Monday 6 February 2012

Tighter policing of business regulations - IRAS / MOM

Policies tailored to keep S'poreans first

WE THANK Mr Edwin Lim ('Ensure Singapore benefits through tighter policing'; Jan 26) who expressed concerns about businesses circumventing Singapore's regulatory laws. We agree that abuses, where they exist, should not be tolerated.

The tax exemption scheme for new start-up companies was introduced in year of assessment 2005 to support entrepreneurship and help local enterprises grow.

Most start-ups benefiting from this scheme are genuine businesses, which go on to contribute their fair share of taxes.

The Inland Revenue Authority of Singapore (Iras) has audit programmes in place, and has in fact taken enforcement actions against companies found to have abused the scheme.

Companies which hire foreign workers without a valid work permit or fraudulently increase their foreign worker quotas through the use of phantom workers are liable to a fine not exceeding $15,000; or a jail term not exceeding 12 months; or to both.

Last year, the Ministry of Manpower (MOM) successfully prosecuted 38 individuals and one company for phantom-worker violations. For employing foreigners without valid work permits, five companies and 53 individuals were convicted while 21 foreigners were convicted of working without a valid work permit.

We encourage the public with information on any violations to contact Iras ( or MOM ( All such information will be kept confidential.

Singaporeans must remain at the core of our open and diverse workforce. To this end, MOM has made a number of adjustments to our employment pass framework.

The EntrePass scheme, offered to allow foreign entrepreneurs to set up businesses in Singapore, was enhanced in 2009 to require local employment.

Qualifying salaries for employment pass and S Pass holders have been raised to ensure Singaporeans compete on a more level playing field with them for employment.

This approach is preferred to introducing quotas at the employment pass level, which will impede employers' ability to hire foreigners with more specialised skills-sets that may be lacking locally.

A revised set of Tripartite Guidelines on Fair Employment Practices was released by the Tripartite Alliance for Fair Employment Practices recently.

The guidelines indicate the reasonable efforts that employers should make to attract and consider Singaporeans for job positions on merit, and to train and develop the potential and careers of Singaporeans.
Claire Chua (Mrs)
Director, Corporate Communications, Inland Revenue Authority of Singapore
Farah Abdul Rahim (Ms)
Director, Corporate Communications
Ministry of Manpower
ST Forum, 3 Feb 2012

Ensure S'pore benefits through tighter policing

SINGAPORE prides itself on being one of the easiest countries to do business in.

However, some companies take advantage of our regulatory laws to earn maximum profits, but with little or no benefits for the host country.

Foreign small business owners who sell fashion accessories in Bugis Village are good examples.

Some of them make use of the tax exemption scheme for new start-up companies, introduced in 2005 by the Inland Revenue Authority of Singapore (Iras) to spur entrepreneurship, and claim full tax exemption on the first $100,000 of income for each of the first three consecutive years of operation.

At the end of the third year, they close the companies and set up similar ones under new names so as to avoid paying any corporate tax.

They also employ nationals from their home countries, sometimes family members and relatives, as retail assistants even if they are on long-term social visit passes.

And in order to comply with the foreign worker quota, some of them have Singaporeans registered as phantom employees so they can employ foreign nationals on work permits to help run the businesses.

In such instances, Singapore does not benefit in terms of corporate tax receipts and nor are jobs created for Singaporeans.

There should be tighter policing of our business regulations and audits of such businesses.

There have also been instances where multinational corporations take advantage of the lack of foreign employee quotas for higher-level white-collar jobs.

In the light of the slowing global economy, I urge the Ministry of Manpower to ensure that Singaporeans come first in terms of employment opportunities by introducing quotas for white-collar jobs.

There could be different quotas for different professions, according to the availability of local talent.

Singapore needs to continue to be an attractive destination for doing business but, at the same time, we must ensure that we, as a nation, reap the benefits which our regulatory frameworks are meant to achieve.
Edwin Lim
ST Forum, 26 Jan 2012

No comments:

Post a Comment