Voluntary Disclosure of Errors for Reduced Penalties

IRAS understands that some taxpayers may occasionally make errors in their tax returns. The IRAS Voluntary Disclosure Programme (VDP) encourages taxpayers who have made errors in their tax returns to come forward voluntarily, in a timely manner, to correct their errors. IRAS is prepared to reduce penalties for voluntary disclosures which meet the qualifying conditions.

The IRAS VDP applies to Income Tax (including cash payouts / bonus), GST, Withholding Tax and Stamp Duty. To qualify for IRAS VDP, you need to submit a voluntary disclosure that is:

• Accurate and complete; and
• Timely and self-initiated.

The reduced penalties are as follows:

Voluntary Disclosure made	Penalty Treatment
Within the 1 year grace period from the statutory filing deadline, and the qualifying conditions are met	No penalty imposed
After the 1 year grace period from the statutory filing deadline and qualifying conditions are met	Reduced penalty of: – 5% of the income tax undercharged or of the amount of cash payout/bonus exceeding entitlement obtained, for each year (after the grace period) the error was late in being rectified    – Flat 5% of the GST undercharged   – Flat 5% of the outstanding Withholding Tax
For late stamping or underpayment of Stamp Duty and the qualifying conditions are met	Reduced penalty of: – 5% per annum computed on a daily basis on the Stamp Duty payable No grace period for Stamp Duty

We have assisted various businesses and individuals to apply for the VDP so that they can avail themselves of the reduced penalties. Please contact us for a consultation if you are considering to apply for a VDP.