The IRAS AIS is a tax policy that is applicable in Singapore, particularly for business owners. The Internal Tax Authority of Singapore strictly oversees and enforces this program (IRAS). Companies can more readily share digitally the earnings data of their employee’s thanks to AIS.
By automatically adding the data supplied by the business or employer through AIS when submitting their income tax returns, this initiative aims to simplify for Singapore employees to calculate their income tax. The goal of AIS is to ease the stress of submitting annual tax returns. The myTax Portal – IRAS website also offers access to the AIS registration procedure online.
WHO MUST ENROLL IN AIS, AND WHY IS AIS REQUIRED FOR SINGAPOREAN BUSINESSES?
Participation in AIS is compulsory for employers with 5 or more employees. It is gazetted under S68(2) of the Income Tax Act.
Most employees are covered by AIS, including:
- Permanent full-time staff
- Permanent part-time workers
- Non-resident workers, including those stationed abroad who must perform services in Singapore throughout the year (excluding details of employment income for which the company has applied for a permit)
- Directors, including those who are not residents
- Board members who receive pension payments from other board or committee members
- Workers who quit the company but received compensation during the reporting year (for example, stock option gains)
- Partners (please note that in the submission, one must include the income data for the partner who is required to meet his or her obligations under the employment contract of the partnership. The majority of the time, these partners have no say in the partnership’s financial results and are not accountable for their obligations. Because of this, they are viewed as partnership employees while holding the title of partner.
- Companies that have received a “Notice to File Electronically Under the Auto-Inclusion Scheme (AIS)”
Other employers are urged to register with AIS voluntarily. The employee count is based on the total number of distinct employees/employees throughout the year. For instance, even if an employee company hired in 2023 quits after one month, they will still be counted as having one employee for the entire year.
This is especially important if the company employs more than six people. All directors and anyone with whom the company must file Form IR8A (Refund of Employee Pay) or Form IR21 (Notice of Termination of Employment or Resignation) are considered employees for the purposes of AIS registration.
Employers in Singapore can file their income taxes more easily thanks to this system because information about their employment income is automatically inputted. Also, if the business submits income tax data via AIS in the future, employees will profit from a non-filing service (NFS).
A fine of up to $1,000 may also be imposed on the business for failing to comply with AIS, which could be costly for the organization as a whole. As a business that complies with state requirements, they should follow these standards for the sake of its future business continuity as AIS is a mandate from the state. Even businesses with eight or more employees who have not received notification from IRAS must contact the Authority directly.
OBJECTIVE OF AIS
Given the significant contribution AIS makes to streamlining the taxation system in Singapore, both the company and the employees gain long-term advantages from this.
These advantages include the following:
- Making it simpler for employees to file their income taxes in Singapore;
- enhancing the accuracy of tax returns submitted by Singaporean employees and assisting in the reduction of tax evasion;
- the absence of the requirement for employers to provide employees with hard copies of IR8As and related documents;
- Automatic information population;
- When the employee files their tax returns, the employment information will already be filled in; they don’t need to enter it again. Moreover, it enables staff to confirm information and draw attention to any inconsistencies);
- The online filing approach makes it simpler to make modifications to individual line items on original tax return submissions, saving paper and being more environmentally friendly.
- being simpler to change; and
- The fact that amending certain line items on submitted original tax returns is made simpler by the online filing process.
INFORMATION NEEDED FOR AIS SUBMISSION
Four different sorts of forms are required if the business plans to register with AIS. The first form is mandatory; the other three are encouraged. They are:
- The obligatory Form IR8A comprises information on the employee’s earnings and employment. All staff should be informed of this, which should be prepared.
- Details about excess/voluntary CPF (Central Provident Fund) contributions made by the employer and reimbursements from the CPF Board are contained in Form IR8S.
- A supplementary document called Attachment 8A offers information on benefits in kind, including housing and lodging benefits, car benefits, etc.
- The advantages or benefits of stock options from an Employee Stock Option Plan (ESOP) or other types of Employee Stock Ownership are detailed in Appendix 8B.
HOW TO SUBMIT FOR AIS
Employers are advised by the IRAS to approach the AIS submission procedure as a straightforward three-step exercise:
- Give someone permission to submit the data electronically.
- Choose a suitable AIS program.
- Electronically submit the employment income data.
CHOOSING A SUITABLE SOFTWARE FOR AIS SUBMISSION
Be sure the selected payroll software to support the AIS submission can:
- Create TXT or XML files in the proper format, which may then be sent using the Validation and Submission Application or
- by integrating directly with the IRAS server and using an API to transmit employment income data (API).
To meet IRAS criteria, the company must confirm that the program can generate and create the necessary files.
WHAT ARE THE PENALTIES FOR ERRORS IN TAX RETURNS?
Those who fail to pay their taxes or submit incorrect tax filings will face penalties from IRAS.
Whether or not there is proof of tax evasion affects the types of penalties that are imposed:
|With the Intention to Evade Taxes||Without the Intention to Evade Taxes|
|Penalty up to 400% of the amount of tax undercharged||Penalty up to 400% of the amount of tax undercharged Penalty up to 200% of the amount of tax undercharged|
|Fine up to S$50,000||Fine up to S$5,000|
|Imprisonment up to 5 years||Imprisonment up to 3 years|
Reach out to us at Relin Consultants for more information.
What is IRAS AIS?
IRAS AIS is an electronic system that allows employers to submit their employees’ income information directly to IRAS.
Who is required to participate in IRAS AIS?
Employers who employ 7 or more employees and whose employees are all Singapore tax residents are required to participate in IRAS AIS.
What information do employers need to submit through IRAS AIS?
Employers need to submit their employees’ income information, including their employment income, bonuses, and benefits.
When do employers need to submit their employees’ income information through IRAS AIS?
Employers must submit their employees’ income information by March 1st of the year following the income year.
How do employers submit their employees’ income information through IRAS AIS?
Employers can submit their employees’ income information through the AIS e-Submission system, which is available on the IRAS website.
What are the benefits of using IRAS AIS?
The benefits of using IRAS AIS include reduced administrative burden, faster processing time, and increased accuracy in tax assessments.
Can employees access their income information submitted through IRAS AIS?
Yes, employees can access their income information through the myTax Portal, available on the IRAS website.
Are employers required to provide their employees with a copy of their income information submitted through IRAS AIS?
Employers are not required to provide employees with a copy of their income information, but employees can access it through the myTax Portal.