SINGAPORE - The Inland Revenue Authority of Singapore (Iras) recovered $79 million in taxes and penalties between July 2020 and June 2023 after audits on companies.

This was from companies that filed erroneous corporate income tax returns for the 2019 to 2021 assessment years, Iras said on Friday.

The recovery came after the tax regulator conducted audits on companies.

Of the cases examined, two-thirds were picked up through Iras’ compliance audit programmes with the aid of data analytics tools. The remaining were identified through random sampling and qualitative analysis, such as environmental scanning and tip-offs.

Understating or omitting income due to incomplete recording of revenue was among the four common tax filing mistakes made by companies.

Examples include food and beverage companies omitting sales earnings from orders placed through food delivery platforms and websites, and construction companies failing to declare income from the sale of scrap materials.

Iras also highlighted poor record-keeping practices at family-owned or managed companies.

Some of these companies failed to retain enough support documents to substantiate their claims for purchases and expenses, while others did not draw clear distinctions between business and private expenses.

Some claimed tax deductions on remuneration paid to company directors or family members that did not match the services rendered.

Other common tax filing mistakes include wrong claims of capital allowances on assets that did not qualify as “plant and machinery” and failure to apply the arm’s length principle for related-party services.

The audit found that some companies did not charge their related parties for support services provided, or charged them a rate that was far below what they would bill unrelated parties. THE BUSINESS TIMES