Large Businesses
Large businesses form 2% of the GST taxpayer population, yet they contribute more than 50% of the total GST payable. These large enterprises often deal with complex business arrangements, engage in cross-border transactions, and handle substantial high-value transactions. In addition, an increasing number are outsourcing their finance functions to overseas shared service centres or undergoing restructuring exercises. This exposes them to a higher risk of making tax errors when their systems and processes fail to accurately record business transactions for GST reporting.
Since 2015, IRAS has intensified its GST audits on large businesses. So far, we have conducted audits on 308 large businesses operating in various industries, including financial services, wholesale, retail, manufacturing, real estate, and construction.
A striking 77% of these businesses were found to have made GST errors, resulting in a total recovery of $73.19 million in taxes and penalties. On average, each case yielded a tax recovery of $308,000. These GST errors made by large businesses span a wide range of issues, including:
- Fundamental errors (e.g., claiming blocked input tax, misclassifying supplies);
- Incorrect tax treatment applied to non-trade receipts;
- Omission of sales not captured within the invoicing module;
- Technical errors stemming from the misapplication of tax laws in complex transactions; and
- Failure to comply with GST-specific provisions (e.g., deeming of gift of goods, input tax apportionment).
Most of these errors stem from inadequate controls in the GST processes. This includes limited checks on tax classification for sales and purchases, a lack of training of staff in GST rules and updates, inadequate oversight of GST documentation requirements, and a failure to communicate effectively between functional units
Summary of findings on common errors and control weakness, case stories:
Category | Types of common errors | Control Weakness |
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System-related |
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Cross border transactions |
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Related party transactions |
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Staff-related transactions |
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Other transactions |
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GST return preparation |
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Strengthen controls and improve GST compliance
The audit results indicate the need for large businesses to strengthen their controls in GST-critical systems and processes to manage tax risks and ensure accurate GST reporting. Businesses should consider GST implications for complex or new business arrangements and finance/tax staff should keep abreast of changes in GST rules that may affect the company’s GST reporting obligations.
Large businesses are also encouraged to undertake IRAS’ GST Assisted Compliance Assurance Programme (ACAP) to enjoy a one-time waiver of all penalties on disclosure of GST errors under ACAP, amongst other benefits. The one-time penalty waiver is subject to IRAS’ periodic review of the programme.
Price Display
IRAS conducted checks on the price displays of 193 GST-registered businesses, primarily in the food catering, fitness, and wellness industries. Among the audited businesses, 86 were required to amend their price displays and incurred penalties totalling $37,500 for non-compliance with the GST Act.
It is mandatory for GST-registered businesses to prominently display, advertise, publish or quote (whether verbally or in writing) GST-inclusive prices. This ensures that consumers are fully aware of the final price they will pay for goods or services upfront.
An exception is granted to hotels and food & beverage (F&B) establishments that impose service charge on their goods and services. They are not required to display GST-inclusive prices to ease their operations.
Among the businesses audited that were found to have errors, most indicated that their published prices were subject to GST but failed to include the GST amount in the displayed prices. In some cases, GST-inclusive prices were not as prominently displayed as GST-exclusive prices.
Common errors in price display detected
Check your price displays now to avoid heavy penalties!
To assist GST registered businesses in adhering to the price display requirements, you can find examples of acceptable and non-acceptable price displays on the IRAS website.
These examples are also covered under the IRAS e-learning course ‘Overview of GST' available to the public.
It is important to note that GST registered businesses that fail to meet these requirements, even for the first time, may face penalties of up to $5,000. IRAS will not hesitate to take legal action against recalcitrant offenders.
To avoid hefty penalties, GST registered businesses should promptly review their price displays to ensure they comply with the law.