Many businesses avoid paying Taxes to keep more income with them or due to time-constraint. Tax Evasion is the most common illegal way of avoiding meeting tax obligations practiced worldwide. Singapore takes tax compliance very seriously, and they follow a strict & stringent policy for individuals & businesses to pay lawful taxes on time.
Singapore aims to keep the country free from corruption and to ensure citizens & businesses are paying taxes on time, Singapore follows a rigid set of penalties to be imposed on people & businesses who avoid paying taxes.
What is the difference between Tax Evasion & Tax Avoidance?
Both Tax Evasion & Tax Avoidance are used for similar purposes with the intention of paying lesser taxes. However, both concepts are different as tax avoidance methods are legal, and Tax Evasion methods are illegal.
Tax Evasion involves using illegal methods to avoid paying taxes intentionally. Tax Evasion happens in the form of deliberately misrepresenting facts on the Tax return.
Tax Avoidance involves using legal methods in the form of claims, deductions, exemptions, bills, and expenses that are entitled within the Income Tax Act of the country you reside or work in.
What is Tax Evasion in Singapore?
Singapore has one of the strict & stringent criminal acts of tax evasion. Singapore takes severe actions for using unlawful methods to avoid tax obligations required by Singapore Income Tax Act.
Some of the Tax Evasion unlawful methods include the following:
- Misrepresentation of information for tax reporting
- Transferring profits amongst family members & friends without appropriate reason
- Claiming false expenses & bills in an excessive amount
The Inland Revenue Authority of Singapore (IRAS) must have the appropriate & correct evidence to justify & prove the intentions of the actions are part of the Act of Tax Evasion and has been used to avoid tax obligations.
Suppose the Inland Revenue Authority of Singapore (IRAS) discovers that the business, company, or individual has not paid the taxes intentionally but due to negligence. In that case, it is considered negligence, not Tax Evasion.
Penalties for not paying Tax in Singapore
Singapore follows a zero-tolerance policy in the event of Tax Evasion and imposes an extreme penalty. Those who are found culprit under the Tax Evasion Act may be subject to the following penalties:
- If charged under GST Evasion, then the penalty of 3 times the amount of tax undercharged and a fine of up to $10,000 or up to 7 years of imprisonment
- If charged under Tax Evasion, then the penalty of 3 times the amount of tax undercharged and a fine of up to $10,000 or up to 3 years of imprisonment
- If charged under Fraudulent Tax Evasion (Misrepresenting or falsifying documents), then the penalty of 4 times the amount of tax undercharged and a fine of up to $50,000 or up to 5 years of imprisonment
- If charged under providing false information on tax liability (improper tax return), then the penalty of 2 times the amount of tax undercharged and a fine of up to $5,000 or up to 3 years of imprisonment
- Companies may be subjected to a fine of up to $10,000. Guilty (Culprits) individuals or parties may be subjected to up to seven years of imprisonment.
How can Individuals Prevent Tax Evasion?
Individual Taxpayers in Singapore must submit correct documents & information regarding Income Tax returns & account books on time to avoid penalties from Singapore Income Tax Act.
We recommend you hire a service provider in Singapore for Tax & Accounting services who will ensure that you have submitted correct & accurate information & documents on time for your Income Tax Return.
At Bestar Services, we provide the best accounting services in Singapore & the best tax compliance services in Singapore. We have a team of highly qualified experts who have assisted thousands of clients in accounting services & meeting 100% tax compliance by ensuring that all the information in accounting books is correctly presented and essential documents are valid & accurate.
How can businesses & companies Prevent Tax Evasion?
Businesses & Companies must ensure that the accounting team keeps valid & correct information & documents ready to submit for Income Tax returns on time. The accounting team must be educated about the consequences of misrepresenting information or fact in the books of accounts which can lead to the Act of Tax Evasion.
Businesses must ensure a risk assessment of third-party business collaborations & corporations that will help safeguard their businesses from Tax Evasion.
Hiring an accounting services firm in Singapore is the ideal option. Bestar Services is one of the top 10 accounting services providers in Singapore & top 10 tax compliance services providers in Singapore. We help all types of businesses & companies with accounting services. Our team ensures that all the accounting books, information & documents are valid, legal, and accurate to avoid Tax Evasion by adhering to 100% tax compliance with the Singapore Income Tax Act.
Looking to get assistance with accounting services & tax compliance?
Bestar Services is one of the best accounting services providers in Singapore. Contact us today to get assistance from the highly qualified accounting services experts & tax compliance experts in Singapore. You can reach out to us via call at +65 62994730 or email at admin@bestar.asia.
