Managing your company’s finances can be a daunting task. Not only do you have to keep track of the money coming in and out, but you also have to make sure you’re adhering to all the relevant tax regulations. The Singapore government has offered three voluntary compliance initiatives to help companies demonstrate good tax governance and risk management. Companies can participate in the Goods & Services Tax (GST) Assisted Compliance Program, which on the 17th of February 2022, was joined by two more programs: The Tax Governance Framework and the Tax Risk Management Control Framework for Corporate Income Tax.
The Tax Governance Framework (TGF)
Singapore’s TGF is a set of principles and practices that Singapore-based businesses can adopt to strengthen their tax governance. The TGF was developed by the Inland Revenue Authority of Singapore (IRAS) in consultation with businesses, tax practitioners and other stakeholders. It is based on international best practices and Singapore’s unique characteristics. The TGF guides how companies can develop and maintain an effective tax governance framework. It covers areas such as risk management, internal controls, tax compliance and Tax planning. The adoption of the TGF is voluntary. However, IRAS encourages businesses to adopt the TGF to improve their tax governance. Companies that adopt the TGF will be better placed to manage their tax risks and comply with Singapore’s tax laws. They will also be able to benefit from a streamlined tax filing process.
The program mainly targets those who:
- Have complex structures or business models
- Recognise how important it can be for a company’s success to have transparent information about their taxes (and thus make sure they are being paid)
- And lastly, if you’re willing to put in some work on this front to ensure you meet your broader Enterprise Social Governance (ESG) goals
Successful applicants are granted a one-time extended grace period of two years for voluntary disclosure of specific categories of non-compliance with the Singapore Income Tax Act. This measure will encourage taxpayers to come forward and voluntarily disclose any past instances of non-compliance and provide them with certainty and peace of mind going forward. The TGF will also help to maintain public confidence in the tax system and foster a culture of compliance.
Tax Risk Management Control Framework for Corporate Income Tax (CTRM)
Singapore’s CTRM is a set of standards and processes that Singapore-based corporations can use to manage their tax risks and controls. The Framework is designed to help corporations better understand and manage their tax risks and improve their tax compliance processes. It is also intended to guide corporations in developing an effective tax risk management and control framework tailored to their specific needs. The Framework is based on international best practices in tax risk management and control and was developed in consultation with corporate taxpayers, tax professionals, and other stakeholders. Corporals who adopt the Framework will benefit from greater certainty and transparency in their dealings with the Singapore Tax Authorities and enhanced efficiency in their tax operations. The Singapore CTRM risk management and control framework is an important step forward in Singapore’s journey towards a more efficient and effective tax ecosystem.
To be eligible, companies must have a three-year corporate tax filing history in Singapore. The tax return for the most recent year must be filed, and the company must not have been convicted of any tax-related offences in Singapore. In addition, the company must have a clean audit report from an independent accountant. There are also a few other requirements, such as having a Singapore tax agent and being up to date on all tax filings and payments. However, these are the main eligibility criteria for the CTRM framework.
Using tax technology to support Singapore’s IRAS tax governance requirement
Technology is crucial in helping meet your organisation’s tax governance obligations. While not the be-all and end-all, systems enable tax function subject matter experts to complete their deliverables more streamlined and effective. Technology can standardise the underlying system controls to manage tax positions and tax risk consistently. Tax technology can support superior reporting, governance, efficiencies, and timeliness while reducing the cost of compliance.
Download our latest report, where we provide insights and guidance on how our CCH Integrator tax software can assist your tax function meet the expectations of the IRAS’ new frameworks.