Tax Audit on Doctors and Dentists
Tax Audit on Medical Professionals had occurred many years ago and it is making a come back. In the article "Taxman recovers $10m from high earners" published by "The Newpaper or TNP" dated 15 Oct 2018, IRAS has recovered millions of dollars from high income earners such as doctors and dentists who had formed companies just to get tax breaks. IRAS had investigated and audited more than one hundred of doctors and dentists in private practice and more than thirty medical groups. IRAS claimed that these medical professionals, who corporatized their businesses to enjoy the difference in corporate tax rate of 17% and highest marginal individual tax rate of 22% (i.e. a 5% tax savings), might have committed a tax offence. In addition, they are enjoying the 3 years' corporate tax exemption for new start-up companies. IRAS is working with Singapore Medical Association (SMA) to assist in educating the medical professionals on the issue of corporatizing their medical businesses (i.e. there must be real commercial reasons for corporatization and tax advantage should not be the sole or primary purpose).
Our Tax Audit and Investigation Specialists can Help
If the medical doctor or dentist has real economic substance for corporatizing the business, we can represent them to explain to IRAS, put the commercial purpose in tax language and settle the issue with the authority. If we think that the case is weak, we can assist in resolving the tax audit with IRAS and mitigate the pain and penalties associated with the tax audit or tax investigation. If you are currently a medical practitioner and are worried that IRAS may check on your tax affair, we can review your tax submission and determine if there is any non-compliance which requires a voluntary disclosure. If yes, we shall help you to liaise the voluntary disclosure with the IRAS and minimize any penalties to be imposed.
Insurance, Property & Commission Agents
It appears that IRAS is also looking closely at insurance agents/sales persons, property agents/sales persons, other commission agents and renovation contractors. For insurance and property agents, it will be more difficult to argue that there is a need for them to corporatize because it is a personalized service where their personal names are reflected in the contracts with the insurance company whom they are representing.
For renovation contractors, some of them may open multiple companies for 2 purposes:
1. Enjoy the corporate tax exemption; and
2. Avoid the GST issue.
By doing so, these contractors may get themselves into real trouble of tax evasion.
Tax Review to Ease Your Stress
If you are unsure if your businesses have broken the tax rules, you may wish to engage us to perform a tax review to surface any non-compliance and rectify them before an IRAS investigation or audit. This may help you to avoid financial and emotional stress when IRAS visit you or you office without notice and pursue your non-compliance in court.
Let us resolve your non-compliance with IRAS as soon as possible.