Iras recovers $10m from tax-avoiding high earners
The taxman is clawing back millions of dollars in back taxes from high earners such as doctors, property agents and lawyers who had avoided paying their proper dues.
It is still early days, but about $10 million has already been recovered from them.
This includes taxes that they should have paid in the four previous years.
More than 20 doctors and dentists have paid back $3.6 million in total. Some had formed companies just to get tax breaks.
Since 2015, the Inland Revenue Authority of Singapore (Iras) has launched investigations into the tax returns of about 145 doctors and dentists in private practice, as well as 32 medical groups.
In 2015, the Government announced that, from the year of assessment (YA) 2017, the highest personal income tax rate would go up from 20 per cent to 22 per cent.
Corporate tax went down from 18 per cent to 17 per cent in YA2010.
With the change, chargeable income above $165,000 would be lower for a company than for an individual. For chargeable income of $500,000, the difference in tax is about $27,000.
Companies also enjoy tax breaks under the start-up tax exemption scheme, where eligible companies in the first three years can save up to $34,000 a year in taxes.
From the fourth year, they can claim partial tax exemption with tax savings of up to $25,925.
“There may be greater impetus for high-income individuals seeking to avoid taxes through corporatisation and arrangements lacking in commercial substance,” said Mr Andy Seah, assistant commissioner of the individual income tax division.
That is why, he added, Iras started scrutinising the tax returns of high earners more closely in recent years.
This has led to the taxman recovering around $6 million from about 60 lawyers, tutors, renovation contractors and commission agents, such as those in insurance and property.