

We may invite you to make 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.

Where it is established that there is a 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.

Serious Fraudulent Tax Evasion

Under the Income Tax Act , any person who wilfully with intent to evade or to assist any other person to evade tax shall be guilty of an offence for which, upon conviction, he or she shall:

  1. Pay a penalty of four times the amount of tax which has been undercharged in consequence of the offence or which would have been undercharged if the offence had not been detected; and
  2. Also be liable to a fine not exceeding $50,000 or to imprisonment for a term not exceeding five years, or both.

Under the GST Act , any person who wilfully with intent to evade or to assist any other person to evade tax shall be guilty of an offence for which, upon conviction, he or she shall:

  1. Pay a penalty of three times the amount of tax which has been undercharged in consequence of the offence, or which would have been undercharged if the offence had not been detected; and
  2. Also be liable to a fine not exceeding $10,000 or to imprisonment for a term not exceeding seven years, or both.

Recent Investigation Activities by IRAS

We will take enforcement actions against non-compliant businesses. All these cases are publicised in the press.

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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