Five Tax Filing Mistakes Companies in Singapore Should Not Make

The Inland Revenue Authority of Singapore (IRAS) is quite rigorous in enforcing a sustainable tax system and mandated corporate taxpayers to file their tax return on time. Companies in the country are given enough time to prepare and file their corporate tax returns. But, it is important to comply with the deadline to avoid penalties from the IRAS. If you own a business in Singapore, make sure you avoid the following tax filing mistakes if you don’t want to face penalties:

Understating Your Income

All companies incorporated in Singapore must keep well-maintained account and bookkeeping records. Such records must include complete, serially- numbered invoices and receipts for rendered services or sold products. Failing to include the receipts of invoices in the tax returns being filed is an offense which merits penalties.

Claiming Deductions on Non-deductibles

It is imperative to have a clear line between employees’ expenses and business’ expenses. A number of companies claim tax deductions for expenses that are not really deductible. Such expenses can include money the company spent on unofficial business activities like vacation trip, entertainment, or club membership expenses of directors or executives.

Filing Incorrect Expenses

This usually includes filing claims based on estimates. It is important to file claims for expenses, purchases and cost of sales based on the actual amount spent, together with the valid supporting documents. Also, every receipt and invoice must have a serial number.

Giving Unjustified Remuneration to Related Parties

These parties can include siblings, children, parents, and spouses. In some cases, a significant remuneration may be given to related parties that don’t work in the companies. Remuneration to a related party can only be reasonable if based on the service rendered, experience, qualifications and how it fares compared to an independent staff doing the same works and having the same qualifications.

Not Maintaining Business Records

This mistake is quite common among all kinds of taxpayers. But, every taxpayer, including corporations, must maintain proper supporting documents which will substantiate the filed claims. For a business, claims should be according to the actual amount spent on corporate purchases and expenses substantiated by invoices and receipts with serial numbers.

The best way to avoid these common tax-filing mistakes it to work with tax professionals. ACHI offers a range of accounting and tax services for small to medium-sized companies. Their services ensure that you can concentrate on more gainful business activities while they handle your accounting and tax needs.