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The Commissioner of Inland Revenue, during Budget Seminar arranged by the Tax Academy of Singapore, has disclosed that the Inland Revenue Authority of Singapore (IRAS) will introduce an extra tax simplification for small companies.
“We recognize that small companies face greater challenges in managing their tax obligations,” he said. “Their resources are already highly stretched, as they struggle just to keep up with their day-to-day operations and focus on business viability.”
For this reason, it has simplified the reporting requirements for Estimated Chargeable Income (ECI) and the filing of the Income Tax Return (Form C) for small companies will also reduce their compliance burden.
Nowadays, all companies in Singapore have to report their ECI within three months of their financial year-end. Even companies without any taxable profit and no ECI are also required to do so. IRAS intends to reduce compliance requirements for small companies with turnover not exceeding SGD1m (USD797,000) and with no ECI, as they will no longer need to file under the ECI system.
New rules will take effect from the 2013 assessment year for companies with an accounting year ending in October 2012, or thereafter. With this change about 42% of all companies, would not need to file their ECI, saving them one step in the overall corporate tax filing requirements.
IRAS has set a threshold of SGD1m of turnover so as to manage the revenue-at-risk, in that larger companies will continue to report their ECI and pay their taxes within the current time-frame.
About 110,000 small companies in Singapore, constituting 70% of all companies, will benefit from the Form C-S as only essential tax and financial information that are most relevant to them are required to be included.
IRAS initiatives will mean a significant reduction in time and effort spent on tax filing for smaller companies, and will help to improve their productivity and lead to greater efficiency for the tax system.