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The Inland Revenue Authority of Singapore (IRAS) updated its guidelines on general anti-avoidance on 31 March 2023, with the release of the IRAS e-Tax Guide: "Income Tax: The General Anti-Avoidance Provision and its Application (Second Edition)" ("Revised Anti-Avoidance ETG").
The Revised Anti-Avoidance ETG sets out additional examples of arrangements that IRAS considers to fall under the general anti-avoidance provision set out in Section 33 of the Income Tax Act 1947 (ITA). It is helpful in providing taxpayers with greater clarity on IRAS' approach to Section 33.
More importantly, the Revised Anti-Avoidance ETG also elaborates how the surcharge under Section 33A of the ITA will be imposed and when a remission on a surcharge may be granted. This is important for taxpayers to note as the Section 33A surcharge is computed based on 50% of the tax or additional tax arising from the adjustment under Section 33. Further, the surcharge generally must be paid within one month after the date of the written notice of the Section 33A surcharge, notwithstanding any objection to the underlying Section 33 adjustment.
In addition, taxpayers should note that while the surcharge is only imposed on any tax or additional tax arising from a Section 33 adjustment made for year of assessment (YA) 2023 or a subsequent YA, the surcharge is applicable to tax avoidance arrangements entered into before the basis period of YA 2023.
In this alert, we discuss the salient aspects of the Revised Anti-Avoidance ETG and consider its impact on taxpayers.
Read the full alert here.
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