The Inland Revenue Authority of Singapore (IRAS) 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.
The TGF and CTRM complement the existing Goods and Services Tax Assisted Compliance Assurance Programme (GST ACAP). Together, they provide a suite of voluntary compliance tools that companies can adopt holistically or as independent programmes, depending on their readiness and business needs.
Tax Governance Framework
The TGF focuses on strengthening the tax governance standards in a company and elevating them to the Board level. It features a set of broad principles and practices 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), and can be adopted by any company willing to commit to good tax governance.
Companies that attain the TGF status can enjoy a longer grace period for voluntary disclosure of tax errors:
- A one-time extended grace period of two years for voluntary disclosure1 of CIT and/or withholding tax errors made within two years from the date of award of TGF status.
- For a GST-registered business accorded 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 award of TGF status; or for 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 award of TGF status.
Tax Risk Management and Control Framework for Corporate Income Tax
Targeted at large companies with complex structures and business models, 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.
“While the TGF, CTRM and GST ACAP are voluntary compliance initiatives that operate independently, we strongly encourage companies to adopt all three frameworks to ensure proper internal controls and systems are in place to manage their tax risks. By doing so, companies will give confidence to their stakeholders that they are effective in managing tax risks and transparent with their tax matters, as well as enjoy lower compliance costs in the long run. IRAS will continue to work closely with companies to enable them to build a sustainable infrastructure that supports voluntary compliance,” said Mr Ng Wai Choong, Commissioner of Inland Revenue/Chief Executive Officer.