It is imperative that companies focus on managing their resources, streamlining their internal processes and controls to cope with the shortened returns-filing period as well as the lower tolerance threshold for errors and mistakes.

TIME, tide and the tax authorities wait for no man. With increasingly tight deadlines for filing their tax returns, Singapore companies are under pressure to meet their compliance obligations on time.

Singapore's tax landscape, once lenient, has now become less tolerant as far as filing of returns is concerned.

In the past, corporate taxpayers had up to 15 months from the end of their financial year to file their tax returns, or even more for those that requested time extensions. So far, the Inland Revenue Authority of Singapore (Iras) has been quite liberal in granting extensions but this is not expected to last.

Iras has given notification to all corporate taxpayers that the filing deadlines will be shortened as follows:

Year of Assessment (YA)

2007: Dec 31, 2007

2008: Nov 30, 2008

2009: Oct 31, 2009

Indeed, by YA 2009, companies with financial year ending Dec 31, 2008 will have a maximum of 10 months to file their returns.

In line with the tightening of filing deadlines, the Iras is meting out harsher penalties to tardy taxpayers who fail to file on time.

In the past, if a company failed or neglected without reasonable excuse to file its tax return as required, the company was generally liable to a fine of up to $1,000. Now, a new section 94A has been enacted to impose an enhanced penalty, for failure to file a tax return for any year for three years or more, of up to double the amount of tax assessed for the year concerned and a fine of up to $1,000.

This, coupled with the Iras's tougher stance on errant or inaccurate tax returns, makes for a much tougher tax regime than before.

It is therefore imperative that companies focus on managing their resources, streamlining their internal processes and controls to cope with the shortened returns-filing period and the lower tolerance threshold for errors and mistakes.

Here, we discuss the "10 golden rules" to ensure timely and compliant filing of tax returns in the new tax reporting environment.

>> Start early

Rule number one: start early in order not to strain resources during the "crunch time" as the filing season draws to a close. This is a very simple "common sense" rule, but which many companies often forget to follow. Procrastination is a habit which must be kicked.

>> Time management

When does the tax compliance process begin? Tax returns preparations don't normally start until the audited accounts are finalised. Using the YA 2008 filing deadline of Nov 30, 2008 as an illustration, companies with a Dec 31, 2007 financial year-end will have 11 months from the end of their financial year to complete the audit of the companies' accounts and tax filing. The auditing process can stretch, depending on the complexities of the operations and transactions, and this can consume a large part of the 11-month period, leaving very little time to file the return. Hence, you should plan to ensure enough time between audit completion and tax filing so that sufficient time is given for tax returns preparation and submission.

>> Understand the process and work hand in hand with your tax consultant

The tax compliance process is not a complicated process. Neither is it a simple one. A number of tasks have to be completed from start to finish. If your company outsources returns preparation, make sure you work closely with your tax consultants and factor in their involvement in the process. Communication is key. As an illustration, a typical cycle involving yourself and your consultant would entail the following:

Step 1: Estimate chargeable income (ECI) preparation and filing.

Step 2: Your tax consultant prepares a checklist of information required for your tax return preparation.

Step 3: Collate such information on your part.

Step 4: Your tax consultant completes the first draft of your tax return for your review.

Step 5: Revise the tax returns, if appropriate and file these with the Iras.

>> Monitor tasks and timelines

To ensure the various tasks identified in the tax compliance process are met on a timely basis, the tasks and timelines should be communicated clearly, discussed and agreed with the parties involved. Draw up a timeline of the tasks for tracking purposes so that everyone in the chain can be alerted to any missed deadline. If your tax consultants are involved in the preparation, remember rule number one applies . provide the audited accounts to them early.

>> Adequate staff resources

Tax is a specialised area of business especially if it concerns companies that enjoy tax incentives. Here, knowledge of applicable special tax rules is key. This, coupled with the tight filing deadline, necessitates dedicated staff who are not only committed to meeting the task timelines agreed upon but also understand the intricacies of specific tax rules. Companies should ensure that they have sufficient resources available to prepare tax returns accurately (or work with their tax consultant) in compliance with local tax regulations and on time in compliance with the filing deadline.

>> Keep up with changes and training

Over the last three to four years, there have been many tax changes made to the income tax laws and regulations. In addition, the Iras has issued a record number of tax circulars, some of which dealt with the simplification of tax compliance procedures. Keeping up with the tax changes is imperative. Send your staff to tax seminars, workshops or organise training from your tax consultants.

>> Invest in technology

It makes sense to invest in technological tools to automate the tax computation system to facilitate easy retrieval and extraction of information, reconciliation, cross-referencing and computation. Above all, devise a technology tool to track timelines and accountability. This will speed up processing time and efficiency significantly, at the same time helping to track deadlines or delays.

>> Documentation

It is important to design a robust and efficient documentation process or system to ensure that information is readily on hand to facilitate the preparation of returns. This will also ensure that there is a proper paper trail to support the submission of your returns should there be queries by the tax authorities on any issues. Once a tax return is submitted, it may be several years before questions are raised by the Iras. Documentation serves as the corporate memory and is essential when there is a turnover in personnel.

>> Risk management and internal control processes

Poor internal controls and an ineffective riskmanagement system could result in inaccurate information being used in the computation of tax returns. Companies must test and evaluate the effectiveness of tax function controls on a regular basis.

>> Do not make assumptions

Do not make assumptions in your tax computations. If you have to make assumptions, verify those assumptions and validate the integrity of your findings. If you still have significant doubts on your tax position, it may be prudent to make the appropriate disclosures in the tax returns.

Lastly, remember the 5Ps - "Proper Planning Prevents Poor Performance". In this case, proper planning will put you on track to meet the filing deadline imposed by the Iras.

Angela Tan and Choo Eng Chuan are tax partners at Ernst & Young. They can be reached via e-mail at Angela.Tan@sg.ey.com and Eng.Chuan.Choo@sg.ey.com

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