Voluntary Disclosure of Errors for Reduced Penalties

IRAS understands that some taxpayers may occasionally make errors in their tax returns due to lack of care or awareness of their tax obligations. The IRAS Voluntary Disclosure Programme (VDP) encourages taxpayers who have made errors in their tax returns to come forward voluntarily, in a timely manner, to correct their errors. IRAS is prepared to reduce penalties for voluntary disclosures which meet the qualifying conditions.

 

Qualifying Conditions

The IRAS VDP applies to Income Tax (including cash payouts / bonus), GST, Withholding Tax and Stamp Duty. To qualify for IRAS VDP, you need to submit a voluntary disclosure that is:

  • Accurate and complete
  • Timely and self-initiated

A voluntary disclosure is considered timely and self-initiated under either one of the following conditions:

  • before you receive a query from IRAS relating to your tax or cash payout / bonus matters; or
  • before you receive notification from IRAS on the commencement of an audit or investigation on your tax or cash payout / bonus matters.

After submitting a voluntary disclosure, you must also:

  1. Cooperate fully with IRAS to correct the errors made; and
  2. Pay or make arrangements with IRAS to pay additional taxes or amount exceeding cash payout / bonus than entitled to and penalties imposed (if any), and honour such arrangements till all payments are made.

To qualify for IRAS' VDP, you need to submit a timely, accurate, complete and self-initiated voluntary disclosure. A voluntary disclosure is considered timely and self-initiated when it is made before you receive a query from IRAS relating to your tax or cash payout / bonus matters, or before you receive notification from IRAS on the commencement of an audit or investigation on your tax or cash payout / bonus matters.

You must also:

  1. Cooperate fully with IRAS to correct the errors made; and
  2. Pay or make arrangements with IRAS to pay additional taxes or amount exceeding cash payout / bonus than entitled to and penalties imposed (if any), and honour such arrangements till all payments are made.

For examples on qualifying and non-qualifying Voluntary Disclosures, please refer to Annex A and Annex B respectively of the e-Tax Guide on IRAS' Voluntary Disclosure Programme (PDF, 519KB).

Reduced Penalties

Disclose Errors Within Grace Period to Avoid Penalties

Voluntary Disclosure made..

Penalty Treatment

 

Within the 1 year grace period from the statutory filing deadline, and the qualifying conditions are met

No  penalty imposed

 

After the 1 year grace period from the statutory filing deadline and qualifying conditions are met

Reduced  penalty of :

  • 5% of the income tax undercharged or of the amount of cash payout / bonus exceeding entitlement obtained, for each year the error was late in being rectified
  • Flat 5% of the GST undercharged
  • Flat 5% of the outstanding Withholding Tax

 

For late stamping or underpayment of Stamp Duty and the qualifying conditions are met

Reduced  penalty of :

  • 5% per annum computed on a daily basis on the Stamp Duty payable

No grace period for Stamp Duty

Extension of grace period for Voluntary Disclosure to the extended filing/submission deadlines announced earlier by IRAS

To support taxpayers that want to rectify past errors, but experience difficulties putting together the information during this COVID-19 period, we will be providing a one-time extension of timelines for determining whether an error was disclosed within the grace period.

This one-time extension is in line with the latest measures to manage the COVID-19 situation where IRAS has extended the filing deadlines for (i) YA 2020 Individual Income Tax returns, (ii) GST returns for accounting period ending Mar 2020, (iii) YA 2020 Income Tax returns for trusts, clubs and associations, (iv) S45 withholding tax forms due in Apr 2020 and (v) tax clearances.

The one-time extension applies to errors that relate to:

  • YA 2019 Individual Income Tax returns
  • GST returns for accounting period ended Mar 2019
  • YA 2019 Income Tax returns for trusts, clubs and associations
  • S45 withholding tax forms due in Apr 2019

 

Scenario

  Prior to extension  After one-time extension

An individual taxpayer discloses an error in his YA 2019 return on 1 May 2020.

The error would attract penalty, as the disclosure is made more than 1 year after the statutory filing deadline of 15 Apr 2019, i.e. after the grace period. 

The disclosure of the error will be treated as falling within the grace period, and will not attract penalty.

This is because it is made before the extended YA 2020 Individual Income Tax filing deadline of 31 May 2020.

A GST taxpayer discloses an error in his return for the accounting period ending Mar 2019 that was due on 30 Apr 2019 on 1 May 2020. The error would attract penalty, as the disclosure is made more than 1 year after the statutory filing deadline of 30 Apr 2019, i.e. after the grace period.

The disclosure of the error will be treated as falling within the grace period, and will not attract penalty.

This is because it is made before the extended filing deadline of 11 May 2020.

A taxpayer discloses an error in the YA 2019 return for his trust / club / association that was due on 15 Apr 2019 on 1 May 2020. The error would attract penalty, as the disclosure is made more than 1 year after the statutory filing deadline of 15 Apr 2019, i.e. after the grace period.

The disclosure of the error will be treated as falling within the grace period, and will not attract penalty.

This is because it is made before the extended filing deadline of 30 June  2020.

A taxpayer discloses his failure to e-file and pay the S45 Withholding Tax due on Apr 2019 on 1 May 2020 The error would attract penalty, as the disclosure and payment is made more than 1 year after the deadline of 15 Apr 2019, i.e. after the grace period.

The disclosure of the error will be treated as falling within the grace period, and will not attract penalty.

This is because it is made before the extended deadline of 15 May 2020.

 

 

Voluntary Disclosure of Past Actions Involving Wilful Intent to Evade Taxes or Obtain Excessive Cash Payout / Bonus

Taxpayers who commit offences involving wilful intent to evade taxes or obtain excessive cash payouts/bonus, including persons who assisted in such acts, may face prosecution, and the consequent punishment of being jailed up to 7 years and / or fined up to $50,000, and penalised up to 400% of tax undercharged / unpaid.

When you come forward and voluntarily disclose past actions involving a wilful intent to evade taxes or obtain excessive cash payouts/bonus, your offences may be treated with a compounded penalty rate of 200% in lieu of prosecution. This treatment applies to Income Tax, Withholding Tax and GST.

However, if you do not meet the qualifying conditions for IRAS' VDP, you may be charged in court for your tax evasion offences.

For guidelines to differentiate cases involving wilful intent to evade taxes or obtain excessive cash payout / bonus, please refer to Annex E of the e-Tax Guide on IRAS' Voluntary Disclosure Programme (PDF, 519KB).

Making a Voluntary Disclosure

a) For voluntary disclosure of errors relating to tax returns, you can inform us in the following ways:

Tax Type

How to Inform IRAS

Individual Income Tax

Email required information and supporting documentation (detailed in Annex F of e-Tax Guide (PDF, 519KB)) to  iit_compliance@iras.gov.sg  

Corporate Tax

Email required information and supporting documentation (detailed in Annex F of e-Tax Guide (PDF, 519KB)) to  ctmail@iras.gov.sg

GST

Send an electronic request to IRAS for GST F7  (Disclosure of Errors on GST Return) and e-File the GST F7 at any time, up to 14 days from the date of request for the GST F7
For GST late registrants, register for GST online at myTax Portal
For unauthorised GST collections, email gst@iras.gov.sg

Withholding Tax

Submit S45 VDP application here

Stamp Duty

Stamp document via the e-Stamping system

b) For voluntary disclosures of past actions involving a wilful intent to evade taxes or obtain excessive cash payout/ bonus, you can either:

  • Email IRAS at ifd@iras.gov.sg; or
  • Write in to:
    Inland Revenue Authority of Singapore
    Revenue House
    55 Newton Road
    Singapore 307987