IRAS rolls out two new tax frameworks to help companies strengthen tax compliance

28 April 2022

On 18 March 2022, the Inland Revenue Authority of Singapore (“IRAS”) announced it has rolled out two new tax frameworks, the Tax Governance Framework (“TGF”) and the Tax Risk Management and Control Framework for Corporate Income Tax (“CTRM”), to help companies strengthen tax compliance. Together with the existing Goods and Services Tax Assisted Compliance Assurance Programme (“GST ACAP”), the new frameworks provide a suite of voluntary compliance tools that companies can adopt holistically or as independent programmes, depending on their readiness and business needs.

More details on the eligibility criteria and the application process for the two frameworks can be found on the IRAS About Tax Governance & Tax Risk Management webpage.

Tax Governance Framework

The TGF focuses on strengthening the tax governance standards in a company and features a set of broad principles and practices centred around three main building blocks of good tax governance: compliance with tax laws, governance structure for managing tax risks, and relationship with tax authorities. The framework is applicable to both corporate income tax (“CIT”) and goods and services tax (“GST”).

Companies that apply for and attain the TGF status can enjoy the following benefits:

  • A one-time extended grace period of two years for voluntary disclosure of CIT errors made within two years from the date of approval of the TGF application.
  • A one-time extended grace period of two years for voluntary disclosure of withholding tax errors made within two years from the date of approval of the TGF application.
  • For a GST-registered business accorded GST ACAP status, a one-time extended grace period of three years for voluntary disclosure of GST errors made within two years from the date of approval of the TGF application, or in the case of a GST-registered business without ACAP status, a one-time extended grace period of two years for voluntary disclosure of GST errors made within two years from the date of approval of the TGF application. 

Tax Risk Management and Control Framework for Corporate Income Tax

The CTRM is a voluntary compliance initiative that a company may participate in to demonstrate that it has good tax governance and tax risk management. It is targeted at large companies with complex structures and business models, particularly publicly listed companies and other multinational corporations.

The CTRM guides these companies in establishing robust internal controls and processes to identify, mitigate and monitor key CIT risks. The framework comprises a self-review checklist featuring processes and measures that would demonstrate that sound controls, i.e. the tax governance structure, entity-level controls and tax reporting controls, are in place to manage tax risks.

Eligible companies that apply for and attain the CTRM status will enjoy these benefits:

  • A one-time waiver of penalties for voluntary disclosure of prior years’ CIT errors.
  • A one-time waiver of penalties for voluntary disclosure of prior years’ withholding tax errors.
  • Step-down on CIT compliance audit for three consecutive Years of Assessment from the date IRAS awards the CTRM Status.

Reference materials

The following materials are found on the IRAS website www.iras.gov.sg: