Every year, a Singapore company finance team will catch an error in a previously filed corporate tax return, GST return or withholding tax submission. Maybe a deductible expense was missed, a non-deductible expense was claimed, a withholding obligation was overlooked, or a GST output tax was understated. The instinct is often to fix it quietly in the next return — but doing so can expose the company to penalties of up to 200% of the under-declared tax.
This is where the IRAS Voluntary Disclosure Programme (VDP) comes in. Properly used, the VDP reduces penalties significantly and shields directors and officers from prosecution. This guide explains what the VDP is, who qualifies, the reduced penalty rates, the disclosure procedure, and the most common situations in which Singapore companies use it.
What the IRAS VDP Is
The IRAS Voluntary Disclosure Programme is an administrative concession that allows taxpayers to come forward and disclose tax errors or omissions in their past filings. In exchange, IRAS imposes a lower penalty than would otherwise apply under the relevant statute (the Income Tax Act 1947, GST Act 1993, or Stamp Duties Act 1929).
The VDP applies to:
- Corporate income tax
- Individual income tax
- Goods and Services Tax (GST)
- Withholding tax
- Stamp duty
The official IRAS page on the VDP is published at iras.gov.sg under “Voluntary Disclosure of Errors”.
The Two Pillars: “Grace Period” and “Reduced Penalty”
Grace Period — No Penalty
If the disclosure is made within one year of the statutory filing deadline of the relevant return, and no IRAS audit or investigation is underway, IRAS treats it as a simple correction and imposes no penalty. Interest at the statutory rate is still payable on the unpaid tax from the original due date.
This is the most generous bucket. Encourage your finance team to surface errors quickly — not at the next audit.
Reduced Penalty — Outside the Grace Period
If the disclosure falls outside the one-year grace period, but is still voluntary (i.e. IRAS has not yet started looking), reduced penalty rates apply:
| Tax Type | Standard Penalty | VDP Penalty |
|---|---|---|
| Income tax (no fraud) | Up to 200% of tax undercharged | 5% of tax undercharged, per year of delay (commonly capped) |
| GST (Section 59(1)) | Up to 200% | 5% per year (subject to capping) |
| Withholding tax | 5% late payment penalty + 1% per month after, up to 15% | Generally similar 5% penalty with VDP relief |
| Stamp duty | Up to 4× the duty short-paid | 5% per year of delay (capped) |
The exact application is fact-specific. Engage your tax adviser to negotiate the penalty rate before submitting.
When You Don’t Qualify
The VDP is unavailable in any of the following situations:
- IRAS has commenced an audit, investigation or query on the return in question (the “no investigation” requirement)
- The disclosure relates to a fraudulent or wilful act intended to evade tax — these are dealt with under the criminal provisions of the Income Tax Act and GST Act, not the VDP
- The taxpayer has previously made a VDP disclosure on the same matter and is now trying to revisit it
- The taxpayer fails to pay the disclosed tax (and interest) within the agreed timeline
Step-by-Step: How to Make a VDP Submission
1. Diagnose the Error
Establish exactly which return is affected, the amount of tax undercharged, and the legal basis for the disclosure. For income tax, this may mean revising the Form C / Form C-S — read our guide on Form C-S vs Form C vs Form C-S Lite. For GST, you will likely need to amend the GST F5 — see our GST F5 guide.
2. Confirm No IRAS Action Is Pending
Check whether IRAS has sent any audit notice, GST audit query, transfer pricing review, or compliance letter on the affected period. If there is any active engagement on the same matter, the VDP is unavailable and a different (negotiated) approach is needed.
3. Submit Disclosure to IRAS
Submit a written disclosure to IRAS via the appropriate channel (myTax Portal for income tax and GST; email to the relevant tax branch for withholding tax or stamp duty). The disclosure should:
- Identify the taxpayer (UEN, name, contact officer)
- State the years/periods affected
- Quantify the tax undercharged, with supporting computations
- Explain the cause of the error and remedial steps
- Confirm that no IRAS audit is ongoing
- Authorise IRAS to issue revised assessments and impose the VDP penalty
4. Pay the Tax and Penalty
Once IRAS confirms the VDP application, the taxpayer must pay the under-declared tax, interest, and the reduced penalty within the timeframe IRAS specifies. Failure to pay can result in the VDP being withdrawn and full statutory penalties reinstated.
Worked Example: Forgotten Withholding Tax
BlueOcean Pte Ltd paid S$120,000 in royalties to a Korean affiliate in November 2024 but forgot to withhold the 10% tax (S$12,000) under the Singapore–Korea DTA. The error is identified in March 2026 during preparation of the YA 2025 tax return — 16 months after the original 15-day filing deadline.
- Outside the one-year grace period — reduced penalty applies, not the no-penalty bucket
- No IRAS audit is ongoing
- Company submits a VDP disclosure with the S-21 form and pays the S$12,000 withholding tax
- IRAS imposes a 5% penalty (S$600) and statutory interest from December 2024
- Total exposure: S$12,000 + S$600 + interest, compared with potentially S$1,800–S$3,600 in late payment penalties under the standard regime — and the avoidance of an IRAS investigation
For background, read our guide to Withholding Tax in Singapore.
When the VDP Is Especially Useful
- Pre-acquisition due diligence: if a target company has historical tax errors, fixing them via VDP cleans up the deal before signing — see our piece on Asset Deal vs Share Deal.
- GST registration retrospective: if a company exceeds the S$1 million threshold but registers late, voluntary GST disclosure under the VDP avoids the worst of the penalty exposure
- Transfer pricing adjustments: if a related-party transaction was mispriced, the VDP allows the company to restate prior years’ transfer prices and pay the resulting tax with reduced penalties — read our transfer pricing guide
- Director’s loan accounts: Section 162 director loan irregularities can have Section 13(1)(a) deemed-income consequences that are best cured proactively — see Section 162 Loans to Directors
- Foreign sourced income remittance: if an exempted dividend or branch profit was remitted incorrectly, the VDP can be used to regularise the tax position
Director and Officer Liability
One of the most overlooked benefits of the VDP is its impact on personal liability. The Income Tax Act and GST Act both contain offences punishable by fine and imprisonment for wilful evasion. A timely VDP disclosure is strong evidence that the taxpayer did not act fraudulently — IRAS routinely declines to prosecute when a clean VDP submission is on file. For directors, this is a powerful reason to surface errors as soon as they are discovered.
This also aligns with the directors’ duties of skill, care and diligence under Section 157 of the Companies Act — see Director Duties in Singapore: Section 157.
How Raffles Corporate Services Helps
Our tax team prepares VDP submissions across income tax, GST, withholding tax and stamp duty matters. We diagnose the error, compute the tax adjustment, draft the disclosure letter, liaise with IRAS, and coordinate payment. Where the underlying issue is structural — e.g. a transfer pricing model that no longer reflects reality, or a GST registration that should have happened earlier — we also redesign the accounting and compliance processes so the same error does not recur.
For ongoing prevention, pair the VDP with a robust corporate calendar — see our Singapore Company Compliance Calendar 2026 and GST Audit preparation guide.
— The Editorial Team, Raffles Corporate Services