Form C-S for Small Companies (Form C-S)
Inland Revenue Authority of Singapore

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
All companies in Singapore are required to submit their corporate tax returns annually, using the Form C which consists of 5 pages and 98 data items to input, and are required to show the tax adjustments regardless of their turnover. Small companies find it daunting to complete Form C. They typically have less complex transactions than larger companies, and many of the data items in Form C are not applicable to them. These requirements resulted in a disproportionately high level of compliance burden on the small companies. According to a 2009 Taxpayer Survey conducted in Singapore, about 16% of the companies spent between $501 and $1,000 on tax compliance; 60% spent between $1,001 and $5,000 and 12% spent more than $5,000 per year. The cost of tax obligations for small companies is higher as they generally do not have full-time accounting staff to help them prepare their accounts and have to engage independent book-keeping firms to handle their tax filing obligations. Although these are small companies, IRAS took the initiative to review their obligations so as to reduce their burden and give them a better tax filing experience.

B. Strategic Approach

 2. What was the solution?
To promote a pro-business environment for Singapore’s entrepreneurs and firms, IRAS continually reviews policies and introduce new initiatives to provide better service. To simplify the process for small companies, IRAS revamped the Form C and introduced the Form C-S, a 3-page tax form consisting of only 41 data items in 2012 for them (i.e. companies with an annual turnover of S$1million or less). The requirement to submit tax computations and financial statements has also been removed. Form C-S can also be filed electronically via the e-Filing module. The electronic Form C-S has resulted in: • Greater convenience for small companies: The form can be filed anywhere anytime; • Accurate information submitted: The software performs checks on the data e-filed and alerts the filer to correct any errors eliminating filing errors; • Secure processing and instant acknowledgement: Form C-S is processed electronically over secured and encrypted lines, and provides immediate acknowledgement of successful filing; and • Faster processing: Companies are able to get their assessments processed faster. This facilitates payment arrangements to meet their cashflow needs.

 3. How did the initiative solve the problem and improve people’s lives?
IRAS innovated to think of ways to customise the approach and treatment for a segment of the taxpayer group i.e. the small companies, after considering their resource constraints and needs. By eliminating data items that are irrelevant for small companies, Form C-S has simplified tax filing and made the tax filing process less daunting and reduced the margin for errors. This initiative encourages smaller companies to complete their tax filing promptly. The improved tax filing experience resulted in more satisfied customers and reduced costs for both the companies and IRAS. The key innovative aspects employed in this project are: a) Leveraged technology to achieve a high degree of productivity and efficiency With the introduction of e-Filing, time saved at IRAS from physical sorting and data capturing of the physical Form C is passed on to the small companies, which are given an extended time to file. This also provides them with an incentive to e-File their tax returns. The e-Filing platform with in-built formulae and mouse over explanations help reduce the occurrence of filing mistakes. b) Adoption of a Risk-Based Approach to administer Form C-S Filing IRAS dispensed with the requirement for companies to submit financial accounts and tax computations with their tax returns, as accounting and tax information vital for assessment and compliance purposes have already been incorporated into the Form C-S. Given that small companies have less complex tax affairs, a thorough evaluation of the necessary tax data led to the elimination of the need for small companies to submit their financial accounts. Companies need only submit their financial accounts and tax computations if they are selected for audit. By taking a risk-differentiated approach in the collection of tax data and subsequent auditing of small companies, we were able to increase productivity and efficiency. c) Data-driven design IRAS used insights derived from data analysis to determine the data requirements for small companies. The data-driven design ensures that the simplified Form C-S would be able to serve the needs of both the small companies and IRAS.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
Analysis of Form Requirements IRAS profiled all companies in its tax base and analysed the common tax data items in Form C, based on various turnover groupings of small companies. Staff and stakeholders were surveyed to further refine the data items applicable to small companies. This was to ensure that only essential information would be retained in the simplified form. Researches on other tax jurisdictions were conducted to study their tax filing requirements for small companies. Design of Form C-S IRAS actively consulted various stakeholders in the design of the Form C-S. Five focus groups with taxpayers and tax agents were conducted to gather feedback on simplifying filing for small companies and reviewing our e-Filing prototype. Members from the Taxpayer Feedback Panel (which comprises taxpayers and tax agents representing different industry sectors) also provided useful suggestions. IRAS also engaged the internal stakeholders on the development and implementation of the simplified tax return. Development of Form C-S e-Filing System The initiative was implemented ahead of schedule due to the close collaboration between the Information Technology (IT) project developer and IRAS. Extensive Marketing and Promotion Efforts IRAS invested in extensive publicity and educational efforts to promote the use of Form C-S. IRAS also engaged the tax agents and the business community such as the trade associations to promote Form C-S. Support and Help To ensure that small companies receive strong support and help with their queries on Form C-S, a dedicated customer service team was set up to handle enquiries (through calls, emails and interviews) on Form C-S. We publicised information on our website and in all other publicity-related materials, including media releases and disseminated articles.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
Form C-S is not just an IRAS’ initiative. Form C-S was the outcome of a strong partnership with businesses, tax practitioners and industry stakeholders. IRAS organised dialogues, seminars and focus groups to gather feedback from tax agents and taxpayers in the process of designing and implementing Form C-S. The ideas and feedback were used to determine the receptiveness of the new form, further refine the form design and explore ways to encourage take-up of the new form by small companies. In fact, the name ‘Form C-S’ had been chosen based on a poll conducted on a group of tax agents and taxpayers. When reviewing the data and information to be retained in Form C-S, the team consulted stakeholders within IRAS such as Tax Policy and Corporate Planning and obtained feedback from the Department of Statistics on the removal of certain statistical data items from the income tax return. IRAS collaborated with the Singapore Institute of Accredited Tax Professionals (“SIATP”) to conduct seminars for their members to inform and promote the use of Form C-S. Lessons learnt from the development of the e-filing platform were shared with other Info-technology project managers within IRAS.
 6. How was the strategy implemented and what resources were mobilized?
In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. How was the project funded and who contributed to the financing? The project was funded by IRAS. The actual expenditure incurred is as follows: Nature of Cost Amount incurred (S$) Application Development 698,000 Printing 13,000 Marketing 45,000 Total 756,000 The IT project vendor was an experienced IT vendor who had worked with IRAS on many other previous projects. The project was managed and supported by a team of IRAS’ officers who have operational knowledge of the corporate tax and the small companies they served.

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
1. High acceptance by intended group of taxpayers We sent out Form C-S packages to 111,844 taxpayers during the first year of implementation for Form C-S, and 71,834 or 64.23% of them submitted Form C-S. Out of these 71,834 taxpayers, 20.7% of them fulfilled their tax obligations via Form C-S e-filing. Given that this was the first year of implementation and the fact that taxpayers qualified to file Form C-S were allowed the option of using the original Form C, the take-up rate for Form C-S was very high. 2. Lower compliance costs for taxpayers and lesser time taken to complete Form C-S The design of Form C-S was intended to make it easier for smaller companies to fulfil their tax obligations, and thus reduce their compliance costs. IRAS engaged independent entities to conduct extensive surveys among its taxpayers once every two years to solicit feedback and track trends. The 2013 survey results provided an indication that compliance costs among smaller companies were reduced in 2013 compared to 2011, notwithstanding inflation during the period. Year $0 - $500 $501-$5,000 More than $5,000 2011 9.0% 68.6% 22.5% 2013 9.4% 58.8% 31.8% The same survey also demonstrated that more taxpayers agreed that the costs incurred to fulfil their tax obligations were reasonable. Year % strongly agree that cost incurred is reasonable % agree that cost incurred is reasonable % somewhat agree that cost incurred is reasonable Total 2011 1.8% 41.2% 42.6% 85.6% 2013 3.2% 58.7% 28.0% 89.9% The above demonstrated that Form C-S had played a significant role in lowering taxpayers’ compliance costs. 3. Lower administration costs to the tax authority The easy-to-understand Form C-S translated to more accurate declarations by taxpayers in their tax returns. This reduced the need for taxpayers to seek clarifications from our officers (via phone calls, emails, letters etc) on how to complete the Form C-S. The improved accuracy in taxpayers’ declarations also reduced the need for us to seek clarifications from taxpayers when we assess their tax returns. Our study showed that Form C-S reduced our need to ask taxpayers for clarifications by about 25%.

 8. What were the most successful outputs and why was the initiative effective?
The progress and implementation of Form C-S were closely monitored by various internal stakeholders. A well-thought through project timeline, was developed and closely tracked to ensure the completion of each activity and milestone. A clear structure and division of roles, responsibilities and tasks also enabled the team to efficiently execute the implementation of Form C-S. Management support and attention as well as staff support and assistance also enabled the project to be executed smoothly. Three levels of meetings were scheduled: • Monthly PMC meetings – to resolve issues relating to system design and development. • Monthly management meetings – to monitor the overall project milestones and set up operational procedures. • Monthly implementation meetings – at which the operation teams reported on the progress of each activity and resolved the issues identified. The filing rate of Form C-S as well as any feedback received from taxpayers was closely monitored after the launch of Form C-S up till the filing due date of the corporate tax return.

 9. What were the main obstacles encountered and how were they overcome?
Designing Form C-S It was essential that Form C-S had to strike a right balance between ensuring that IRAS collect the relevant data to determinate tax liability and the simplification of filing for small companies. The simplification must not result in unintended revenue implications for IRAS. Extensive consultation was therefore necessary with stakeholders to determine their needs. Five focus groups with taxpayers and tax agents were conducted to gather their feedback on simplifying filing for small companies and reviewing our e-Filing prototype. Members from the Taxpayer Feedback Panel (both English and Mandarin) provided useful suggestions. All companies in IRAS’ tax base were profiled and the common tax data items in Form C analysed, based on various turnover groupings of small companies. Staff and stakeholders were also surveyed to further refine the data items applicable to small companies. This was to ensure that only essential information would be retained in the simplified form. To gain insights to the tax filing requirements for small companies in other tax jurisdictions, research was conducted on United Kingdom (UK), Hong Kong, Australia, New Zealand and Malaysia. Taking into account the various inputs, a prototype was developed to help the team visualise the final product delivery, troubleshoot user-interfaces and minimise major rework during the development phase. Form C-S was designed to retain only the following essential data and information relevant to the majority of small companies: • Declaration • Tax adjustments • Information from financial statements The table below illustrates some of the key differences between Form C and Form C-S: Form C Form C-S No. of pages 5 + 2 3 (no Appendix) (main form + Appendix) No. of data items 98 41 Supporting documents required Financial accounts, Tax computation and Supporting schedules None Time taken to complete the form 20 min 10 min Time taken to review paper form 34 min 16 min

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
With the implementation of Form C-S, the accuracy of hardcopy tax returns improved by 25%. 69.8% of our target group of small companies also filed Form C-S in the first year of implementation. For Year of Assessment (“YA”) 2012, corporate tax return filing packages were sent to 157,699 companies. Of these, 111,844 (70.9%) companies were sent Form C-S packages (either paper Form C-S or invitation letter to e-File Form C-S). 71,834 or 64.23% of the target group of corporate taxpayers used Form C-S to submit their YA 2012 returns, while 14,877 or 35.3% of the e-Filing target group of 42,105 filed YA 2012 Form C-S electronically. Impact and benefits for small companies The compliance costs for small companies have been reduced and voluntary compliance has improved. This is in line with IRAS corporate goals in the following ways: i. The simpler design is easier to complete; it is anticipated that it would only take half the amount of time to complete Form C-S compared with the Form C. ii. Companies can choose to e-file Form C-S or use the physical form. iii. A host of benefits that make filing easier are available to companies should they choose to e-file. These are: a) iHelp facility that guides companies as they e-file; b) in-built formula to compute the relevant fields, so that companies need not compute those figures themselves; c) auto-computation of estimated tax payable; d) save draft function, that allows companies to complete the Form at their convenience; and e) instant acknowledgement, so that companies know if their filing has been successful. Examples of compliments which IRAS received from companies: “The Form C-S e-Filing system is very clear, easy to understand and used by personnel from small corporations and tax practitioners who are working for small corporations. It has a user-friendly function in saving as draft in the system up to the filing due date. Good innovative job done by the IRAS team.” Mr Hu Cheng Hong, Director, Handy Business Consultants Pte Ltd “A user-friendly and convenient system that makes filing easier. I would encourage eligible companies to e-file their Form C-S – you will be pleased with how much time you can save.” Ms Serena Toh, Sole-proprietor, Serena Toh Consultancy “Form C-S is indeed an easy, fast and efficient way to file our company’s income tax. When tax filing is simple, taxpayer is willing to file as soon as possible. Thank you.” Mr Peter Lu, Director, BKS Pte Ltd “Form C-S for small companies to report their income is a great initiative to help enterprises ease their administration, improve work productivity and focus on developing their core businesses. The initiative is beneficial in promoting entrepreneurship and facilitating the growth of SMEs.” Ms Nancy Lim President, Spa Association Singapore, CEO, Singapore SPA Institute Pte Ltd The media has also lauded Form C-S Mediacorp Channel 8 news bulletin on 06/11/2012 – In this news feature, Form C-S was cited as a good example of how the government is simplifying business procedures for SMEs. The news highlighted the positive e-Filing experience of a corporate taxpayer and the e- Filing benefits, which include convenience and the iHelp facility which makes it easier for companies to e-File their tax returns on their own. Benefits to IRAS As edit checks are built into the e-filing system, less casting/transposition errors will be made. IRAS’ officers need not review such cases manually to rectify the errors. E-Filing allows IRAS to free up resources required to data-capture paper forms. Frontline contacts are also reduced as companies find it easier to complete Form C-S without requiring assistance from officers. The collaborative design of Form C-S also enabled IRAS to forge closer relationships with stakeholders, namely the associations, taxpayers and tax agents.

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
The Form C-S allows small companies to enjoy the benefits of easy filing, which reduces their time and effort which can be better used to boost their productivity and revenues. IRAS continuously looks at programmes to reach out and bring more companies on board this initiative. The success of this initiative can also be attributed to the open consultative process undertaken to involve the public in the design of Form C-S so as to meet their needs. The table below shows a comparison of Form C-S take-up rate for Year of Assessment 2012 vs. 2013: Year of Assessment 2012 (as at 31 Dec 2012) Year of Assessment 2013 (as at 15 Dec 2013) No. of paper Form C-S filed 71,834 80,000 (estimated) No. Form C-S e-filed 14,877 23,721 Total base 157,699 174,102 % of Form C-S paper-filed 45.55% 45.95% % of Form C-S e-filed 9.43% 13.62% The number of companies filing Form C-S is encouraging. With the introduction of Form C-S for YA2012, there is an overall reduction of 2.3% in the number of cases that required manual review by officers for YA2012 as compared to YA2011. Riding on the success of the e-filing of the Form C-S, IRAS is expanding the e-filing group by inviting all newly incorporated companies to e-file with effect from Year of Assessment 2014. IRAS will also be introducing e-filing of Form C in 2015 for the bigger companies.

 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
The Form C-S initiative demonstrated that deep insights into stakeholders and customers’ needs made it possible to design a successful, customised product. This initiative highlights the importance of focused and continuous engagement of stakeholders from pre-inception through the development and implementation of the initiative. A strong stake in and commitment by all parties involved in the project - from the IT project vendors, to the user groups and taxpayer segments go a long way to ensure that the project is on track and within budget. We need to continue to work with our business community to address their needs and partner them in a practical manner, so as to jointly achieve our objectives. It is also important that we are able to demonstrate our progress in having achieved successful outcomes to be able to sustain our initiatives. These lessons will be adopted into our other projects.

Contact Information

Institution Name:   Inland Revenue Authority of Singapore
Institution Type:   Government Agency  
Contact Person:   Ernest, Kian Meng Lee
Title:   Director, Organisation  
Telephone/ Fax:   +6563513037
Institution's / Project's Website:  
Address:   55 Newton Road, Revenue House Singapore
Postal Code:   307987
City:   Singapore
State/Province:   Singapore

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