Penalties incurred from violation exceeded $1 million
More than 900 employers under the Auto Inclusion Scheme (AIS) were prosecuted in 2023 for failing to file their employees' employment income information on time.
According to the Inland Revenue Authority of Singapore (IRAS), this has led to the collection of more than $1 million from employers in penalties.
In Singapore, employers with five or more employees are obligated under the AIS to annually submit their employees' employment income information between January 6 and March 1.
But in 2023, one in 10 employers failed to meet this obligation in time despite repeated reminders, according to the IRAS.
Non-compliant employers mostly included restaurants, food courts, coffee shops, general contractors, wholesale trade of goods, retail trade, beauty salons, and spa services.
The most common reasons cited by businesses for non-compliance include changes in person handling the AIS, as well as challenges in keeping up with administrative obligations.
"It is critical for employers to submit their employees' income information on time," the IRAS said in a media release.
"Failure to do so results in missing data on pre-filled tax returns, leading to inaccurate tax bills and delayed tax assessments for employees."
What is the AIS?
Singapore's AIS, launched in 2018, simplifies the tax filing process for employees by automatically incorporating their income information in their tax returns to prevent underreporting or unintentional errors, according to the IRAS.
Employers with five or more employees in 2023, as well as those who have previously joined the AIS, are mandated to submit their employees' employment income information by March 1.
Failure to comply would result to a fine of up to $5,000, according to the IRAS. Key personnel of non-compliant businesses, such as company directors or partners, can also be fined by up to $10,000 and/or receive a prison term of up to 12 months.
Submitting inaccurate income info
Employers are also told to ensure the complete and accurate submission of employment income information, as they are used to calculate their employees' tax bills.
"Submitting inaccurate employee income information is an offence and may result in a penalty of up to two times the amount of tax undercharged," the IRAS said.
According to the authority, the most common errors in AIS filing include:
- Omitting taxable benefits in kind (cash/non-cash)
- Omitting employee income or benefits outside the payroll system
- Under-reporting of stick/options gains
Employers are encouraged to voluntarily disclose any past errors or omissions immediately to reduce penalties under the IRAS Voluntary Disclosure Programme.
This year, the IRAS is expecting about 110,000 employers to participate in AIS, marking the highest since the programme's introduction.
