Iras to reward whistle-blowers on private property deals exploiting '99-to-1' loophole to evade ABSD - The Straits Times

SINGAPORE – The Inland Revenue Authority of Singapore (Iras) is offering a reward of up to $100,000 to whistle-blowers who call out private property buyers who use the so-called “99-to-1” or similar arrangements to evade or reduce the 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 said on Tuesday.

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, 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 after exercising the purchase option.

Mr Chee said 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 that took place 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 share to another person, enabling him to buy a second property without having to pay ABSD as that transaction would be deemed his first.

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