Iras to reward whistleblowers on private property deals exploiting ‘99-to-1’ loophole to evade ABSD

Published Wed, Apr 26, 2023 · 07:37 PM

THE Inland Revenue Authority of Singapore (Iras) is offering a reward of up to $100,000 to whistleblowers who call out private property buyers who use the so-called “99-to-1” or similar arrangements to evade or reduce additional buyer’s stamp duty (ABSD) on their purchase.

A reward based on 15 per cent of the tax recovered – capped at $100,000 – for each case will be given to informants if the information and/or documents provided lead to tax recovery, the tax regulator told The Straits Times on Tuesday (Apr 25).

This is not the first time Iras has offered a reward for information on tax avoidance or evasion.

About 0.5 per cent of private residential properties transacted in the period from 2018 to 2021 involved 99-to-1, or similar, purchase arrangements, where the owners sold a partial interest in the home to another buyer within a short period of time, Senior Minister of State for Finance Chee Hong Tat told Parliament last Friday in response to questions by MPs on such arrangements.

The loophole enables those who already own property to reduce or avoid paying ABSD while still becoming the additional property’s co-owner and a co-applicant for a loan to finance the purchase.

Earlier in April, ST reported that Iras sent letters to some first-time buyers asking them to explain why they sold just 1 per cent of the property to a relative within a short period of time after exercising the purchase option.

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Chee added that such arrangements made up a “very small” but rising proportion of overall residential transactions in recent years.

In response to ST’s queries, Iras on Tuesday said it is unable to disclose details of these transactions as the audit is ongoing.

The taxman added that it is unable to disclose “the number of 99-to-1 transactions that it has identified, including similar arrangements, as well as the number of buyers who have been penalised, or the number of promoters/facilitators who have been referred to the relevant regulatory agencies”.

Iras said its audit will be done in phases and that it will also probe transactions after 2021.

When asked, it did not specify if decoupling arrangements will be looked into. Under this practice, a co-owner of a property would transfer his or her share to another person, enabling him or her to buy a second property without having to pay ABSD as that transaction would be deemed his or her first.

A total of 95,755 private homes (excluding executive condominiums) were transacted between 2018 and 2021, said Ms Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie.

So 0.5 per cent of that total would amount to 479 units sold under 99-to-1 deals, she added.

Property curbs such as ABSD were introduced in December 2011, with a 3 per cent duty tacked on Singaporeans’ third and subsequent property purchases. Permanent residents buying a second or subsequent residential unit had to pay ABSD of 3 per cent, while foreigners paid 10 per cent ABSD for every property.

Singaporeans now pay 17 per cent ABSD on their second residential property, and 25 per cent on third and subsequent homes. Foreigners now pay 30 per cent ABSD on property purchased.

Those who are aware of those who entered into such tax avoidance or tax evasion arrangements can write to Iras at

Reward payments are at the discretion of Iras, which said it will keep confidential the identities of informants and documents/information.

Iras added: “We understand that individuals may enter into various property purchase arrangements for different reasons, both tax- and non-tax related. Whether a case involves tax avoidance depends on the facts and circumstances surrounding the case.”

Taxpayers who wish to come forward voluntarily to disclose and make good any underpayment of taxes may do so, and Iras will, in general, look at such cases more favourably.

In cases of tax avoidance, the Commissioner of Stamp Duties will disregard or vary any tax avoidance arrangement, recover the rightful amount of stamp duty and impose a 50 per cent surcharge on the additional duty payable.

Further penalties of up to four times the outstanding amount may be imposed if the stamp duty and surcharge are not paid by the deadline, the taxman said. THE STRAITS TIMES

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