Tax compliance has to be one of the least pleasant parts of being an employee, employer, or business person. But it’s also pretty important if you want to avoid getting hit with some significant fines and penalties. Singapore has an enhanced tax system, and its departments dedicate to providing services and figuring out how to find defaulters. Hence, it’s essential to pay attention to what your country expects from you to avoid some horrible situations later on. Here are the top tax compliance tips that anyone living in Singapore should know.
1. Hire A Tax Compliance Advisory Expert
It’s easy to take tax compliance for granted when you are used to having your taxes done by a tax consultant. However, to keep on top of new changes and developments within your specific industry, it is essential to hire a tax solutions company for a tax compliance service on an annual basis. Doing so can help ensure that your business stays compliant with any new changes brought about by legislation or policy and keep up with current tax rates.
Changes in tax law and regulations can lead to taxation risks if you do not have a tax expert keeping an eye out for you. If you run a small business, these changes could cost you thousands of dollars in penalties and extra costs each year if they go unnoticed until it is too late.
2. Keep Clean Records of Your Transactions
You need to keep certain records for tax filing purposes regardless of whether you’re running a small business or working as an employee. These include your personal and business income records (basically, anything that supports your deduction claims) and receipts for significant expenses. It’s a good idea to scan them into your computer or store them electronically to retrieve them easily should you need them. Better safe than sorry!
It’s also good to make copies of everything and back up any data stored on your home computer onto an external hard drive. Don’t forget about mobile devices either—make sure you back up all critical files on these. Lastly, don’t let financial paper clutter build up at home—organize it properly from day one so it doesn’t become overwhelming later. Your accountant will thank you for keeping things organized!
3. Pay Estimated Taxes on Time
Being on time with your estimated taxes ensures that you won’t get hit with any penalties and fines from IRAS. Remember to keep an accurate record of due dates for paying your estimated taxes and when you pay them. Estimated tax payments are due quarterly on March 15, June 15, September 15, and December 15 of each year (except if the date falls on a weekend or holiday). If you have not paid enough by these deadlines, IRAS will send out a bill for what you owe—plus interest and late fees!
Additionally, make sure you know how much you need to pay by each deadline so that it doesn’t slip your mind. To help you keep track of your estimated tax payments: 1) Set up an automatic payment plan; 2) Pay online; 3) Keep a record of your payments. An excellent place to start would be talking to your tax expert to help you understand your obligations. The more familiar you are with your obligations and rights as a taxpayer, the less likely you will run into trouble later on down the road.
4. Be an Enabler, Not an Obstacle to Tax Systems
If you’re an employer, instead of standing in the way of tax compliance, try helping your employees and company become tax compliant. Being a helpful resource or connecting your colleague or employer to a reliable tax compliance service provider will make it easier for everyone to meet compliance. Tax compliance experts will help you understand what you need to do, why you need to do it, and how to accomplish your tax obligations. Everyone wins when you take on an enabler role rather than an obstacle role.
Employees can also remind each other of due dates and deadlines when necessary. Also, you’ll be glad that you helped your colleagues or company avoid penalties and fines that come with non-compliance. And, of course, society benefits when businesses operate efficiently and pay their fair share of taxes so governments can continue providing valuable services like public safety, infrastructure maintenance, and education programs. In short: It is a win-win-win situation!
5. Be Honest and Accurate While Filing Your Returns
If you’re not honest and accurate with your tax filing, you could pay more than you should. Be sure to review your past filings before submitting them, and make sure everything checks out. Also, remember that tax evasion is a serious crime. Lying to get out of paying taxes can result in civil or criminal penalties. If you’re interested in learning more about filing an accurate tax return, contact a reliable tax advisor for help.
However, remember that you’ve timelines to meet and support documents to attach and submit despite your returns being accurate. Missing these deadlines or failing to include required documents will result in fines and penalties from IRAS (Inland Revenue Authority of Singapore). Ensure you’re familiar with all tax-filing procedures and deadlines to avoid such complications.
6. Learn and Avoid Common Mistakes By Most Taxpayers
Mistakes that taxpayers make are often systematic. If you check the wrong box or fill out a form incorrectly, you might typically be liable for interest and penalties. However, if you intentionally and knowingly make an incorrect claim in your tax return, you could face criminal prosecution from the Inland Revenue Authority of Singapore (IRAS). There is a fine or prison sentence involved for more severe cases where IRAS does prosecute individuals for their intentional fraudulent tax returns (and yes, it happens).
Taking your time to look into your taxation support documents and the tax returns can help you avoid costly mistakes and fines. Such expensive mistakes may include;
- Making false claims
- Using false invoices
- Underreporting income
- Non-declaration of income
- Not declaring capital gains
- Failing to pay taxes on time
- Reporting personal expenses as business expenses
Why not speak with a professional for a tax compliance service with all these factors in mind? It will significantly reduce getting caught up with such issues when filing your tax returns at IRAS.
7. Ensure Transfer Pricing Compliance
Businesses with operations in more than one country must comply with transfer pricing regulations. Transfer pricing is a system of rules that determine how multinational companies set prices for transactions between their subsidiaries. If these companies set prices outside legal bounds, they risk hefty fines from tax authorities.
A tax compliance service provider can help you avoid transfer pricing compliance issues by ensuring you have an up-to-date transfer pricing policy and follow it when making intercompany sales or purchases. They will also make sure your staff is aware of its contents.
The best method of compliance that also minimizes tax liability is being aware and proactive. Remember, it is your responsibility as a taxpayer to ensure you report your taxes fully and correctly. Advice: stay on top of all taxation requirements and stay current with changes. Keeping up with local tax laws will help you avoid penalties or audits by the Inland Revenue Authority of Singapore (IRAS). Contacting a tax expert for your tax filing and tax compliance service can assist you with preparing accurate tax returns and provide professional advice regarding accounting methods and strategies for minimizing your tax liabilities.