Whistleblowers in Singapore to Get Up to S$100k Reward

Jakarta Globe, Theresa Tan - Straits Times, December 16, 2012

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Singapore. Whistleblowers who sound the alarm about tax cheats in Singapore could receive up to S$100,000 ($82,000), after the maximum reward was raised by 10 times.

The Inland Revenue Authority of Singapore (Iras) increased the sum in an attempt to flush out more offenders.

“We want to encourage people to come forward... and to compensate them for any possible risks,” said its assistant commissioner of investigation and forensics, Wilson Ong.

The Iras will pay a reward of 15 percent of the tax recovered, up to S$100,000. Before the increase, the maximum reward was S$10,000.

Ong said whistleblowers will be paid only if their information leads to taxes being recovered. They must also identify themselves to Iras when providing the tip-off if they want to receive the money.

“Based on our records, not all informers want to be rewarded,” he said. “In fact, more than 50 percent of informers do not want rewards. They share the information with us for more altruistic reasons, such as to ensure the fairness of the tax system.”

Ong said the reward scheme had been around for at least 20 years. He added that the largest sum paid out to date was S$10,000, to a senior staff member who felt “very uncomfortable” with his company’s practices.

The whistleblower’s boss was trying to evade paying “a significant amount” of corporate income tax and ended up with a multi-million-dollar penalty after being caught.

Tax experts who spoke to The Sunday Times said offering money to informants is a common practice in other countries such as the United States and Britain.

They added that the Iras’ bigger cash rewards give those in the know about possible wrong-doing a stronger financial motivation to blow the whistle.

Ernest Kan, chairman of the Singapore Institute of Accredited Tax Professionals, said: “For Iras, this strategy appears to be planting more eyes and ears in the business community.”

The authority also encourages taxpayers to come clean about their mistakes under its voluntary disclosure program. Those who do so may receive either a reduced penalty or none at all.

Ong said: “We believe that the majority of taxpayers want to comply with their tax obligations, but occasionally they may make mistakes in their tax returns due to the lack of care or awareness of their tax obligations.”

Since Iras introduced the program in 2009, it has received about 2,700 voluntary disclosures, which Ong described as encouraging.

Most of them are individual income tax cases, including those that arise when people leave out their rental income when filing their returns, or employers who made errors when reporting their employees’ salaries.

From Jan. 1, the Iras is reducing the penalties under this program to encourage more people to step forward.

For example, those who confess to past acts of “willfully” evading tax may have their offenses compounded, instead of being prosecuted in court. They may also face a lighter penalty of twice the amount in taxes that they have underpaid.

At the moment, convicted tax evaders face up to five years in jail and a penalty of four times the underpaid taxes.

Ong added: “Taxpayers are encouraged to review their past tax returns and when in doubt, approach Iras for advice.”

Reprinted courtesy of The Straits Times