IRAS Secure First Convictions for False Information in Stamp Duty Audit

by | Mar 4, 2025 | Accounting, Stamp Duties, Tech News

The Inland Revenue Authority of Singapore (IRAS) has secured its first criminal convictions under Section 65(2) of the Stamp Duties Act 1929 for the provision of false and misleading information during a stamp duty audit. Two individuals, a mother and son, were sentenced to two weeks’ imprisonment each for their roles in obstructing an investigation into a “99-to-1” residential property transaction.

Case Details:

  • Offense: Providing false/misleading information to IRAS officers during a stamp duty audit.
  • Legal Basis: Convicted under Section 65(2) of the Stamp Duties Act 1929.
  • Transaction Under Scrutiny: A “two-step 99-to-1” property purchase arrangement.
  • Sentence: Two weeks’ imprisonment for each individual.

Understanding “99-to-1” Transactions:
This transaction structure typically involves:

  1. An individual without existing property ownership purchases a residential property solely in their name.
  2. Within a very short timeframe (often immediately after), this individual sells a small share (typically 1%) of the property to another party, who would otherwise be liable for a higher rate of Additional Buyer’s Stamp Duty (ABSD) if purchasing outright.
  3. The ABSD liability is calculated only on the 1% share transferred in the second step, potentially resulting in significant duty avoidance compared to a direct joint purchase by the second buyer.

IRAS Stance on Tax Avoidance:

  • IRAS assesses whether such “99-to-1” arrangements constitute tax avoidance based on the specific facts and circumstances.
  • Consequences of Tax Avoidance Determination: If IRAS determines an arrangement is tax avoidance:
    • The full stamp duty avoided (including ABSD) will be recovered from the buyers.
    • A surcharge of 50% of the additional duty payable may be imposed.
  • Audit Timeframe: IRAS emphasizes there is no statutory time limit for conducting stamp duty audits, allowing investigations into historical transactions where necessary.

This landmark conviction underscores IRAS’s commitment to rigorous enforcement of stamp duty regulations. The authority explicitly warns taxpayers and advisors against participating in schemes designed to circumvent stamp duty liabilities and stresses the severe consequences, including criminal prosecution and imprisonment, for providing false information during audits.

Source: IRAS, 28 February 2025.