GST Risks With
Robust Internal Controls Framework
On 5 April 2011, the Inland Revenue Authority of Singapore (IRAS) announced a new GST
initiative known as Assisted Compliance Assurance Programme (ACAP). It sets out what is
expected of a company’s framework for good GST risk management and governance. What are
the salient points and how will this initiative affect companies? ICPAS Research Bulletin tells
The Goods and Services Tax (GST) was introduced
Tax Advisor of SIATP). This co-funding is the first of
on 1 April 1994 to shift Singapore’s reliance from
its kind and highlights the importance that IRAS place
direct to indirect taxes. According to IRAS’
in GST compliance. To further sweeten the deal,
FY2009/2010 annual report, they recovered S$256
there will be an exceptional one-time full waiver of
million from their GST audits and investigations, an
penalties for non-fraud errors arising from and
almost 29% increase compared to the previous year.
voluntarily disclosed in the first ACAP review. Taken
In the same assessment period, there were 8,021
together, IRAS said companies can potentially save
non-compliance cases. The swelling collection of tax
and penalties from GST audits, signals the increasing
A Comprehensive Suite of Benefits
need for IRAS to work together with stakeholders to achieve a high level of voluntary tax compliance while
The ACAP is chock-full of carrots for eligible
keeping compliance cost low. This reinforces the
need for businesses to develop a holistic and
proactive framework for GST risk management.
certifications, the ACAP is also accorded to companies as a badge of honour. Depending on the
ACAP comes to the rescue
robustness of the processes and controls of the
IRAS announced on 5 April 2011 a voluntary review
ACAP applicant, the IRAS would accord the applicant
programme to help GST-registered businesses better
either an ACAP Premium (5 years) or ACAP Merit
manage their GST risk. This is known as the Assisted
status (3 years). This denotes the duration that the
Compliance Assurance Programme (ACAP), a
ACAP status holders may enjoy the benefits.
successor to the 2007 Compliance Audit Programme
(CAP). It is believed that stronger internal GST
Box 1: Benefits of ACAP status
controls and robust risk management framework will
lead to lower risks of incorrect GST returns. Thus,
lowering the compliance costs for businesses. Simply
Step-down of IRAS compliance activities: 3
put, ACAP is the aspirin treatment to help businesses
years for ACAP Merit status, and 5 years for
manage their ‘migraine’ arising from GST filing.
ACAP Premium status unless significant anomalies are noted in your GST declarations
What is unique about ACAP, as compared to similar
risk-based approaches to tax risk management and
Expeditious GST refunds and dedicated officer
governance in Australia and the United Kingdom, is
to handle GST rulings and resolve your GST
the offer from IRAS to co-fund 50%, capped at
S$50,000, of the ACAP applicant’s costs of engaging
an independent ACAP reviewer (e.g. a CPA firm
where the team is lead by an accredited Tax Advisor
As participating in ACAP demonstrates a company’s
of the Singapore Institute of Accredited Tax
commitment to GST compliance, the company must
Professionals (SIATP) or an independent in-house
meet certain criteria before being eligible.
Internal Audit team with one of the team member being an Accredited Tax Practitioner or Accredited Tax
The potential benefits to your company include
Box 2: Eligibility for ACAP
reduction in time spent on following up with IRAS-
ACAP applicants must meet certain criteria to
GST compliance activities and savings from potential tax penalty due to the exceptional one-time waiver of
Be GST-registered for at least three years
Should not be in the process of undergoing a
Some pertinent questions that your company should
Good tax compliance records with IRAS and
consider before adopting ACAP framework include:
Is the management committed to allocating
Exhibit a proactive management of GST risks by
sufficient resources to the GST accounting
Established all key controls for the three levels
(i.e. Entity, Transaction and GST Reporting)
Have its latest financial statements audited and
Do we have in place a structural system to
Committed to appointing a qualified ACAP
Are our accounting systems adequately automated and robust to ensure the completeness and accuracy of our GST
So what does ACAP mean for you?
The GST is the second largest contributor to tax revenue, accounting for 23% of the taxes collected by
place to ensure that our controls are up-to-date and effective?
IRAS for the last financial year (S$6.9 billion). IRAS’ latest compliance initiative is timely, especially when
Are there regular checks, reviews and update to ensure that the GST system is well-
GST revenues are rising in importance to the nation. However, companies often view GST as an off-shoot
established and working effectively? And how much are we willing to pay for this
of the accounts receivable and accounts payable
system. Most companies manage their GST risks on
an ad-hoc basis, which may prove costly and often
IRAS has earmarked S$5 million for this programme
too late. Hence, ACAP hopes to change that notion
over the next five years. It is their hope that at least
by pushing GST issues onto the agenda of the board.
100 companies will take up the challenge. Currently,
This is a paradigm shift to manage GST risks through
SingTel and Cold Storage are among the first few
strong internal control processes, thus providing a
companies to sign up. The benefits of ACAP and
most robust framework towards GST compliance.
IRAS’ co-funding are subject to review in three to five
The five aspects of an internal controls framework
years, implying that the current slew of benefits may
change. ACAP can assist businesses in building a
environment, risk assessment, control activities,
sustainable infrastructure to avoid GST errors and
information and communication and monitoring. The
reduce GST compliance costs in the long run.
tone from the top can make a difference to the way
Therefore, if your company meets the ACAP’s
an organisation perceives GST risk management.
eligibility conditions, do not dally in considering participation.
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your comments to firstname.lastname@example.org _____________________________________________________________________________________________________________ This document contains general information only and ICPAS is not, by means of this document, rendering any professional advice or services. This document is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a professional advisor. Whilst every care has been taken in compiling this document, ICPAS makes no representations or warranty (expressed or implied) about the accuracy, suitability, reliability or completeness of the information for any purpose. ICPAS, its employees or agents accept no liability to any party for any loss, damage or costs howsoever arising, whether directly or indirectly from any action or decision taken (or not taken) as a result of any person relying on or otherwise using this document or arising from any omission from it.
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