Traditionally, the tax administration in Singapore depended on a system of full desk-audit of tax returns and accounts received from taxpayers to assess the tax payable. Apart from being time-consuming and laborious, such a system does not always produce results commensurate to the efforts put in. With the substantial increase in the number of taxpayers and the constraint of manpower struggle, IRAS established a field audit branch in August 1992.
Field audits are carried out at the premises of taxpayers to ensure the income liable to tax has been properly determined. A field audit is not a tax investigation to prove that an act of tax evasion has been committed. It is rather aimed at achieving the following principal objectives:
- to help taxpayers comply with requirements of the law by explaining to them what the law requires and advise them on the proper records and books of accounts to keep.
- to review the tax returns which have been submitted against the records and books of accounts kept by taxpayers so as to determine if there are areas in which taxpayers need to make amendments.
- to determine if the records and books of account kept by taxpayers are sufficient to enable their tax liability to be determined correctly.
- to promptly put together and implement programmes to address areas of uncertainty brought to light as a result of the field audits.
Field audits will normally cover the tax return and books of account relating to the most current year of assessment. Where the circumstances warrant it, however, the scope of an audit may be extended to cover the tax return and accounting records of earlier assessment years.