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:
-
Cooperate
fully with IRAS to correct the errors made; and
- 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:
- Cooperate fully with IRAS to correct the errors made; and
- 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