What is Tax Investigation?

Where the Tax Authority has preliminary information or reasons to believe that a taxpayer is evading tax, the Authority will trigger tax investigation actions. The investigation may cover individual income tax, corporate income tax and GST.

It is important to examine and understand the nature of the tax queries raised by the Authority and acts on how best to deal with them. There have been cases the investigation ends up in court where there is sufficient evidence available for the Authority to prosecute the taxpayer for tax evasion.

So if a taxpayer realises that there are some irregularities in his tax affairs and does not know how to resolve them, it is best that he seeks professional advice on how best to navigate his way out of the trouble. It is strongly recommended that he consults a tax specialist as soon as possible. You can seek an initial discussion with us and we will give you the necessary guidance.

How long does a Tax Investigation take?

It depends on the scope of the tax investigation, complexity of the underlying irregularities, and the level and sincerity of the taxpayer’s cooperation he renders to the Authority in the process of the investigation. Normally, an investigation on average may take about 15 to 24 months to complete.

Design Services

Prosecution

Where the Authority has established a prima facie case that offences have been committed, it may consider initiating court proceedings to prosecute the errant taxpayer and/or any abettors for tax evasion or other tax related offences.

Composition

In some cases. a “composition” penalty may be imposed on the errant taxpayer in lieu of prosecution and conviction in court for that offence, for example, just incorrect return made.

Wilful Evasion

For wilful evasion, the penalty could go up to treble the amount of the tax. For serious fraudulent evasion, the penalty is set at 4 times the amount of the tax.

No Further Action

Where there is no evidence of wrongdoing, for example, where the irregularity is in the nature of technical interpretation, the case may be closed with just appropriate tax adjustments made and little or no penalty imposed.

Frequently Asked Questions

Tax investigation happens when IRAS has preliminary information to believe that a taxpayer is evading tax on individual Income Tax, Corporate Company Income Tax, GST and other tax types administered by IRAS.
We understand it is stressful when you are picked for a tax investigation. However, you should give the investigation officer your full cooperation and do not obstruct them from performing their duties. You may appoint a tax professional who is experienced in handling tax investigation as tax investigation is a complicated process.
Unfortunately, you cannot appeal against an investigation being opened.

You are required to provide any information and documents that IRAS requests.

It depends on the scope of the tax investigation, complexity of the underlying irregularities, and the level and sincerity of the taxpayer’s cooperation he renders to the Authority in the process of the investigation. Normally, an investigation on average may take about 15 to 24 months to complete.

Penalty (% of tax undercharged)

  • Up to 300% for willful intent
  • Up to 400% for serious fraudulent

Fine

  • Up to S$50,000

Jail Term

  • Up to 5 years

We are able to help as follows:

  • Collating information and ensuring the correct information is provided to IRAS.
  • Dealing with further requests for information.
  • Negotiate a final settlement including interest and penalties.
  • Negotiate time to pay.

Tax Investigation happened for a reason. Sometimes it is due to information that the taxpayer is unaware of or a misunderstanding of information that has been provided. There is very little that can be done to avoid an investigation in these circumstances. However, very often an investigation is the result of affairs that the taxpayer is aware of, and for some taxpayers, they know that eventually, one day IRAS will be asking questions and may investigate them. These are the situations where a tax investigation, and the worst aspects of one, can be avoided.

Contact us

Contact us if you have any question that is not in the FAQ. We have a team of experience tax advisors that will work to resolve your tax investigation, tax enquiry or tax dispute with IRAS.