The collector of income tax (CIT) began to engage tax agents in late 2011 on their push for corporate income tax e-filing under the system for tax administration and revenue services (STARS). CIT’s work with tax agents and other stakeholders such as company directors and accountants involved with tax compliance, continued in 2012 to ensure the smooth implementation of STARS. In its leaflet “STARS Discovery Day”, the CIT states that the objective of introducing STARS is to enhance and streamline the tax administration process, and to provide taxpayers with greater flexibility to perform their tax obligations efficiently. With a new tax regime in operation, taxpayers can enjoy a number of advantages including: enhanced taxpayer services through the provision of self-service capabilities leading to more timely submissions; smart forms with online validations to minimise errors in tax computations; real-time access to assessment status of submitted income tax forms; status of refunds requested; access to taxpayers’ statement of accounts; and online payment via internet banking channels. These benefits can be realised once taxpayers and agents experience the full cycle. Teething problems such as lengthy taxpayer and tax agent registrations, erratic company profiles, slow uploading of attachments, and unclear categories of assets and businesses were encountered by taxpayers and tax agents, but the CIT was quick to rectify the issues. As STARS requires company details to be entered into the system, taxpayers found that certain information uploaded about their companies was not up-to-date. Some companies had failed to lodge their latest information, including details on directors and shareholders, with the registrar of companies (ROC). Indeed, several individuals who no longer held the position of company director found out that they were in fact still registered as directors after receiving letters from the CIT informing them of STARS. With this information, they sought to reach the companies and rectify the records. Although some directors or taxpayers tried to put the blame on the CIT for having inaccurate information in STARS, it is very clear that the companies themselves were at fault as they had failed to update their records with the ROC.
A number of directors of companies have been slow in taking up this new initiative by the CIT. This ultimately affects the establishment of the relationship with their tax agents as the online set-up has to be carried out by the directors of the company. This provision requires that directors know their tax agents, and also that their latest financial records to be current and audited. In many instances, companies are simply delinquent in keeping their accounting records up to date and audited.
Indeed, a number of auditors disclosed that they had reminded their clients to ensure compliance with the Companies Act with regards to getting their company accounts audited every year. These reminders, however, were unheeded by companies that believed that as the authority had faced difficulty with enforcing compliance in recent years, it would continue to do so. In some cases, “sleeping” directors thought the executive directors had ensured that everything was in order and were surprised when it was revealed that their companies had not complied for many years.
STARS requires tax details, including audited financial statements, to be entered online, and applicable tax payments to be paid before the tax submission can be considered complete. It is an interesting contrast from previous years when companies, with the help of their tax agents, submitted the IT1 form with minimal information including no audited financial statements and just waited for the CIT to come back with a Notice of Assessment (NOA). NOAs will no longer be issued by the CIT, as the tax submission is now a self-assessment return and any false details provided are an offence. The onus is therefore on the taxpayer to submit their tax returns honestly and accurately.
This first year of STARS implementation has been exciting. With a growing number of tax jurisdictions already introducing e-filing, the practice is here to stay.
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