CONTENTS 02 Taxpayers...Our Partners 08 Accolades 10 Chairman s Statement 12 Members of the Board 14 Corporate Governance 16 Commissioner s Message

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2 In Singapore, we are privileged to live in a well-organised society where the government provides a high standard of living for everyone. The building blocks of our nation - education, environment, health care, housing, security and transport - however, all come at a cost. Every year, some $11 billion is required for security, $6 billion for education and $2 billion for transport. This is the price of building a nation that must be met by taxes. We, at IRAS, would like to partner all taxpayers in this important nation building mission. This Annual Report describes the roles we each have to play. In so doing, together, we will continue to make Singapore a home we are all proud of. CONTENTS 02 Taxpayers...Our Partners 08 Accolades 10 Chairman s Statement 12 Members of the Board 14 Corporate Governance 16 Commissioner s Message 18 Senior Management Team 20 Organisation Structure 28 Calendar of Events 32 Accomplishing our Mission 36 Attaining our Goals 54 Our Service to the Community 56 Looking Ahead 57 Highlights of Tax Changes 63 Financial Report 87 Appendices

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4 TAXPAYERS... OUR PARTNERS Inland Revenue Authority of Singapore ANNUAL REPORT 2003 TAXPAYERS...OUR PARTNERS This year, partly through the taxes that IRAS collects, S$2.21 billion will be spent on transport and S$1.76 billion on housing. Jubir and Anita say thanks to their fellow taxpayers. With four children, their priorities are a nice home and reliable public transport. Sengkang New Town fits that bill. Not only does it offer them an affordable and spacious apartment amid green and open spaces, its buses and new MRT station provide quick access to work, schools and shops.

5 TAXPAYERS... OUR PARTNERS Inland Revenue Authority of Singapore ANNUAL REPORT 2003 Thanks to the excellent professional and technical qualifications of our workers and our safe and secure society, Singapore is a very attractive hub for new enterprises. This year, partly through the taxes that IRAS collects, S$10.97 billion will be spent on security and S$6.36 billion on education. Gerald and his colleagues say thanks to their fellow corporate taxpayers and GST traders. Their contributions help to fund the government s many pro-business measures including assistance for startups and grants for entrepreneurs.

6 TAXPAYERS... OUR PARTNERS Inland Revenue Authority of Singapore ANNUAL REPORT 2003 Nothing could be better than to enjoy good health in a clean country. This year, S$2.24 billion will be spent on health care and S$1.72 billion on the environment, both made possible partly by the taxes IRAS collects. Mr Singh says thanks to his fellow taxpayers. He supports his wife, two children and elderly mother by running a Tandoori stall and knows only too well that good hygiene is the best defence against diseases and that he and his family will get the best treatment if sickness does strike.

7 ACCOLADES 30th Annual Report Award 2003 Best Annual Report Award (First Runner-Up) 2003 Singapore Quality Award For Business Excellence ISO 9001:2000 Certification Of Estate Duty And Stamp Duty Processes Distinguished Public Service Award For Organisational Excellence 2003 People Developer Standard Re-Certification

8 ACCOLADES Inland Revenue Authority of Singapore ANNUAL REPORT 2003 Singapore H.E.A.L.T.H Award (Gold) Ministry Of Home Affairs Award For NSmen s Employers Ministry Of Finance Productivity Day / ExCEL Awards Best WITS Awards (Outstanding) 1 Best WITS Award (Meritorious) Ministry Of Finance ExCEL Convention Best SSS Award Ministry Of Finance Star Service Award 9 Awards National Innovation And Quality Circles Carnival (IQC) 1 Gold Award 3 Silver Awards PS21 ExCEL Convention Gold Awards 1 Bronze Award Annual ComChest Awards SHARE Programme Award (Platinum)

9 CHAIRMAN S STATEMENT 2003 was a challenging year for Singapore. The sluggish US economy dampened our growth prospects and events such as the Iraq war and the outbreak of SARS dashed hopes for a quick recovery. As a result, Singapore grew by a mere 1.1% in While we dealt with the immediate woes, we knew that even as the world emerged from the global slowdown, Singapore could not hope to regain the boom years of the past simply by relying on old ways of competition. Singapore faces the twin challenges of a maturing economy and increasing global competition. As our economy matures, we have to contend with becoming a costlier location for business even as lower cost alternatives such as China and India ramp up their pace of development. Our tax competitiveness is also being tested as many developed countries including UK, Australia, Ireland and Germany and developing countries such as Russia, Hungary, Czech Republic and Poland have cut corporate tax rates in recent years in a bid to attract foreign investment. To maintain and enhance our competitive advantage, we are decisively restructuring our tax system by shifting from direct to indirect taxes. Over the last few years, the corporate income tax rate and the top personal income tax rate were reduced to 20% and 22% respectively while the GST rate was raised to 5% to offset part of the revenue loss. The ability to carry out these fundamental changes amid difficult times demonstrated the strength of Singaporeans our resilience and our unity the same strengths that will help Singapore rise to the challenges ahead. revenues in FY2003/04 declined slightly by S$0.1 billion to S$16.5 billion, I am confident that the rebound in economic growth worldwide, together with our restructuring efforts, will have a positive impact on our economy and tax revenue. Although significant tax reforms have been put in place, we must continue to adapt ourselves and remake our economy to face the changing external landscape. Government agencies must constantly seek to create a pro-business environment and fuss-free administration wherever possible. In this, IRAS has performed well. It has coped with the difficult economic conditions and the various tax reforms and continued to strive for organisational excellence. I am happy to note that in 2003, IRAS was awarded the Singapore Quality Award, one of the first few government agencies to win it. As a world-class organisation, IRAS will continually look for ways to improve its processes and to provide cost-effective quality service to the taxpayers. The project to develop a new generation of information systems in IRAS, also known as IRIN, will be implemented soon, and promises to reduce administrative hassle and improve service delivery to all taxpayers. On behalf of the Board, I would like to thank the management and staff of IRAS for their dedication and commitment. With an excellent team of committed and competent people and high quality work systems in place, IRAS is well on her way to become the leading tax administration in the world. The outlook for the year ahead is optimistic. Our economy has picked up and growth rate in the first quarter of 2004 was a strong 7.5%. Although tax LEE HSIEN LOONG Chairman

10 CHAIRMAN S STATEMENT Inland Revenue Authority of Singapore ANNUAL REPORT 2003 The ability to carry out these fundamental changes amid difficult times demonstrated the strength of Singaporeans our resilience and our unity the same strengths that will help Singapore rise to the challenges ahead.

11 MEMBERS OF THE BOARD

12 MEMBERS OF THE BOARD Inland Revenue Authority of Singapore ANNUAL REPORT MR LEE HSIEN LOONG Deputy Prime Minister / Minister for Finance Mr Lee was appointed Minister for Finance in November 2001 and has been Chairman of the Board since then. 2 MR LIM SIONG GUAN Mr Lim is Head of Civil Service, Permanent Secretary of Ministry of Finance, as well as Permanent Secretary (Special Duties) of the Prime Minister s Office. Mr Lim has been a member of the Board since September MR KOH CHER SIANG Mr Koh is the Commissioner of Inland Revenue. He has been on the IRAS Board since April MR CHEE KENG SOON Mr Chee is the former Auditor-General. He also chairs the IRAS Audit Committee. He has been part of the Board since September MR LIM YONG WAH Mr Lim is Chairman and Executive Director of Inter-Roller Engineering Limited. He also sits on the Boards of several other companies. Mr Lim has served on the Board since September MR THAI CHEE KEN Mr Thai is Chairman of the Nanyang Polytechnic Board of Governors. He also sits on the Boards of several property, trading and manufacturing corporations. Mr Thai has been a member of the Board since September MR CHIANG CHIE FOO Mr Chiang is Permanent Secretary of Ministry of Education, as well as Chairman of the National Institute of Education. Mr Chiang has been on the Board since September Correct as at 31 March 2004

13 CORPORATE GOVERNANCE IRAS BOARD IRAS is overseen by a Board which comprises the Chairman Mr Lee Hsien Loong, who is the Minister for Finance, and six other members. The other members are Mr Koh Cher Siang, the Commissioner of Inland Revenue, Mr Lim Siong Guan, Mr Chee Keng Soon, Mr Lim Yong Wah, Mr Thai Chee Ken and Mr Chiang Chie Foo. The duty of the Board is to ensure that IRAS performs its functions with proficiency. The Board has established two committees, the Executive Committee and the Audit Committee, to assist it in carrying out its responsibilities. The Board met twice last year to review major corporate policies and approve financial statements, annual budget as well as major expenditure projects.

14 CORPORATE GOVERNANCE Inland Revenue Authority of Singapore ANNUAL REPORT 2003 EXECUTIVE COMMITTEE The Executive Committee is chaired by Mr Lim Siong Guan and has three other members, Mr Koh Cher Siang, Mr Lim Yong Wah and Mr Chiang Chie Foo. The role of the Committee is to review key operational plans and personnel policies. It is also the approving authority for key appointments and promotion of senior executives in IRAS. The Executive Committee met once during the last financial year. AUDIT COMMITTEE The Audit Committee is chaired by Mr Chee Keng Soon and comprises four other members, Mr Koh Cher Siang, Mr Thai Chee Ken, the Accountant-General Ms Chua Geok Wah and the Deputy Secretary (Policy) of the Ministry of Finance Mr Ravi Menon. The Committee ensures that accounting policies and internal controls are in place and reviews the adequacy of IRAS financial and accounting policies. The Committee also reviews the reports of our Internal Audit Branch and approves its annual audit plan. The Committee works closely with the external auditor, the Auditor-General, in reviewing the financial statements of IRAS, the scope of audit, the audit results and the adequacy of internal controls in IRAS. The Committee met once last year.

15 COMMISSIONER S MESSAGE 2003 was an eventful year indeed; we faced many difficult challenges. Despite the onslaught of SARS and the volatility in economic conditions, we persevered with determination and tenacity, and continued to work towards the high standards we have set for ourselves. I thank all staff for braving the storm together. Without our excellent people, IRAS could not have carried out its responsibilities with efficiency and professionalism. It gives me great pleasure to report that our efforts culminated in the winning of the prestigious Singapore Quality Award. The SQA recognises our journey towards excellence and our growth as an organisation. Operationally, we met most of the business targets set by the Ministry of Finance. The assessment targets for all tax types were met. The cost per dollar increased from 0.99 cents per dollar to 1.01 cents per dollar. This was due to an increase in the amount of provision for pension payment. Our emphasis on cost-efficiency does not mean that we compromised on our service standards. We believe in helping the taxpayers to fulfil their tax obligations with ease and convenience. In the past year, we have met all service level targets for correspondence, telephone calls and interviews. In fact, our e-filing service remained extremely popular, with the number of individuals using e-filing rising from 913,540 to 977,815, despite the fall in the number of taxable individuals this past year. At IRAS, we believe strongly that people make the organisation. Hence, we invest heavily in training and developing our staff. Last year, we were re-certified as having attained the People Developer Standard yet again. With the SQA on our mantelpiece, we must be mindful not to be complacent, but to continue in our quest for constant improvement. The world is changing at a rapid pace. We must learn to anticipate and adapt to the shifting environment. With our emphasis on the effective deployment of technology, I am certain that our Information Systems Project, better known as IRIN, will position us well to embrace the future. The restructuring of our organisation in April will further streamline our processes and complement the systems overhaul to bring about greater productivity gains. I believe that partnership is the key to bringing our Vision to fruition. The management of IRAS partners the staff in fostering a spirit of innovation and creativity, and in cultivating a competent and committed workforce. This partnership is extended to our taxpayers with whom we work together in nation building. With these partnerships in place, I am confident that we will achieve our Vision to become the leading tax administration in the world. KOH CHER SIANG Commissioner of Inland Revenue

16 COMMISSIONER S MESSAGE Inland Revenue Authority of Singapore ANNUAL REPORT 2003 It gives me great pleasure to report that our efforts culminated in the winning of the prestigious Singapore Quality Award. The SQA recognises our journey towards excellence and our growth as an organisation.

17 SENIOR MANAGEMENT TEAM MR KOH CHER SIANG Commissioner 2 MR ALAN OW SOON SIAN Senior Deputy Commissioner (Individual Group) 3 MR NG KEAT SENG Deputy Commissioner (Business Group) 4 MR GOH KHEE KUAN Deputy Commissioner (Centralised Service Group) 5 MR ONG KHIAW HONG Deputy Commissioner (Corporate Group) 6 MRS ENG-TAY GEOK LEE Deputy Commissioner (Property Group) (Covering) / Assistant Commissioner (Goods and Services Tax Division) 7 MR JAMES KHOR NGIAP LONG Assistant Commissioner (Individual Income Tax Division) 8 MISS CHIAM YAH FANG Acting Assistant Commissioner (Taxpayer Services Division) 9 MRS SABINA CHEONG HWEE BIN Assistant Commissioner (Corporate Tax Division) 10 MISS CHEONG SWEE YING Assistant Commissioner (Tax Policy and International Tax Division)

18 SENIOR MANAGEMENT TEAM Inland Revenue Authority of Singapore ANNUAL REPORT MS ANG SOCK TIANG Acting Assistant Commissioner (Property Tax Division) 12 MR CHIA CHONG SING Assistant Commissioner (Accounting and Processing Division) 13 MDM CHEW TIEW SAN Acting Assistant Commissioner (Enforcement Division) 14 MR ONG TAI LIM * Assistant Commissioner (Investigation and Intelligence Division) MS CHIN LI FEN Assistant Commissioner (Corporate Development Division) 17 MRS PATRICIA MAK KWOK SING Assistant Commissioner (Corporate Services Division) 18 MR WILSON ONG JOON LIM Assistant Commissioner (Infocomm Division) / Assistant Commissioner (Information Systems Planning) 19 MR LIU HERN KUAN Chief Legal Officer (Law Division) (Covering) 15 MR TAY YONG CHIN Assistant Commissioner (Investigation and Intelligence Division) - 2 *Mr Ong Tai Lim retired on 24 July 2004.

19 ORGANISATION STRUCTURE STAFF TAX POLICY AND INTERNATIONAL TAX Assistant Commissioner Miss Cheong Swee Ying TAXPAYER SERVICES Acting Assistant Commissioner Miss Chiam Yah Fang GOODS AND SERVICES TAX Assistant Commissioner Mrs Eng-Tay Geok Lee INDIVIDUAL INCOME TAX Assistant Commissioner Mr James Khor Ngiap Long CORPORATE TAX Assistant Commissioner Mrs Sabina Cheong Hwee Bin INFORMATION SYSTEMS PLANNING OFFICE Assistant Commissioner Mr Wilson Ong Joon Lim INDIVIDUAL INDIVIDUAL Senior Deputy Commissioner Senior Deputy Mr Alan Ow Soon Sian Commissioner Alan Ow Soon Sian BUSINESS Deputy Commissioner Mr Ng Keat Seng COMMISSIONER Mr Koh Cher Siang IRAS BOARD With effect from 26 April 2004.

20 ORGANISATION STRUCTURE Inland Revenue Authority of Singapore ANNUAL REPORT 2003 DIVISION INVESTIGATION AND INTELLIGENCE Assistant Commissioner - 1 Mr Ong Tai Lim LAW Chief Legal Officer Mr Liu Hern Kuan (Covering) Assistant Commissioner - 2 Mr Tay Yong Chin INFOCOMM Assistant Commissioner Mr Wilson Ong Joon Lim ENFORCEMENT Acting Assistant Commissioner Mdm Chew Tiew San CORPORATE SERVICES Assistant Commissioner Mrs Patricia Mak Kwok Sing PROPERTY TAX Acting Assistant Commissioner Ms Ang Sock Tiang ACCOUNTING AND PROCESSING Assistant Commissioner Mr Chia Chong Sing CORPORATE DEVELOPMENT Assistant Commissioner Ms Chin Li Fen GROUP PROPERTY Deputy Commissioner Mrs Eng-Tay Geok Lee (Covering) CENTRALISED SERVICE Deputy Commissioner Mr Goh Khee Kuan CORPORATE Deputy Commissioner Mr Ong Khiaw Hong INTERNAL AUDIT BRANCH Director Mrs Teo Po Chu

21 INDIVIDUAL INCOME TAX DIVISION Provides end-to-end administration of Individual Income Tax and Estate Duty. This includes serving taxpayers, assessing and collecting tax and ensuring compliance for all employees, self-employed individuals, unincorporated businesses and non-resident individuals. This division also handles withholding tax administration for taxpayers who are individuals. Key Officers : Mr James Khor Ngiap Long Miss Ang Sor Tjing Mrs Ang Siew Tee Mrs Christine Deniz Girgin Miss Marjorie Tan Yong Hin Mr James Khor Ngiap Long Assistant Commissioner Deputy Director (Employee) Director (Employee-Specialised) Director (Foreigner and Clearance) Director (Self-Employed) Director (Ruling and Estate Duty) [Covering] TAXPAYER SERVICES DIVISION Handles frontline tax enquiries and manages overall taxpayer relations, service infrastructure and e-services. Key Officers : Miss Chiam Yah Fang Mrs Chia-Tan Hai Geok Ms Jackalin Er Hwee Pheng Acting Assistant Commissioner Director (Contact Centre) Manager (Taxpayer Services Management Unit) CORPORATE TAX DIVISION Provides end-to-end administration of Income Tax for companies, charities and bodies of persons, including withholding tax for payers who are companies; Charities Act, Betting and Sweepstakes Act and Private Lotteries Act. This includes serving taxpayers, assessing and collecting tax and ensuring compliance. Key Officers : Mrs Sabina Cheong Hwee Bin Mrs Choy-Koh Kum Lin Mr Kok Ching Kong Mrs Loke-Ng Lay Beng Miss Ang Chiew Leng Assistant Commissioner Deputy Director (General) Director (Field Audit) Director (Large Corporation) Director (Ruling, Charities, Clubs, Private Lottery, Trust)

22 ORGANISATION STRUCTURE Inland Revenue Authority of Singapore ANNUAL REPORT 2003 GOODS AND SERVICES TAX DIVISION Provides end-to-end administration of Goods and Services Tax. This includes serving taxpayers, assessing and collecting tax and ensuring compliance. Key Officers : Mrs Eng-Tay Geok Lee Mrs Lim Kim Kok Mrs Eng-Tay Geok Lee Mrs Eng Li Ming Assistant Commissioner Director (General) Director (Wholesale Trade) [Covering] Director (Large Business) TAX POLICY AND INTERNATIONAL TAX DIVISION Provides technical advice in the formulation of tax policy and tax changes. Deals with issues on international taxation as well as international relations. Key Officers : Miss Cheong Swee Ying Miss Cheong Swee Ying Mr See Jee Chang Assistant Commissioner Director (Tax Policy and Ruling) [Covering] Deputy Director (International Tax) PROPERTY TAX DIVISION Provides end-to-end administration of Property Tax and Stamp Duty. This includes serving taxpayers, assessing and collecting tax and ensuring compliance. Key Officers : Ms Ang Sock Tiang Mrs Fong Lee Kheng Mrs Daphne Ng Siew Kwang Ms Sally Mok Chong Chin Mrs Christine Leow Bee Lian Mrs Shirley Lee Y L Acting Assistant Commissioner Director (Residential) Director (Commercial) Deputy Director (Industrial) Director (Valuation) Director (Stamp Duty Unit) ACCOUNTING AND PROCESSING DIVISION Manages bulk processes across tax types as well as revenue accounts and reporting. Key Officers : Mr Chia Chong Sing Mrs Chia Seok Khim Miss Koh Mui Gek Mr Colin Chew Koo Chung Assistant Commissioner Director (Processing Centre) Deputy Director (Electronic Interface) Director (Revenue Accounting)

23 ENFORCEMENT DIVISION Promotes voluntary compliance in filling of tax returns and payment of taxes and takes action on defaulters. Key Officers : Mdm Chew Tiew San Ms Harriet Marion Van Buerle Mrs Chia-Mao Kawn Hwa Mrs Dorothy Guan Acting Assistant Commissioner Deputy Director (Filing Compliance) Director (Compliance Service) Director (Payment Enforcement) INVESTIGATION AND INTELLIGENCE DIVISION Gathers intelligence and deters tax evasion through investigation. Key Officers : Mr Ong Tai Lim* Assistant Commissioner 1 Mr Tay Yong Chin Assistant Commissioner 2 Mr Low Boon Hong Director (Investigation) Mr Low Han Hsien Manager (Intelligence Unit) * Mr Ong Tai Lim retired on 31 July 2004 CORPORATE DEVELOPMENT DIVISION Supports IRAS management in strategic planning; handles training and development programmes and knowledge management. Key Officers : Ms Chin Li Fen Mr Ernest Lee Kian Meng Mrs Teo-Wang Lock Wui Assistant Commissioner Deputy Director (Training and Knowledge Management) Director (Corporate Planning) CORPORATE SERVICES DIVISION Manages the corporate communication, human resource, finance and administrative functions. Key Officers : Mrs Patricia Mak Kwok Sing Miss Loh Cheng Cheng Mrs Patricia Mak Kwok Sing Mrs Lee Leng Kiong Assistant Commissioner Director (Finance and Administration) Director (Personnel) [Covering] Director (Corporate Communications Unit)

24 ORGANISATION STRUCTURE Inland Revenue Authority of Singapore ANNUAL REPORT 2003 INFOCOMM DIVISION Provides Information Technology (IT) services and support whilst ensuring the security of IT systems and resources. Leads IRAS in technology planning and system acquisitions. Key Officers : Mr Wilson Ong Joon Lim Mdm Chew Soh Lang Ms Khoo Hung Ling Assistant Commissioner Director (Infocomm Service) [Covering] Director (Infocomm Operation) [Covering] LAW DIVISION Provides legal opinions on the application of tax laws; drafts legislation and other legal documents; represents IRAS in legal proceedings. Key Officers : Mr Liu Hern Kuan Mr Liu Hern Kuan Ms Foo Hui Min Chief Legal Officer [Covering] Principal Legal Officer (Litigation) Senior Legal Officer (Legislation) INFORMATION SYSTEMS PLANNING OFFICE Develops and implements the information system, Inland Revenue Interactive Network (IRIN). Key Officers : Mr Wilson Ong Joon Lim Mrs Wee-Poh Lai Khim Mdm Chew Soh Lang Assistant Commissioner Deputy Director IT Technical Director INTERNAL AUDIT BRANCH Evaluates the adequacy and effectiveness of internal controls in IRAS and ascertains whether policies and guidelines are complied with. Key Officer : Mrs Teo Po Chu Director

25 STAFF PROFILE Scheme of Service Individual Group Business Group Property Group Centralised Service Group Corporate Group Commissioner s Office, Internal Audit and Information Systems Planning Office Total Professional/ Management Technical Office Administration and Support TOTAL DISTRIBUTION OF STAFF BY AGE 28% Age 41 to 50 12% Age 51 and above 24% Age 31 to 40 36% Age 30 and below

26 ORGANISATION STRUCTURE Inland Revenue Authority of Singapore ANNUAL REPORT 2003 DISTRIBUTION OF STAFF BY QUALIFICATION 35% Diploma 20% O Level and below 2% A Level 43% Degree and above STAFF TURNOVER RATE 6% 4% 4.6% 3.9% 2% 2.7% 0% FY2001/02 FY2002/03 FY2003/04

27 CALENDAR OF EVENTS APRIL 2003 A project office was set up to manage the development of a new information system, Inland Revenue Interactive Network (IRIN). MAY 2003 Singapore Quality Award (SQA) assessors conducted a 3.5 day site audit from 20 to 23 May. JUNE 2003 IRAS organised a movie outing for children of Chen Su Lan Home to catch Finding Nemo. Staff donated $10,830 towards the SARS Courage Fund, and personally penned 50 pages of encouragement and well-wishes for the healthcare workers of Tan Tock Seng Hospital. JULY 2003 IRAS attained the SQA. Our Commissioner, Mr Koh Cher Siang, accepted the award at the SQA Award Ceremony held at the Ritz Carlton. AUGUST 2003 In conjunction with the National Day celebration, a Makan Parade was held to raise funds for The President s Challenge 2003 and the Pertapis Children s Home. An 11-day Tax Policy and Administration Course was conducted for delegates from 23 countries from 14 to 25 Jul. SEPTEMBER 2003 Staff celebrated IRAS 11th birthday, revelling in the recent SQA win and remembering the less fortunate by raising a total of $75,454 for The President s Challenge The Tax Specialist Accreditation Scheme, which saw 62 tax specialists accredited at the inaugural accreditation ceremony, was launched.

28 CALENDAR OF EVENTS Inland Revenue Authority of Singapore ANNUAL REPORT 2003 OCTOBER 2003 Our Commissioner led a delegation to attend the 33rd Study Group on Asian Tax Administration and Research (SGATAR) held in Seoul, Korea. DECEMBER 2003 NOVEMBER 2003 inex, our employee intranet portal, was officially launched on 10 Nov by our Commissioner. IRAS hosted the Ministry of Finance National Day Awards 2003 Investiture. IRAS Family Day 2003, Splash Clash Adventure, saw 1,200 staff and family members enjoying themselves at the Jurong Bird Park on 30 Nov. Our Estate Duty and Stamp Duty processes were ISO-certified. The first IRAS ecourse, Basic Goods and Services Tax Law and Practice, was launched. Our Commissioner led a delegation to attend the 24th Commonwealth Association of Tax Administrators Conference (CATA) in Kuala Lumpur, Malaysia. A charity bazaar involving Voluntary Welfare Organisations was held to raise funds for the Community Chest of Singapore. JANUARY 2004 A Management Planning Workshop was held on 26 and 27 Jan to deliberate and consolidate the focus and workplans for the year. IRAS was re-certified for the People Developer Standard. FEBRUARY 2004 All staff participated in the Annual Staff Workshop which was conducted in 10 sessions held over five consecutive days. MARCH 2004 The first blood donation drive for the year was held. Two IRAS officers trained 16 beneficiaries of the Society for the Physically Disabled on the E-Filing System so that they may in turn help taxi drivers to e-file their income tax returns. A Budget Seminar, open to the public, was held to discuss the new tax changes.

29 OUR MISSION Act as an agent of the Government and provide service in administering, assessing, collecting and enforcing payment of taxes Advise the Government and represent Singapore internationally on matters relating to taxation OUR VISION The leading tax administration in the wor A partner of taxpayers in na Name Mathew Mohan Age 45 Profession His Priority Self-Employed Businessman Opportunities to Succeed an excellent team of competent and committed people Mathew knows the value of money. Happy moments for him were when he received his first pocket money, first full-time wage and first payment when he became self-employed. With money, he can get on with what he enjoys - his golf. He knows that governments also need money for the good things in life and he thinks that Singapore has a great example of a government which uses taxes properly, giving its people the opportunity to better themselves.

30 ACCOMPLISHING OUR MISSION We represent the Singapore government in administering, assessing, collecting and enforcing the payment of taxes. Our principal role as partners in financing the growth and welfare of our nation is to make sure that all taxes due are collected. Taxpayers role in this partnership is to contribute their fair share to the seven taxes that IRAS administers: Income Tax, Property Tax, Goods and Services Tax, Betting Duty, Stamp Duty, Private Lotteries Duty and Estate Duty. Tax Collection For the financial year ending 31 March 2004, IRAS collected taxes amounting to S$16.5 billion, which accounted for 65.4% of the Singapore government s operating revenue and 10.3% of the Gross Domestic Product for the year. While total contributions fell by 0.4% from the previous year, we succeeded in meeting the revised collection estimate set by the Ministry of Finance for the year. Individual and Corporate Income Taxes were the key sources of tax revenue, making up 59.2% of total tax contributions and amounting to S$9.7 billion. However, this was a decrease of 9.9% compared to that contributed in Financial Year (FY) 2002/03, a result of the lower income tax rates. Property Tax contributions amounted to S$1.3 billion, an increase of 8.0% over that contributed in FY2002/03. The brisk property market resulted in a 6.8% increase in Stamp Duty contributions from S$695 million to S$742 million. Estate Duty collection increased from S$75 million to S$181 million. Betting Duty fell from S$1.3 billion to S$1.2 billion. However, Goods and Services Tax (GST) contributions increased by 36.5% from S$2.1 billion to S$2.9 billion. This was due to the higher GST rate in the year International Relations As Singapore s international representative for taxation, we enjoy strong and amicable relations with our foreign counterparts. As at 31 March 2004, we have 47 comprehensive bilateral tax treaties in force. Through these treaties, Singapore taxpayers can avoid or alleviate double taxation, thereby encouraging them to engage in international trade and investment. Such bilateral ties also formalise arrangements for the sharing of information to prevent fiscal evasion. In the past year, we signed bilateral tax treaties with Bahrain, Hong Kong SAR, Lithuania and Oman and ratified tax treaties with Egypt and Kuwait. We also held tax treaty negotiations with Germany, India, Kazakhstan and Malaysia and will be holding tax treaty re-negotiations with Canada, Israel and Thailand. Tax Advice IRAS also acts as an advisor to the government on matters relating to taxation. During the year, we provided inputs for the formulation of new tax rules and policy to ease the tax burden on individual and corporate taxpayers. These included the exemption from tax of all foreignsourced income received in Singapore by individuals and the reduction of the corporate tax rate from 22% to 20%, both with effect from Year of Assessment Signing of Singapore s 51 st Avoidance of Double Taxation Agreement with Lithuania in November 2003 In addition, IRAS hosted 98 visitors from countries including Australia, China, Hong Kong SAR, Indonesia, Japan, New Zealand, South Africa, Thailand and the United Kingdom. These delegates were especially interested in, and impressed by, our use of advanced Information Technology (IT) in our organisation and operations. The representatives from

31 ACCOMPLISHING OUR MISSION Inland Revenue Authority of Singapore ANNUAL REPORT 2003 A Visit from Thailand s Revenue Department in August 2003 the New Zealand Inland Revenue Department, for example, paid particular attention to our IT developments which impact our interactions with our taxpayers and our investment in the development of our people. During the year, IRAS was invited to a number of important international conferences where our officers shared with other participants our experiences with the use of IT in tax administration such as e-services, the auto-inclusion of income system and the tax treatment of financial instruments. Conferences attended were held in Korea (33rd Study Group on Asian Tax Administration and Research Meeting), Thailand (Annual Meeting of the Head of Area Revenue Officials), Malaysia (24th Commonwealth Association of Tax Administrators Conference) and Australia (2004 Australian State and Territory Revenue Commissioners Conference). We also shared our Vision of being a partner of taxpayers in our mission of collecting taxes for nation building. A Vision of Partnership IRAS Vision is to be the leading tax administration in the world and a partner of taxpayers in nation building, accomplished through the efforts of an excellent team of competent and committed people. We are certainly on the right path to realising this Vision, given our achievement of the Singapore Quality Award 2003, the top award for organisations that have reached high standards of business excellence. IRAS was also conferred the Distinguished Public Service Award for Organisational Excellence 2003, the highest award in the civil service for organisational excellence. Speaking on behalf of IRAS, our Commissioner aptly summed up our commitment to excel in his opening address at the Taxpayer Feedback Panel Appreciation and Appointment Ceremony held in August 2003, Attaining these awards means that we are committed to continue on this quality journey of ours and to strive harder to achieve even better results.

32 OUR CORPORATE GOALS To be cost-effective in tax administration taking into account compliance costs of taxpayers To enhance customer service and compliance To enhance operational efficiency To enhance staff competence and satisfaction Name Barry Lea Age 48 Profession His Priority Bank Chief Executive Value for Money OUR QUALITY POLICY We are committed to providing excellent service and to continually improving in the way we excel in meeting our customers' needs and expectations. Barry recalls landing in one piece after his first solo flight in a light aircraft as one of his life s happiest moments. He knows that such happy endings cannot be taken for granted. He has to work out in the gym or run, often with his dog, in order to enjoy eating, drinking and staying fit. He believes that Singapore s tax system works out too. And well-managed social benefits work out so that people living in poverty or having disabilities can achieve their dreams. Barry adds that the tax system is simple, efficient and allows him to save more of his pay - we would all vote for that.

33 ATTAINING OUR GOALS IRAS takes a balanced scorecard approach towards formulating its corporate goals that focus on: cost-effectiveness in tax administration, customer service and compliance, operational efficiency and staff competence and satisfaction. These corporate goals drive its divisional targets and workplans. To be Cost-Effective in Tax Administration Taking Into Account Compliance Costs of Taxpayers Our relationship with taxpayers is one of partnership. Taxpayers contribute their fair share to nation building and IRAS provides quality service to reduce taxpayers compliance costs and to help them fulfil their tax obligations. Being cost-effective in tax administration, therefore, means not only being prudent in our usage of public funds, but also making it less costly for taxpayers to play their part. much lower than the industry average of US$ This cost-effectiveness was mainly attributed to the high level of automation in our processes. It was noted that our use of Information Technology (IT) is far more pervasive than the developed tax administrations in countries such as Belgium, Canada and Sweden. Our cost per taxpayer has increased from S$48.90 in Financial Year (FY) 2002/03 to S$54.20 in FY2003/04 due to a fall in the number of taxpayers following tax rate changes. Cost per taxpayer According to the New Zealand Inland Revenue Department s International Technology Benchmarking Study, conducted in 2003 over 21 international and 10 United States state tax administrations, our cost per dollar of tax collected was 0.9 cents 1, slightly below the industry average of 1.1 cents. More remarkably, our cost per taxpayer was US$29.oo, 1 All figures quoted from the International Technology Benchmarking Study are in US dollars, with the figures pertaining to IRAS belonging to FY2001/02.

34 ATTAINING OUR GOALS Inland Revenue Authority of Singapore ANNUAL REPORT 2003 Economy drive Besides leveraging on technology to attain cost-effectiveness, in 2003, we embarked on an Economy Drive journey which aims to reinforce a mindset of prudence and value for money across the organisation. Through a review of processes, improvement in procurement strategies and implementation of staff suggestions to support the Economy Drive, we achieved S$10.2 million in cost savings. We initiated several measures such as lowering contract specifications, aggregating demand with the public sector, embarking on a utilities-saving campaign and resizing IT resources. With staff support, there was also a freeze on recruitment and replacement to contain our manpower costs.

35 OUR SERVICE PLEDGE Dear Taxpayer We are committed to providing excellent service. You can expect courtesy, competence, clarity and convenience from us. COURTESY We will be attentive and polite when we serve you. COMPETENCE We will ensure that you are served by well-trained officers and our tax assessments are accurate. CLARITY We will provide clear and complete information to help you fulfil your tax obligations. CONVENIENCE We will continuously seek improvements to make it simple for you to meet your tax obligations. Name Age 26 Profession Her Priority Chow Poh Chi Graphic Designer Reliable Public Transport Poh Chi is a fun-loving girl. When not backpacking, getting lost and finding the right track again, she s hanging out with her friends, watching movies and partying. If she could change one thing, she would want to be a kid again, but she s grownup enough to realise that being a good citizen means making a contribution. While out enjoying the social whirl, she likes to think that her bit of tax contribution helps to stop her mum from worrying how she ll get home. Success means happiness to Poh Chi and for sure, nothing makes her happier than good transport so that she can get to the clubs and shops and back again. We will respond to you in a timely manner : We will answer most of your telephone calls within 2 minutes. We will reply to most letters within 3 weeks. We will usually attend to you within 20 minutes when you visit us. We will usually make refunds to you within 30 days. We recognise your desire for excellent service. To help us deliver service to meet your expectations, we need your co-operation to : Be timely in filing your return Give us accurate and complete information Pay your tax on time Comply with tax laws Thank you. IRAS

36 To Enhance Customer Service and Compliance Service standards Being cost-effective has not resulted in any compromise on our service standards. Our commitment to providing quality service is reflected in our Service Pledge where we make a promise to taxpayers to fulfil set service standards in four key areas: letters, telephone calls, walk-ins and refunds. We received 769,857 taxpayers letters in FY2003/04 and replied to 85% of them within three weeks, 5% above the target of 80% and an improvement from 84% in FY2002/03. Of 958,351 calls received, 88% were answered within two minutes, well above the target of 75% and 2% up from the preceding year. In 2003, as part of our continuous improvement efforts, we made an on-going arrangement with the Civil Aviation Authority of Singapore to audit the quality of our telephone service as part of our mystery caller programme. The results of the audit are reported and published on a quarterly basis. Our front-line officers attended to 89% of 223,887 walkins at our Taxpayer Services Centre within 20 minutes of their arrival, well above our service standard of 80% and equalling our achievement in FY2002/03. In recognition of its understandable importance to taxpayers, we set ourselves a service standard of processing 100% of refund cases within 30 days. We met this standard in 99% of 148,354 refund cases, the equivalent of last year s percentage, and are determined to do better to achieve our target of 100% in the year ahead. fulfilling tax obligations were reasonable, indicating that our efforts to provide quality service to reduce the compliance costs of our taxpayers have paid off. The respondents rated their satisfaction with IRAS service against other organisations. IRAS was ranked third, after a private bank and another statutory board. In the area of service quality and outcome, individual and business income taxpayers ranked IRAS second, ahead of the private bank, signifying that enhancements made to our customer service have been fruitful. Taxpayer feedback IRAS welcomes feedback from taxpayers as it enables us to learn of their concerns and pinpoint the areas where we need to make improvements. Only with this partnership can we make the changes in our service that matter most to taxpayers. Taxpayers can contact us directly if they have any feedback to share with us. In FY2003/04, we received 9,479 compliments and several learning opportunities, of which 16 were tracked in our Complaints Management System and shared among our officers to enable them to further enhance their service levels. Taxpayer satisfaction survey The best measurement of any service is to ask those who use it. In a customer service evaluation survey conducted by Forbes Research in October 2003, 2,466 respondents expressed a high level of satisfaction with our services, especially our service provided to walk-ins. We also met our customers requirement for the four Cs: Courtesy, Competence, Clarity and Convenience. Over 80% of the respondents agreed that the time and money spent on Our Commissioner with the Taxpayer Feedback Panel members

37 ATTAINING OUR GOALS Inland Revenue Authority of Singapore ANNUAL REPORT 2003 An E-Filing Roadshow held at Toa Payoh HDB Hub in March 2004 We also conducted three Taxpayer Feedback Panel sessions and six Taxpayer Focus Groups in FY2003/04. The taxpayers involved gave us invaluable feedback on a series of issues such as our Vision, the new computer system that will replace the current obsolete one, our website and E-Filing publicity The feedback was considered and some recommendations have been implemented. IRAS thanks the Taxpayer Feedback Panel Members and Taxpayer Focus Group participants for their time and contributions. In addition to getting feedback from taxpayers, we hold dialogue sessions with members of the Institute of Certified Public Accountants of Singapore (ICPAS) to gather their opinions on newly minted tax treatments and administrative concessions before their implementation. During the two dialogue sessions held in August and September 2003, IRAS and ICPAS members discussed the taxability of interest-free / subsidised loans given to company directors, the income tax treatment of foreign exchange gains or losses for businesses and the filing of income tax computations and financial statements in non-singapore dollar functional currencies. Use of technology IRAS leverages on technology to make it as easy and painless as possible for taxpayers to fulfil their tax obligations. Since Year of Assessment (YA) 2002, we have identified individual taxpayers whose chargeable incomes were below the minimum income threshold and informed them that they did not need to file their income tax returns. 98,669 taxpayers, whose incomes fell below the S$20,000 threshold, were issued with these no return required letters for YA2004. More significantly, we have, over the years, put in place a series of convenient e-services. The most prominent of which is the E-Filing of individual income tax returns, which saw a take-up rate of 67% this year, close to our target of 70%. 977,815 individuals submitted their income tax returns via Internet or phone, an increase of seven percentage points from last year. For the convenience of heartlanders, IRAS partnered 700 E-Filing volunteers to provide assisted E-Filing services at 22 eclubs islandwide. E-Filing 2004 was widely publicised through roadshows, posters and print and radio advertisements during the filing period. Another important initiative in which we make it easier for taxpayers to file their tax returns is the auto-inclusion scheme for employment income and donations. This scheme automatically includes employment income and donation information in taxpayers tax assessments by enabling employers and Institutions of a Public Character to electronically transmit the details to IRAS. For YA2004, 2,258 employers participated in the auto-inclusion scheme for employment income, an increase of 28.0% from the previous YA. As a result, approximately 832,000 employees enjoyed easier filing.

38 This year, we added a new income item to the autoinclusion scheme to make filing even more smooth-sailing dividends paid by private companies to individual taxpayers. Taxpayers no longer need to declare dividend income from private companies in their income tax returns. For our present taxpayers, we held four Goods and Services Tax (GST) seminars in 2003 for GST-registered traders to equip them with practical and in-depth knowledge of several GST topics such as input tax claims, bad debt relief, reimbursement and disbursement. We have also leveraged on banking services to enable taxpayers to pay their taxes through a wide range of modes GIRO, enets, AXS station, S.A.M, vpost, Internet banking, ATM, Phone Bank Service and Telegraphic Transfer. Taxpayer education Better understanding by taxpayers of the importance of taxes to nation building will promote taxpayer compliance and a better partnership with IRAS. We believe that it is never too early to inculcate in the young the social responsibility of paying taxes and its importance to Singapore s economy. Hence, we welcome students, our future taxpayers, to visit our premises as part of their National Education Visit programme. Taxpayer compliance Besides taxpayer education programmes, our compliance activities include regular audits to uncover cases where taxpayers omit or understate their income in their tax returns. Industry-specific audits carried out included real estate agents, lawyers, doctors and engineers. The audit on interest benefits derived by company directors from interest-free / subsidised loans given to them in the course of their employment, which started in September 2001, was completed in 2004 due to the large number of cases involved. Most taxpayers are compliant in the submission of their returns and payment of their taxes. As at 31 March 2004, IRAS has received 95.9% of 1,383,466 individual income tax returns issued for YA2003, a slight improvement from 95.1% for YA2002. Of 101,811 corporate income tax returns issued for YA2003, 69.6% have been submitted, a small decline from 73.1% for the previous YA. 249,452 returns were issued to 64,507 GST-registered traders for YA2003 for them to file on a monthly, quarterly, half-yearly or annual basis. As at 31 March 2004, 96.6% of these returns have been submitted, a marginal improvement from 96.4% for YA2002. A National Education Visit from Students of CHIJ Katong Convent Secondary School in February 2004 During the year ending 31 March 2004, we played host to 477 students from secondary schools, junior colleges and polytechnics. In addition, the concept of the importance of taxes to nation building was incorporated in the Primary 6 Social Studies syllabus.

39 ATTAINING OUR GOALS Inland Revenue Authority of Singapore ANNUAL REPORT 2003 The amount of tax arrears as a percentage of tax contributions decreased from 2.3% in FY2002/03 to 1.5% in FY2003/04, indicating that taxpayers have become more prompt in paying their taxes, thanks to the timely efforts of our enforcement officers. There is, unfortunately, still a minority who chooses to run foul of the law. We come down hard on these recalcitrant taxpayers because they are not being fair to the vast majority of taxpayers who pay their taxes. Recent court cases involving tax evasion highlighted by the media serve to demonstrate the seriousness with which we view these offences. During FY2003/04, the audit and investigation divisions handled 36,872 cases and recovered S$422 million in taxes and penalties.

40 OUR CORE VALUES FAIRNESS Treat everyone in the same circumstances equally INTEGRITY Do what is right without fear or favour in all circumstances PROFESSIONALISM Have the competence and take pride in doing our work in the most efficient and effective way TEAMWORK Help one another and work together with mutual trust and respect Name Age 30 Profession His Priority Eugene Ng Sales Engineer Good Infrastructure Eugene loves to read and travel. Fortunately for him, the two go well together. With our dependable air, land and sea connections, he can sit back and enjoy a good book while exploring the world. One of his happiest moments was when he received his first bonus because that showed how much his work was appreciated by his company. By paying his taxes on time, he shows how much he appreciates what the government has done for him. RESPONSIVENESS Anticipate and promptly meet changing needs INNOVATION Continuously seek new ways to do our work better Success for Eugene means meeting the targets and expectations that he has set for himself. We can all share in that thought.

41 To Enhance Operational Efficiency The provision of quality service is one major building block of realising our Vision to be the leading tax administration in the world the second is operational efficiency in two key areas: raising of assessments and enforcing payment of taxes. Raising of assessments As at 31 March 2004, 99.8% of the individual income tax returns received for YA2003 have been assessed. Due to the increase in the minimum chargeable income threshold from S$11,000 to S$20,000, a lower number of individual taxpayers million - were assessed for YA2003, compared to 1.95 million for YA2002. The completion rates of assessment of the corporate income tax returns received in YA2003 and YA2002 were 70.6% and 95.7% respectively. 98,202 corporations were assessed for YA2003 and 104,218 for YA2002. The yearly review of properties annual values ensures that they reflect the estimated annual rent that the properties could fetch if they were rented out. 1,105,651 properties had their annual values reviewed for YA2003, an increase of 2.7% from YA % of the properties which had their annual values reviewed have been assessed for Property Tax for YA2003, whilst 98.6% of newly completed properties have been assessed for the same YA. The high completion rates of assessment for these taxes show our efficiency in the raising of assessments. This can be credited to our effective deployment of technology. Enforcing payment of taxes As at 31 March 2004, 76.4% of taxes due in FY2003/04 have been collected. This is below the target of 80% as more taxpayers have requested to pay by instalments. A higher proportion of instalments has been approved to help taxpayers in view of the poor economic conditions last year. Sharing with local organisations How IRAS manages its operations is of interest to many organisations in Singapore and in the past year, our visitors included Singapore Power, Subordinate Courts and National Healthcare Group. Shortly after news broke that we had clinched the Singapore Quality Award (SQA), we had guests from organisations such as Ministry of Defence, Urban Redevelopment Authority, Tan Tock Seng Hospital, Immigration and Checkpoints Authority, Land Transport Authority, Singapore Quality Institute and Corrupt Practices Investigation Bureau with whom we shared our SQA journey. A Visit from ComChest s Customer Relationship Management Workgroup in February 2004 To Enhance Staff Competence and Satisfaction Staff training It is only through the contributions of an excellent team of competent and committed people that IRAS can realise its Vision of being the leading tax administration in the world and a partner of taxpayers in nation building. Thus, we place great emphasis on the development of our people to maintain and enhance their level of competence. In FY2003/04, we invested S$3.2 million in training. As a percentage of payroll, training expenditure was 3.1% (a reduction from 4.7% in FY2002/03) and the average training man-days per employee was 10.7 days (a decline from 12.9 days in FY2002/03). These results were due to the deferment of some training in view of the organisational restructuring and development of a new computer system where a majority of staff was actively involved. Our commitment to developing our people and adopting the best practices in our training and development system, however, has not taken a backseat - this is best illustrated by our re-certification for the People Developer Standard in December We offer a diverse range of in-house and external courses to our officers for them to acquire not only in-depth tax knowledge, but also soft skills such as negotiating with taxpayers, fostering employee motivation, promoting team creativity and influencing others positively. In April 2003, we introduced elearning which allows IRAS staff to take a series of courses online at a time and place of their choice. 57% of the 250 elearners enrolled in the programme completed at least five courses and 75 participants took the Basic GST ecourse which was rolled out in two phases.

42 ATTAINING OUR GOALS Inland Revenue Authority of Singapore ANNUAL REPORT 2003 In 2003, we launched the IRAS I-LEAD programme to develop the leadership skills of our supervisors. The curriculum includes induction for new appointees, structured development programmes for existing supervisors and a structure for dialogue to build the team of supervisors. Knowledge management The highlight of the year was the introduction of the Knowledge Management (KM) movement in IRAS. This provides a framework for the identification of knowledge gaps at organisational level and allows us to be proactive in the acquisition of knowledge to close the gaps. There were two significant events which occurred in 2003 as part of the KM movement in IRAS. One was the setting up of an Accreditation of Tax Specialists framework. This framework seeks to encourage technically inclined officers to put in efforts to continually upgrade their technical knowledge and become tax specialists. Accredited tax specialists are expected to actively share their knowledge and expertise with their peers and other tax officers through various activities to further enhance the overall technical competence of tax officers in IRAS. On 1 September 2003, 62 tax officers were accredited in the three main tax types: Income Tax, GST and Property Tax. The second event was the rolling out, in November 2003, of a central knowledge repository to provide staff with the means to obtain and share information, knowledge and ideas. The consolidation of information within IRAS into a central repository enables easy access by every employee and minimises the loss of knowledge over time. It allows our people to search for information from various sources, locate Subject Matter Experts and participate in online discussion forums. Staff can build upon existing knowledge rather than start from scratch. The KM system effectively enhances IRAS standing in the knowledgebased economy, taking us one immense step closer to realising our Vision. Productivity and awards Our numerous initiatives in the area of training have clearly paid off in our officers high productivity each officer handled 1,529 taxpayers in FY2003/04, compared to 1,756 in FY2002/03. The difference was due to a fall in the number of taxpayers. In addition, we are pleased to shine the spotlight on a select group of IRAS officers who have demonstrated a high level of proficiency in their work and have made significant contributions to the organisation. They have been duly rewarded with various awards and we congratulate them. Our Accredited Tax Specialists

43 Name of Staff Mrs Eng-Tay Geok Lee Mdm Chew Soh Lang Mr Koh Eng Chuan Mrs Ng-Lee Yeow Khiang Mrs Tan Kai Wah Mr Meera Sahib Bin Aspar Ms Kamisah Bte Ibrahim Mrs Oh-Lim Swan Giok Miss Ang Soh Lan Mrs Tan Gik Knoh Mrs Goh Tuan Eng Mr See Ngiap Ching Miss Mary Chua Miss Tan Bee Tin Miss Chia Lay Hoon Mdm Teoh Kim Choo Miss Chia Hui Hoon Mrs Faridah Saleh Recipients of Awards in FY2003/04 Designation and Branch of Staff * Assistant Commissioner (Policy, Planning and Research) IT Technical Director (IT Services) Principal Tax Investigator (Investigation 1) Manager (Accounts Review) Manager (Processing Centre) Assistant Administration Officer (Processing Centre) Assistant Administration Officer (Training) Senior Assistant Administration Officer (Taxpayer Services 4) IT Specialist (IT Services) Senior Tax Officer (Return Review 2) Manager (Training) Senior Valuation Officer (Specialised Property Assessment) Senior Assistant Administration Officer (Processing Centre) Senior Assistant Administration Officer (Return Review 2) Assistant Manager (Taxpayer Services 3) Senior Tax Auditor (Audit 3) Principal Tax Auditor (Audit 1) Senior Tax Officer (Taxpayer Services 2) Name of Award Public Administration Medal (Silver) Public Administration Medal (Bronze) Commendation Medal Efficiency Medal Efficiency Medal Singapore Labour Foundation Award Travel Award (Silver) Travel Award (Silver) Travel Award (Silver) Travel Award (Silver) Travel Award (Silver) Travel Award (Silver) Travel Award (Bronze) Travel Award (Bronze) Travel Award (Bronze) Travel Award (Bronze) Travel Award (Bronze) Travel Award (Bronze) * As at the time the award was given Recipients of Good Service Badges 1 in FY2003/04 Name of Staff Mrs Jamaliah Raub Miss Noor Daziah Bte Abdul Aziz Miss Asmah Bte Atan Miss Lim Hsu Wei Jaina Ms Ng Siew Geok Miss Wee Pei Hsia Yvonne Mr Ling Gee Sin Mdm Noor Samsiah Bte Osman Mrs Chow-Chang Siew Mooi Designation of Staff 2 Tax Officer Tax Officer Tax Officer Tax Officer Tax Officer Tax Officer Tax Officer Tax Officer Senior Assistant Administration Officer Branch of Staff 2 Non-Filer and Prosecution Non-Filer and Prosecution Taxpayer Services 1 Taxpayer Services 1 Taxpayer Services 1 Taxpayer Services 1 Taxpayer Services 2 Taxpayer Services 3 Taxpayer Services 4 1 The Good Service Badge is to reward front-line staff for rendering good service to taxpayers. 2 As at the time the award was given

44 ATTAINING OUR GOALS Inland Revenue Authority of Singapore ANNUAL REPORT 2003 Winners of Quality Service Award 1 in FY2003/04 For the Quarter Ended Name of Staff Designation of Staff 2 Branch of Staff 2 Jun 2003 Mr Chew Woon Leong Stanley Tax Officer Accounts Recovery 2 Mrs Chan Yoke Meng Principal Tax Officer Taxpayer Services 2 Ms Kho Wan Hwa Joyce Senior Project Officer Systems Ms Han Swee Peng Tax Specialist Rulings and Tax Policy Miss Ng Pei San Senior Finance Officer Finance Mr Foo Maw Yaw Tax Officer Return Review 1 Miss Ho Su Ling Janice Valuation Officer Computer Assisted Mass Appraisals Ms Chow Wai Yee Tax Specialist Corporate Tax (Specialised Group) Mr Chia Tiong Heng Assistant Manager Audit 1 Sep 2003 Mr Toh Peng Hian Jason Tax Officer Accounts Review Mr Teng Chee Wai Senior Tax Investigator Investigation 1 Mdm Noraini Bte Mohd Noor Assistant Administration Officer Processing Centre Mdm Sapinah Bte Parni Assistant Administration Officer Taxpayer Services 1 Ms Tan Hui Ling Wendy Ms Tng Peck Hua Miss Chung Sin Yean Senior Corporate Communications Officer Assistant Manager Senior Tax Auditor Corporate Communications Corporate Tax (General Group) Audit 3 Miss Choh Mew Seong Senior Internal Auditor Internal Audit Miss Nang Peck Yan Valuer Specialised Property Assessment Dec 2003 Miss Loh Wan Li Triffny Mr Tan Sze Khiang Tax Officer Senior Tax Officer Return Review 2 Taxpayer Services 5 Miss Tan Kwee Khim Kellyn Miss Chan Sook Kham Joey Assistant Manager Project Officer Computer Assisted Mass Appraisals Information Systems Planning Miss Low Suat Hoon Administration Officer Administration Mrs Ong-Fong Swee Ling Tax Specialist Corporate Tax (Specialised Group) Ms Lim Hwei Ling Senior Rulings and Tax Policy Officer Rulings and Tax Policy Ms Chan Siok Feng Doreen Senior Tax Auditor Audit 2 Miss Tan Yar Teng Tax Officer Accounts Recovery 2 Mar 2004 Ms Shyla Damodaran Senior Quality Development Officer Quality Development Unit Mr Tan Choon Hee Senior Tax Officer Return Review 1 Mr Lim Peck Kwang Assistant Manager Information Systems Planning Mrs Choo Lai Chun Internal Auditor Internal Audit Mdm Mehrajnisa Assistant Manager Accounts Recovery 1 Miss Geetha D/O Kamala Kanthan Tax Auditor Audit 3 Mrs Ramlah Bte Ibrahim Tax Officer Taxpayer Services 4 Miss Lim Ai Chin Avril Valuation Officer Property and Valuation Services Mrs Tan-Yong Shew Fong Assistant Manager Corporate Tax (General Group) 1 The Quality Service Award is to reward staff for providing excellent service to taxpayers or internal customers. The winner has to fulfil the four Cs: Courtesy, Competence, Clarity and Convenience. 2 As at the time the award was given

45 IRAS and IRASSU Collective Agreement Signing Ceremony and Bursary Awards Presentation held in March 2003 A.C.T.I.V.E Day 2003 A Morning Stretch Staff welfare In addition to enhancing the competence of staff, IRAS tries to make work fun by providing an enjoyable working environment so that our people can be happy, productive and committed employees. In 2003, IRAS and the IRAS Staff Union signed a new IRAS Staff Collective Agreement (which will be in force until 2005) and Memorandum of Understanding, signifying our partnership and commitment to staff welfare. Under this new agreement and memorandum, IRAS has implemented schemes like Elder Care Time-Off and Subsidised Comprehensive Health Screening to further enhance staff welfare. The Elder Care Time-Off scheme allows staff timeoff to take care of their elderly parents and is one of many family-friendly initiatives in place in IRAS including a childcare centre within our premises and a part-time scheme for female officers with children below the age of eight. As at 31 March 2004, 78 officers have children enrolled in the childcare centre and three female officers are working part-time. Healthy living is actively promoted among IRAS staff. The Subsidised Comprehensive Health Screening scheme encourages staff to go for regular check-ups. On top of this, we have stretch breaks led by each branch s appointed health facilitator and free distribution of fruit every week. Once a month, health tips are disseminated and lunchtime talks on topics such as stress, family relationships and bone health are organised. We also have several modern sports facilities available in our building including a gymnasium, badminton courts and a tennis court. The Inland Revenue Recreation Club (IRRC) Sports Committee arranges inter-organisation as well as in-house competitions and sporting events for staff. Highlights for the year included Revenue Climb, Fun Pedal Food Pedal and Fun and Fitness Day Held at the Toa Payoh Stadium, Fun and Fitness Day 2003 attracted a huge turnout with games, the Sports for Life Walk, boxercise for adults and balloon sculpting and face painting for children. On A.C.T.I.V.E (All Companies Together In Various Exercises) Day 2003, staff came to work in sports attire and took part in various activities such as a morning stroll, line-dancing and breast cancer talk. For our efforts in promoting healthy living among our officers, IRAS received the Singapore H.E.A.L.T.H Award (Gold) for the fifth consecutive year. Our Commissioner also won the Singapore H.E.A.L.T.H Leader Award while the Staff Well-Being Committee Chairperson, Ms Chin Li Fen, received the Singapore H.E.A.L.T.H Promoter Award. Every member of IRAS belongs to one of six Houses represented by the colours: Blue, Green, Purple, Red, White and Yellow. During the year, the six Houses and the IRRC Social Committee organised an array of activities to bring staff from different divisions together for interaction and bonding. Popular events included Makan Parade, Colour Your Houses, Talentime and Family Day The latter was held at the Jurong Bird Park with the theme Splash Clash Adventure. There is a structure in place in IRAS to ensure that staff well-being is not compromised. The Staff Well-Being

46 ATTAINING OUR GOALS Inland Revenue Authority of Singapore ANNUAL REPORT 2003 Committee headed by an Assistant Commissioner will continue to review staff programmes to further enhance staff well-being and satisfaction and to ensure a happy workforce, sentiments that we trust will be reflected in the results of the upcoming biennial Organisational Climate Survey in Staff innovation Our care for staff is not limited to training and welfare. We encourage our people to let their creative juices flow and give our backing to their innovative efforts. Each officer is encouraged to put in two ideas a year to the Staff Suggestion Scheme (SSS) and we target to implement 70% of their suggestions. In FY2003/04, each officer put up an average of 1.6 suggestions and we succeeded in hitting the target of 70%. In addition, every employee of IRAS is a member of a Quality Action Circle (QAC) and each QAC is encouraged to complete two projects a year. We surpassed that goal as each QAC completed an average of 2.1 projects. Estimated savings from these QAC projects were S$7 million, two and a half times more than the savings of S$2.8 million in FY2002/03. Our people s innovative efforts were recognised nationally by a host of awards: two Best WITS Awards (Outstanding) and one Best WITS Award (Meritorious) at the Ministry of Finance Productivity Day / ExCEL Awards 2003; one Best SSS Award at the Ministry of Finance ExCEL Convention 2003; one Gold Award and three Silver Awards at the National Innovation and Quality Circles Carnival; and two Gold Awards and one Bronze Award at the PS21 ExCEL Convention Excellent suppliers The excellent team of competent and committed people which will help us to realise our Vision includes not only IRAS staff but also our suppliers. They underpin the smooth running of our operations and in acknowledgement of their contributions, we recognise them with the presentation of an annual Outstanding Supplier Award. Our support for staff s innovation is best illustrated by the Golden Bits suggestion scheme in which our Commissioner personally responds to employees who have put in inventive ideas. We also give financial backing to officers who wish to experiment with their ideas through the Eye on Innovation and Divisional Innovation Fund. In FY2003/04, we received 15 Golden Bits and funded two Eye on Innovation and six Divisional Innovation Fund projects. Thanking our Outstanding Suppliers for Year 2003 Outstanding Suppliers for Year 2003 Name Cisco Recall Total Information Management Pte Ltd CSA Autonated Pte Ltd Kodak Singapore Pte Ltd Min Hwa Envelope Manufacturers Pte Ltd NCS Pte Ltd NCS Pte Ltd Oce (Far East) Pte Ltd Singapore Post Ltd Project Independent Record Keeper for IRIS and E-Filing Maintenance of Personal Computers Maintenance of Scanners Supplier of Envelopes Management of IT Facilities Management of Network Infrastructure Maintenance of Non-Impact Printers Collection of Tax IRAS takes this opportunity to thank its suppliers for their continuous support.

47 OUR PUBLIC RESPONSIBILITY STATEMENT Inculcate a strong sense of public responsibility among staff Recognise and support volunteerism Appreciate the beauty of a greener environment Serve the community and the nation Name Anisah A Karim Age 48 Profession Her Priority Financial Services District Manager Enough for All To fulfil the statement, we will promote: Volunteerism by the community for the community Active citizenry and a spirit of volunteerism amongst staff Having given birth to her fourth child at the age of 41, it is fortunate that Anisah enjoys cooking, baking and making handicrafts. She is most moved by child labour and victims of war and would eliminate poverty if she could change the world. As a caregiver herself, she values those who give selflessly regardless of race or religion and believes that it is important for the government to raise enough revenue to provide a good environment for everyone.

48 OUR SERVICE TO THE COMMUNITY We seek to make a contribution to nation building by being a partner of taxpayers and by being actively involved in the community. Our commitment to the community is reflected in our Public Responsibility Statement - to fulfil this statement, we aim to promote volunteerism by the community for the community, active citizenry and a spirit of volunteerism amongst staff. Volunteerism by the Community for the Community The major event for 2004 was the provision of Volunteer E-Filing Service during the individual income tax filing period to 9,400 taxpayers, a record high since its introduction in IRAS partnered the National Volunteer and Philanthropy Centre for the first time and together with the People s Association and the Infocomm Development Authority of Singapore, provided assistance at 22 eclubs islandwide to taxpayers who needed help to e-file their income tax returns saw a much bigger turnout of E-Filing volunteers compared to in 2004 versus 400 in 2003, a 75% increase. In addition, IRAS held a special training session for 16 physically disabled persons from the Society for the Physically Disabled who wanted to thank taxi drivers for transporting them by helping them to e-file. Active Citizenry and a Spirit of Volunteerism Amongst Staff To promote the spirit of volunteerism, our officers are given up to two days of time-off to take part in community activities. During the year, our Inland Revenue Recreation Club s (IRRC) Community Involvement Committee did an excellent job of organising a variety of community activities for IRAS staff to participate in. IRRC and the IRAS Staff Union adopted the Pertapis Children s Home in S$5,000 was successfully raised for the Home from organising the annual food fair Makan Parade, held in conjunction with the National Day celebration. Events were also held for the Home on A.C.T.I.V.E (All Companies Together In Various Exercises) Day 2003 and groceries were distributed to the Home as part of the Hari Raya Puasa celebration. Our SHARE (Social Help and Assistance Raised by Employees) programme became more structured with the identification of SHARE representatives, the objective being to help IRAS raise its current 84% participation rate of staff contributing monthly to the Community Chest of Singapore (ComChest). To achieve this, we carried out branch sharing sessions to raise awareness and organised various activities such as a debut lunchtime performance by children from the Movement for the Intellectually Disabled of Singapore. In November 2003, we were awarded the Platinum Award by ComChest for attaining a SHARE participation rate exceeding 80%. Provision of Volunteer E-Filing Service

49 OUR SERVICE TO THE COMMUNITY Inland Revenue Authority of Singapore ANNUAL REPORT 2003 Our Staff Tending to IRAS Green 122 volunteers continued to tend to IRAS Green, our plot of foliage at Marina Promenade, on their Saturdays-off. We also held two rounds of Mass Cleaning in which we raised about S$3,300 from pulping our trash. Other events included raising S$75,454 for The President s Challenge 2003 through the organisation of various events such as Makan Parade and the IRAS Star Charity Show. S$10,830 was also donated to the Courage Fund set up at the peak of the SARS outbreak. Our staff took part in a number of community activities including accompanying children from the Chen Su Lan Home to watch the movie Finding Nemo, selling National Day T-shirts and collar pins for ComChest and supervising students selling flags for the Disabled People s Association. We also organised two Blood Donation Drives to help the Singapore Red Cross Society meet their target of 200 units of blood per day - both resulted in more than 120 units being donated.

50 LOOKING AHEAD 2004 will be an exciting year for IRAS and its taxpayers. Our commitment to providing an even higher level of quality service is the driving force behind the organisational restructuring and implementation of a new computer system. Taxpayers will reap the benefits of our efforts in these areas through an ever-closer partnership as we continue to build the nation together. Organisational Restructuring On 26 April 2004, we moved to a new organisation structure, with each division overseeing a tax-type and centralised service divisions providing bulk processing services across tax-types. This allows for better focus on taxpayers needs which differ according to tax-type and the provision of end-to-end services. There is also cost-efficiency for bulk processes which require similar competencies and skill sets and more attention devoted to compliance activities such as debt management and intelligence. The restructuring was the result of a one-year review of IRAS initiated in March The review was to meet the challenges arising from the changes made to the tax system (such as the introduction of a one-tier corporate income tax system) and to enable the organisation to achieve its medium-term strategic goal of being a more cost-effective tax administration through more customised and selfserve services. New Computer System The new computer system will enhance our communication and quality of interaction with taxpayers. Taxpayers will be able to complete a transaction or a series of transactions on a real-time basis with just one log-on, as most electronic services and applications will be provided on a 24x7 timebasis. For instance, they will be able to retrieve and submit their pre-filled income tax returns, receive their tax assessments, tax bills and instalment plans and pay their taxes, all online. This will, in effect, empower taxpayers by giving them access to their tax information and by enabling them to self-serve. Taxpayers will realise that there is no need for personal service as it is more convenient to help themselves to the electronic services provided at their fingertips. This is a major milestone in our continuous efforts to provide quality service. The computer system catering to Corporate Income Tax and Goods and Services Tax will be implemented in the third quarter of 2004, whilst that for Individual Income Tax is targeted to be put in place in the early part of The systems for Property Tax and other tax types will be rolled out thereafter in Financial Year 2003/04 was a momentous year for us not only did we clinch the prestigious Singapore Quality Award, we also made significant progress in our plans for re-organisation and implementation of a new computer system. The organisational restructuring and implementation of a new computer system are intended to bring about an even higher level of quality service for our taxpayers and to bring IRAS closer to achieving its Vision of being a partner of taxpayers in nation building.

51 LOOKING AHEAD/ HIGHLIGHTS OF TAX CHANGES Inland Revenue Authority of Singapore ANNUAL REPORT 2003 HIGHLIGHTS OF TAX CHANGES Income Tax Changes for Businesses Income Tax Changes for Individuals Income Tax Changes for Businesses, Individuals and/or Bodies of Persons Estate Duty Changes

52 Income Tax Changes for Businesses Reduction in Tax Rate for Companies The tax rate for companies will be reduced from the current 22% to 20% with effect from Year of Assessment (YA) Similarly, the withholding tax rate for payments to non-residents (other than those subjected to the final withholding tax rate of 15%) will be reduced to 20%. Full-Tax Exemption Scheme for New Companies Full-tax exemption on normal chargeable income (excluding Singapore franked dividends) up to S$100,000 will be granted to the qualifying company for any of its first three consecutive YAs which falls within YA2005 to YA2009. The first YA refers to the YA relating to the basis period during which the company is incorporated. Enhancement of Incentive Granted to Headquarters (HQ) Companies The following enhancements have been made: Companies which have been operating in Singapore for more than one year are eligible for HQ incentive under the Development and Expansion Incentive. The tax incentive period for Regional HQs award has been extended from the current three years to five years, provided the conditions specified by the Economic Development Board are met. Enhancement to Approved International Shipping Enterprise (AISE) Scheme To enhance the AISE scheme s effectiveness, the scope of the tax exemption has been expanded to include income derived by an AISE from the chartering of ships to any person other than a non-resident and an AISE. Enterprise Investment Incentive The existing scope of the Technopreneur Investment Incentive scheme has been expanded to include all forms of start-ups and the scheme has been renamed the Enterprise Investment Incentive. Concessionary Tax Treatment for Special Purpose Vehicle (SPV) in an Asset Securitisation Arrangement Concessionary tax treatment is granted to qualifying SPVs that are based in Singapore and are engaged in asset securitisation. Extension of Pioneer Incentive Period The grant of pioneer incentive period has been extended from 10 years to 15 years for new strategic activities / projects that involve substantial investments in Singapore.

53 HIGHLIGHTS OF TAX CHANGES Inland Revenue Authority of Singapore ANNUAL REPORT 2003 Tax Exemption on Payments made by Financial Institutions to Non-Residents on Over-The-Counter (OTC) Financial Derivative Contracts Payments on all OTC financial derivative contracts that are due and payable during a specified period by financial institutions other than approved derivative traders, to nonresidents (excluding permanent establishments in Singapore), are exempted from tax. Inclusion of Secondary Loans Trading as a Qualifying Activity in the Financial Sector Incentive (FSI) Scheme The existing list of qualifying activities in the FSI scheme has been expanded to include secondary loans trading and related activities. Enhancements to Tax Incentive for Futures Members of Singapore Exchange (SGX) Enhancements that have been made to the incentive are as follows: a) Lifting of Currency Restrictions The concessionary tax rate of 10% has been extended to include income from qualifying transactions in Singapore dollar derivative products. The concessionary tax rate of 5% has been extended to include income from qualifying transactions in approved new derivative products denominated in Singapore dollar. b) Extending the Incentive to Corporatised Locals The 5% concessionary tax rate has been extended to corporatised locals which are among the top 20 members (as determined by SGX in respect of the total volume of transactions, excluding trades cleared for other members) in approved new derivative products. Tax Incentive for Commodity Derivatives Trading Qualifying financial institutions and companies may enjoy a concessionary tax rate of 5% for a period not exceeding five years on income from qualifying transactions carried out with a qualifying counterparty in commodity derivatives denominated in any currency. Tax Incentive to Promote Processing Services Provided to Financial Institutions This tax incentive grants a concessionary tax rate of 5% on income derived by approved companies from the provision of qualifying high value-added processing services. Income Tax Changes for Individuals Tax Exemption for Individuals Resident in Singapore Tax exemption is granted in respect of the following: Foreign-sourced income received by resident individuals in Singapore (excluding foreign-sourced income received in Singapore through partnerships in Singapore) without any qualifying conditions. Certain specified local-sourced investment income derived by both resident and non-resident individuals. Changes to Tax Relief for CPF Top-Up There has been an increase of tax relief cap to S$7,000 for a resident individual who makes a cash top-up to his own, his parent s or his grandparent s Retirement Account(s). The scope of the tax relief has been extended to cover top-ups in cash for spouses who are above 55 years of age and whose incomes are not more than S$2,000 in the year preceding the year of top-up.

54 Income Tax Changes for Businesses, Individuals and/or Bodies of Persons Extension of Incentives currently granted on Interest derived from Qualifying Debt Securities (QDS) to cover Discount derived from such Securities The tax exemption and 10% concessionary tax rate granted to interest from QDS have been extended to cover discount income from QDS, provided the tenure of such securities is a year or less and the conditions applicable in respect of interest derived from QDS are met. Enhancement of Incentives to Promote the Asset Management Industry The following incentive schemes have been enhanced: a) Tax Exemption Scheme for Foreign Investors and Foreign Trusts To include certain items as designated investments. To include certain income as specified income. b) Designated Unit Trusts (DUT) Scheme To exclude certain income from statutory income of DUT and deem as income for certain unit holders in respect of distribution out of such income. Reduction in Rate of Tax (Final) on Royalty Payments to Non-Residents The tax on royalty payments made to non-residents has been reduced from 15% to 10%. This reduction will only apply when such royalty payments are not accrued to or derived by the non-resident from any trade, business, profession or vocation carried on or exercised by him in Singapore and not effectively connected with any permanent establishment in Singapore of the non-resident.

55 HIGHLIGHTS OF TAX CHANGES Inland Revenue Authority of Singapore ANNUAL REPORT 2003 Estate Duty Changes New Estate Duty Interest Rate Structure The interest rate structure has been revised for death occurring on or after 1 January 2005 and the changes are as follows: The interest rate payable has been reduced to 0% for the first six months from the date of death without the need to meet any conditions. The 6% per annum interest rate will only be imposed from the seventh month after the date of death to the eighteenth month and 12% per annum from the nineteenth month after the date of death to the date of the Notice of Assessment (NOA) or to the date of full payment, whichever is earlier. The Commissioner is empowered to reduce the interest rate imposed but the reduced rate should not be less than the prevailing prime rate. It is a requirement for duty to be paid within 30 days from the date of NOA. A penalty for late payment will be imposed if the executor / administrator fails to pay within the 30-day penalty-free period. Should the end of 30 days deadline fall within the six months after death, no penalty will be imposed unless the duty remain unpaid after the end of the six months. A penalty of 6% per annum of the sum outstanding will be imposed for the first month after the 30-day period, with an additional 1% added for each subsequent month, up to a maximum of 12% per annum.