Singapore Tax Authority Catches 279 High-Income Earners in Avoidance Crackdown

Singapore’s Inland Revenue Authority (IRAS) has caught 279 high-income earners using corporate structures and sham arrangements to dodge personal income tax. From 2021 to 2025, IRAS probed 124 cases and clawed back S$49 million in additional tax. A High Court ruling this week upheld IRAS’s power to disregard these schemes under Section 33 of the Income Tax Act, sending shockwaves through Singapore’s high-earning professionals who believed they had found legal loopholes.

How the tax avoidance scheme worked

High-income earners set up private companies to receive their income, then paid themselves low salaries of S$5,000 to S$6,000 monthly. Companies pay corporate tax at 17 per cent on profits. Owners then extracted profits as tax-exempt dividends or interest-free shareholder loans, avoiding the 24 per cent personal income tax bracket for earnings above S$1 million. One doctor earned over S$2 million annually but reported monthly salaries of only S$5,000 to S$6,000.

IRAS deploys Section 33 to block arrangements

The Income Tax Act’s Section 33 empowers IRAS to disregard or vary any contrived arrangement created mainly to avoid tax. A High Court ruling upheld IRAS’s decision to levy additional taxes on three doctors who challenged the authority’s assessment. The doctor in question faced over S$400,000 in annual taxes instead of less than S$3,000 on declared salary alone.

Scale of the crackdown

IRAS has caught 279 high-income earners to date for using sham arrangements. Of 124 cases probed from 2021 to 2025, nearly all involved extracting profits as tax-exempt dividends or interest-free shareholder loans. The authority clawed back S$49 million in additional tax from these cases. Companies enjoy various tax concessions to spur growth and entrepreneurship, but IRAS found that errant taxpayers used these structures purely to channel funds to themselves rather than expand business or hire employees.

What this means for high earners

The High Court ruling signals that IRAS will aggressively pursue similar arrangements. Professionals earning above S$1 million face the 24 per cent personal tax rate, while corporate profits are taxed at only 17 per cent. However, Section 33 allows IRAS to ignore the corporate structure entirely and tax income at personal rates if the arrangement lacks genuine business purpose. High-income earners can no longer rely on dividend and shareholder loan strategies to reduce their tax bills.

Final Thoughts

IRAS’s crackdown and the High Court’s backing of Section 33 have closed a major loophole for Singapore’s high earners. The S$49 million clawed back from 124 cases signals the authority’s commitment to enforcing genuine tax obligations on income above S$1 million.

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