Tax Governance Framework and Tax Risk Management and Control Framework for Corporate Income Tax

To encourage Singapore companies to adopt good tax governance and tax risk management practices so as to give confidence to its stakeholders and the general public that it is transparent in its tax matters and is contributing its fair share of taxes, the Inland Revenue Authority of Singapore (IRAS) recently introduced two new voluntary tax compliance initiatives:
  1. Tax Governance Framework (TGF); and
  2. Tax Risk Management and Control Framework for Corporate Income Tax (CTRM).

Both these initiatives target large companies and multinational companies (MNCs) with complex business models/structures to encourage MNCs to adopt good governance principles and/or to be attested that they have a robust tax governance framework.

How TGF works

TGF is a principle-based framework featuring broad principles and practices to guide companies in enhancing good governance for Corporate Income Tax (CIT) and GST.

TGF is centered around 3 essential building blocks of good tax governance:  

-          Compliance with tax laws

-          Governance structure for managing tax risks

-          Relationship with tax authorities

Companies can apply for the TGF status if they meet certain conditions.

Benefits of TGF

Companies will enjoy a one-time extended grace period of 2 years for voluntary disclosures of CIT, GST and withholding tax (WHT) errors made within 2 years from the date of award of the TGF status.

GST-registered companies accorded with the ACAP[1] status will enjoy a one-time extended grace period of 3 years for voluntary disclosure of GST errors. However, these benefits do not apply to fraudulent errors or errors uncovered under IRAS’ investigation or audit.

How CTRM works

This voluntary program helps companies to perform a self-review on the robustness and effectiveness of their internal control processes to manage CIT compliance risks. IRAS will apply a one-time waiver of penalties once for voluntary disclosure of prior years’ CIT errors and/or WHT errors within 3 years of the date of award of the CTRM status. Companies with this status can also expect a step-down on CIT compliance audit by IRAS.

Companies wishing to apply for this status will have to meet a list of criteria and appoint a CTRM reviewer to conduct a review of the companies’ internal controls.

How can Mazars help?

Mazars may help you by reviewing your company’s current policies and procedures as the appointed CTRM Reviewer and applying for ACAP status. We can also assist to formulate a governance structure for tax risk management and document a tax governance policy. Please contact us if you are looking to apply for these statuses.

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[1] Assisted Compliance Assurance Program