Not many of Singapore's taxpayers are aware of the long history of the Inland Revenue Authority of Singapore (IRAS), which administers the tax that they pay. Over the years, IRAS has made invaluable contributions to the financial success and economic stability of Singapore.
The Inland Revenue Authority of Singapore (IRAS) is one of the Singaporean government’s statutory boards. It is the country’s primary tax authority. Therefore, IRAS oversees all tax-related issues across the country.
Even though most people in Singapore are familiar with IRAS itself because of its influence on Singaporean taxation and thereby life in general, not many know that IRAS has a long and impressive history.
History of IRAS
When IRAS was first founded, it was not known as IRAS. At the time of its introduction in 1947, it was known as the Singapore Income Tax Department. The primary purpose for its establishment was to ensure that the provisions specified in the newly-enacted Income Tax Ordinance would be carried out. Income tax was assessed in Singapore for the first time in November 1948. Thus, the period from 1948 to 1949 was the country’s first year of assessment (YA).
The next notable development in the history of IRAS took place in 1960. In that year, the Inland Revenue Department was created. This department united multiple forms of revenues that had previously been collected by different agencies. The Inland Revenue Department oversaw significant amendments to the Income Tax Act. These changes came into effect on January 1, 1966.
In 1970, Hsu Tse-kwang became the first local commissioner of the Inland Revenue Department. In the ensuing years, more of the Inland Revenue Department’s resources were channeled towards training of staff than ever before. However, the next major change to the tax system did not take place until 1987, when the corporate tax rate fell from 40% to 33%.
IRAS was established as a statutory board in 1992. It was to function under the auspices of the Ministry of Finance and would perform all the functions that had previously been performed by the Inland Revenue Department. IRAS was granted much more flexibility and autonomy than the Inland Revenue Department had.
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Throughout the 1990s, IRAS placed much emphasis on lowering direct taxes. The major tax-related development of the era was the introduction of the Goods and Services Tax in 1994. This tax would be applied to all goods and services purchased in Singapore, excluding residential properties and financial services. It is in existence to this day.
Since the beginning of the 21st century, IRAS has not overseen many major tax changes. During this period, it has emphasized policies which promote investment in Singapore and which are intended to attract foreigners to live and work there. However, it is also worth noting that over this period, tax rates in Singapore were severely reduced. Today, the corporate income tax rate is 17% and the maximum individual income tax rate is 22%.
Over the course of its history, IRAS has done a great deal to serve Singapore and its taxpayers. Under its administration, Singapore’s tax system and its management have become much more efficient and operate at a higher level. IRAS has truly become an irreplaceable pillar of the Singaporean government and Ministry of Finance.