Singapore’s Tax Governance and Tax Risk Management Initiatives

To help companies strengthen tax compliance, the Inland Revenue Authority of Singapore (“IRAS”) launched two new tax governance initiatives on 17 February 2022, namely the Tax Governance Framework (“TGF”) and the Tax Risk Management and Control Framework for Corporate Income Tax (“CTRM”). The TGF and CTRM complement the Goods and Services Tax Assisted Compliance Assurance Programme (GST ACAP), which was introduced in 2011.

The TGF, CTRM and GST ACAP are voluntary compliance initiatives that operate independently, and a company may choose to adopt each or all of the initiatives depending on its readiness and business needs.  

The Tax Governance Framework (“TGF”)

The TGF aims to strengthen a company’s tax governance standards, which are elevated to the Board level. The TGF Framework is based on a set of broad principles and practices revolving around the following 3 essential building blocks:

• Compliance with Tax Laws;
• Governance Structure for Managing Tax Risks; and
• Relationship with Tax Authorities

Benefits under the TGF status 

Under the TGF, companies may enjoy:

• A one-time extended grace period of 2 years for voluntary disclosure of Corporate Income Tax, Withholding Tax and GST (for non-ACAP entities) errors made within 2 years from the date of approval for the TGF application. 
• ACAP entities are given a one-time extended grace period of 3 years for voluntary disclosure of GST errors made within 2 years from the date of approval for the TGF application. 

The errors do not include fraudulent errors and errors discovered under IRAS’ audit or investigation.

To participate under the TGF 

Companies must meet the following pre-requisites:

• Publish the company’s tax governance policy which includes details on managing the tax risks under the 3 essential building blocks of TGF on its corporate website or annual report which is publicly accessible.
• Complete and submit the signed¹ declaration form for Tax Governance Framework to the IRAS confirming that the company(s) have adhered to the guiding principles and key practices outlined under the TGF. The application for TGF status is subject to IRAS’ approval.

The Tax Risk Management and Control Framework for Corporate Income Tax (“CTRM”) 

The CTRM framework comprises a self-review checklist featuring processes and measures that would demonstrate that there are sound controls to manage tax risks. Under the CTRM, large corporations, in particular, the public listed companies and multi-national corporations, are guided to establish robust internal controls and systematic risk management processes to better manage its corporate income tax compliance risks.  

The CTRM features 3 elements of controls as follows: 

• Tax Governance Structure;
• Entity-Level Controls; and
• Tax Reporting Controls. 

Benefits under the CTRM status 

• Companies awarded the CTRM status would be granted a one-time waiver of penalties for voluntary disclosure of prior years’ Corporate Income Tax and/or Withholding Tax errors within 3 years from the date of award for the CTRM status. This excludes any non-compliance which involves tax evasion or serious tax avoidance.
• The company may also expect a step-down on Corporate Income Tax compliance audit by IRAS.

To participate under the CTRM

Companies must meet the following pre-requisites:

• Implemented the key controls listed in the CTRM checklist (i.e. Checklist for self-review of Corporate Income Tax Controls) for all 3 levels covering the CTRM period².
• Have met the minimum benchmark of at least 60% or more of the control features of each key control listed in the CTRM checklist.
• Have unqualified statutory auditors’ opinion in the last 3 years’ financial statements.
• IRAS is currently not conducting any Corporate Income Tax audit for tax avoidance or investigation on any of the companies.
• The companies have good compliance records³ for Corporate Income Tax (including Withholding Tax), GST and Property Tax for the last 3 years and there is no outstanding⁴ tax with IRAS as at the date of application to participate in the CTRM.
• Appointed a qualified CTRM reviewer⁵ to conduct the CTRM review.

The CTRM Status is valid for 3 years and is renewable before the end of the third year.

RSM Singapore supports clients on tax audit and investigation matters as well as application(s) for the TGF and the CTRM status. If you would like to learn more about how we can support you in the application or require further information or assistance, please contact any of our following Tax Partners:

¹ Signed by the Chief Executive Officer or Chief Financial Officer.   
² 12-month period immediately preceding the month in which the IRAS approves the company’s CTRM participation, or the 12-month period of the company’s latest financial year.   
³ Includes filing of tax return and payment of tax promptly as well as responding to queries by the deadlines as agreed with IRAS.   
⁴ Excludes tax due under instalment plan or amount due for the next GIRO deduction.   
⁵ A CTRM reviewer could be a Public Accounting Entity (“PAE”) or its tax affiliate with a track record in conducting audits and/or tax return reviews of large entities. The CTRM participant's independent Internal Audit team which reports directly to its Audit Committee (or equivalent) can also be considered.