Global Tax Alert | 28 June 2013

Singapore announces changes to corporate income tax objection and appeal process

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Effective 1 January 2014, the Inland Revenue Authority of Singapore (IRAS) will implement certain administrative changes to the corporate income tax objection and appeal process, primarily to expedite the closure of tax issues and achieve tax certainty.

Scope

The revised objection and appeal process will apply to the following taxpayers:

  • Companies
  • Registered business trusts
  • Real estate investment trusts
  • Permanent establishments in Singapore, including Singapore branches of foreign companies

It will cover all assessments raised by the Comptroller of Income Tax (CIT), except for assessments based on estimated taxable income furnished by the taxpayer.

Stages in the objection and appeal process:

The objection and appeal process consists of four stages:

  • Objection to a Notice of Assessment issued by CIT
  • Review of the objection and information by CIT
  • Litigation, if taxpayer disagrees with CIT’s decision
  • Finalization of the assessment

Changes

The revised administrative procedures mainly relate to those at the objection and review stages.

Prior to 1 January 2014

From 1 January 20141

Objection stage

  • The taxpayer must file an objection to the Notice of Assessment (NOA) within 30 days from the date of service of the NOA.

  • The deadline to file an objection will be extended to two months from the date of service of the NOA.
  • Taxpayers file their objection, stating their precise grounds of objection, via a letter or an e-mail.
  • Taxpayers are encouraged to file an objection electronically via IRAS’ e-Services or via an Objection Form. (The form includes a checklist to ascertain whether or not the objection filed is valid.) Alternatively, as in the past, taxpayers may also file an objection via a letter or an e-mail, stating the precise grounds of objection.
  • There is no acknowledgement of the validity and receipt of an objection.
  • The CIT will only issue an acknowledgement of receipt and validity2 of an objection if it is filed via IRAS’ e-Services or an Objection Form. No acknowledgement will be issued if the objection is filed via a letter or an e-mail.
  • If the objection is invalid, the IRAS will inform the taxpayer who may file another objection, provided the two-month deadline for filing an objection has not lapsed.

Review stage

  • No fixed time frame for the CIT to complete the review of an objection filed by the taxpayer.

  • The CIT will review and inform the taxpayer in writing within six months from the date of receipt of the taxpayer’s last correspondence with complete information and supporting schedules. For complex cases requiring a longer period for review, the CIT will inform the taxpayer the estimated time required for the review.
  • No time frame for the taxpayer to reply to the CIT’s decision on the item under objection.
  • The taxpayer must inform the CIT in writing within three months from the date of the CIT’s letter, whether or not they agree with the CIT’s decision on the item under objection.
  • The CIT is unable to bring to a closure the taxpayer’s objection when:
    • Information requested remains long outstanding
    • The taxpayer does not reply to the CIT’s decision on the item under objection
    • The taxpayer’s agreement to the CIT’s decision is qualified.
  • To ensure closure of an objection, the CIT will issue a Notice of Refusal to Amend when:
    • Information requested by the CIT remains outstanding after two years3 from the date of receipt of the objection filed by the taxpayer
    • The taxpayer does not reply to the CIT’s decision on the item under objection within three months from the date of the CIT’s letter
    • The taxpayer’s agreement to the CIT’s decision is qualified.

When a Notice of Refusal to Amend is issued, the taxpayer will have to either accept the CIT’s decision, in which case the assessment will be regarded as final and conclusive, or file a Notice of Appeal to the Income Tax Board of Review within 30 days from the date of the Notice of Refusal to Amend if it does not agree with the CIT’s decision.

Comments

The changes made by the IRAS are intended to streamline the objection and appeal process and expedite the closure of taxpayers’ income tax matters. The milestones set at each stage of the process are guidelines given to both CIT and taxpayers; however, it is expected that the CIT will continue to exercise flexibility in granting extension of time in genuine circumstances.

Endnotes

1. The changes will apply to Notices of Assessment issued on or after 1 January 2014.

2. Acknowledgement of the validity of the objection is based on the declaration in the Objection Form or IRAS’ e-Services.

3. The CIT generally expects a reply from the taxpayer within two months from the date of the CIT’s letter, and will send reminders if no reply is received after the deadline. A final reminder will be sent to the taxpayer, highlighting the consequences of not furnishing a reply to the CIT’s queries, before the issue of a Notice of Refusal to Amend.

For additional information with respect to this Alert, please contact the following:

Ernst & Young Solutions LLP, Singapore
  • Adrian Ball
    +65 6309 8787
    adrian.r.ball@sg.ey.com
  • Russell Aubrey
    +65 6309 8690
    russell.aubrey@sg.ey.com
  • Chung-Sim Siew Moon
    +65 6309 8807
    siew-moon.sim@sg.ey.com
  • Lim Joo Hiang
    +65 6309 8654
    joo-hiang.lim@sg.ey.com
Ernst & Young LLP, Asia Pacific Business Group, New York
  • Chris Finnerty
    +1 212 773 7479
    chris.finnerty@ey.com
  • Jeff Hongo
    +1 212 773 6143
    jeff.hongo@ey.com
  • Kaz Parsch
    +1 212 773 7201
    kazuyo.parsch@ey.com
  • Bee-Khun Yap
    +1 212 773 1816
    bee-khun.yap@ey.com

EYG no. CM3573