THE Inland Revenue Authority of Singapore (Iras) has recovered S$79 million in taxes and penalties for the period between July 2020 and June 2023.

This was from companies that filed erroneous corporate income tax returns for the 2019 to 2021 assessment years, the tax regulator said on Friday (Oct 20).

Among the audits done, two-thirds were picked up through Iras’ compliance audit programmes with the aid of data analytics tools; the remaining were identified through random sampling and qualitative analysis, such as environmental scanning and tip-offs.

Understating or omitting income due to incomplete recording of revenue were among the common tax-filing mistakes by companies.

Examples include food-and-beverage companies omitting sales earnings from orders placed through food-delivery platforms and websites, and construction companies failing to declare income from the sale of scrap materials.

Iras also highlighted poor record-keeping practices at family-owned or managed companies.

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Some of these companies failed to retain enough support documents to substantiate their claims for purchases and expenses; others did not draw clear distinctions between business and private expenses.

Some claimed tax deductions on remuneration paid to company directors or family members that did not match the services rendered.

Other common tax-filing mistakes include wrong claims of capital allowances on assets that did not qualify as “plant and machinery”, and the failure to apply the arm’s-length principle for related-party services.

Audits revealed that some companies did not charge their related parties for support services provided, or charged them a rate far below what they would bill unrelated parties.