Understanding IRAS: Its Importance for Your Company

March 31, 2024

If you pay taxes in Singapore, you deal with the Inland Revenue Authority of Singapore (IRAS). They collect taxes, make tax laws, and help the government with tax matters. 
Here's what you should know about IRAS and when you might need to contact them.

WHAT IS IRAS?

IRAS, or the Inland Revenue Authority of Singapore, started in 1947 as the Singapore Income Tax Department. Its main job is to collect taxes from people and businesses. Additionally, it has departments dedicated to investigations, enforcement, and international taxation.IRAS collects about 70% of the government's money, which is used for Singapore's economy and social programs.

RESPONSIBLE OF IRAS:

1. Tax Collection

The IRAS collects various types of taxes, including income tax, goods and services tax, property tax, stamp duty, casino tax and taxes for charities.

2. Tax Advisory

It advises the government on tax matters. Furthermore, it includes helping to make tax policies and laws, as well as creating tax treaties.

KEEPING RECORDS FOR IRAS

IRAS asks companies to maintain accurate records and accounts of their business operations. This involves documenting financial transactions, maintaining accounting records, and storing bank statements.

Using IRAS-approved accounting software is recommended for businesses to ensure their records are well-maintained. Failure to keep proper accounts can result in penalties and fines from enforcement authorities.

UNDERSTANDING TAXATION IN SINGAPORE

Territorial Tax System:

In Singapore, companies are taxed based on their profits, not where they are registered. For example, if a company is registered in Singapore but does most of its business in another country, it may only need to pay tax on the money it makes there.

Low Corporate Income Tax Rates:

Companies in Singapore pay corporate income tax from 0 to 17%. After paying taxes, they can share profits with shareholders through dividends without extra taxes. Moreover, companies also get tax rebates and incentives to lower their tax bills.

Free-Trade Agreements (FTA):

As of 2021, Singapore has made 26 free trade agreements (FTAs). These agreements are meant to remove obstacles to trade and encourage investments among countries. Businesses in Singapore can use these FTAs to get advantages like lower tariffs, quicker access to new markets, and better protection for their inventions and ideas.

CONCLUSION

These are the key points to remember about IRAS. It's important to follow tax rules by understanding them. Tax matters can be intricate, so consider hiring a qualified tax agent like Clooud Consulting for guidance. We're here to assist you with any tax-related inquiries you may have!

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