By Boo Kok Chuon

Benjamin Franklin’s famous observation about death and taxes has aged rather well. For the modern Singapore SME owner, however, tax certainty increasingly comes bundled with another phenomenon: a growing architecture of digital reporting obligations that sits alongside the underlying obligation to calculate and pay the correct tax.

One such obligation is the Auto-Inclusion Scheme for Employment Income, better known as AIS.

AIS itself is not new, and I use the word “reform” in this article in a practical rather than technical sense. The five-person compulsory threshold has applied from Year of Assessment (“YA”) 2022. What deserves fresh attention is the 20 June 2025 Gazette Notice governing employment income earned in 2025, together with the overhaul of IRAS’ employment-income digital services from September 2025 and the increasingly visible enforcement consequences of missing the filing obligation.¹²

For an SME owner, the apparently simple question is:

When am I legally required to submit employment income electronically to IRAS?

The answer is more complicated than simply counting the number of conventional employees on payroll.

Start With Section 68, Not the Portal

The statutory starting point is section 68 of the Income Tax Act 1947. Section 68(2) empowers the Comptroller of Income Tax, by notice in the Gazette, to require employers to prepare and deliver a return identifying specified classes of persons employed by them and the remuneration paid or payable to those persons. Every employer caught by such a notice is bound to comply within the time stated or such extended time as the Comptroller may allow.³

The legal hierarchy matters:

Income Tax Act → Gazette Notice → administrative guidance → digital filing system.

IRAS webpages and the myTax Portal are enormously useful in explaining how the system is administered. But a portal button is not itself the source of legal power. The obligation must ultimately be traceable to legislation.

For income earned during calendar year 2025, the relevant instrument is Government Gazette No. 2365, first published on 20 June 2025. It requires returns for specified classes of persons who were employed in Singapore at any time during 2025, including full-time and part-time resident employees, certain non-resident employees, company directors, board members receiving fees, pensioners and former employees who continued receiving reportable income.⁴

The Five-Person Rule Is Not the Whole Rule

Many SME owners understand AIS in one sentence: “It applies when I have five employees.” That is incomplete.

Paragraph 4 of the 20 June 2025 Gazette catches an employer who either has, in total, five or more persons falling within the specified classes for the year ending 31 December 2025 or has received the “Notice to File Employment Income Of Employees Electronically”. Those employers must furnish the completed and correct return electronically and be registered for AIS.⁵

Paragraph 5 then creates another route into electronic filing. An employer outside paragraph 4, but already registered for AIS on or before 1 March 2026 and still registered on that date, must likewise furnish the return electronically. Paragraph 6 deals separately with employers outside paragraphs 4 and 5, requiring one copy of the prescribed form to be completed and given to the relevant person.⁶

The framework is therefore closer to this:

• Five or more relevant persons: compulsory electronic filing.
• Fewer than five, but specifically notified by IRAS: compulsory electronic filing can still arise.
• Fewer than five, but already in AIS: the obligation can continue.

IRAS itself states that once an employer is registered for AIS, participation is continuous even if the number of employees later falls below five.⁷

So a three-person company cannot safely count to three and stop thinking.

The Director Trap: “But We Do Not Have Five Employees”

There is another reason ordinary headcount can mislead.

In many areas of law, “employment” naturally directs attention to a contract of service. A director, shareholder and employee are not automatically the same legal creature. The contrast between the major employment-related statutes is particularly instructive. Section 2 of the Employment Act 1968 defines an “employee” as a person who has entered into or works under a contract of service with an employer. Section 2 of the Central Provident Fund Act 1953 similarly defines “employed” by reference principally to engagement under a contract of service or apprenticeship, while also extending the definition to employment in respect of which contributions are payable under regulations made under that Act. Both therefore begin with the contract-of-service relationship as the core concept.^8A

The Income Tax Act 1947 deliberately takes a broader course. Its own section 2 expressly provides that, in relation to a company, “employee” includes a director of the company, and requires “employer” and other cognate expressions to be construed accordingly.^8B A director who would not ordinarily be characterised as an employee under a contract-of-service analysis can therefore still be brought within the income-tax meaning of “employee” by express statutory inclusion. Section 68 then goes further for the particular employer-reporting regime by containing an additional deeming provision.

Section 68(3) states that, where the employer is a company or body of persons, the manager or principal officer is deemed to be the employer for the purposes of the section, and any director of a company, or person engaged in its management, is deemed to be a person employed.⁸ Paragraph 9 of the 2025 Gazette repeats the same point.⁹

This is a statutory fiction. Parliament has deliberately told us to treat certain persons as employed for section 68 even if another statutory regime might characterise their relationship differently.

Practical lesson: do not count only the names appearing in your payroll software. Check directors, persons engaged in management, board members receiving fees and other classes listed in the Gazette.

Fewer Than Five, Yet IRAS Says You Must File: Why?

This is probably the least intuitive part of the framework.

Suppose ABC Pte. Ltd. has only three relevant persons. It has never knowingly joined AIS. It does not satisfy the obvious numerical threshold. Yet it receives a Notice to File Employment Income Of Employees Electronically.

Paragraph 4 expressly contemplates this. Receipt of the specified notice is an alternative limb to the five-person threshold.¹⁰

What the published materials do not clearly explain is the detailed administrative methodology by which every sub-five employer is selected. IRAS states that employers identified to join AIS will receive a notification letter, but the cited public guidance does not set out a comprehensive selection matrix for such employers.¹¹

That does not mean the Comptroller lacks power to issue the notice. Section 68(2) is broad, and the Gazette itself expressly contemplates specifically notified employers. But an SME owner faced with such a notice is entitled to ask sensible questions:

• Was the company already registered for AIS?
• Did IRAS believe there were five or more relevant persons?
• Was a specific electronic-filing notice actually issued?
• When was it issued?
• Where can the company retrieve it?
• If the company disputes the factual basis, what information did IRAS rely upon?

Those are not acts of rebellion. Before deciding whether someone has breached an obligation, one should first identify the obligation.

This point became even more important after the September 2025 myTax Portal enhancements. IRAS states that more employer documents, including notices, acknowledgements, registration confirmations and correspondence, became available through View Notices under the Inbox.¹³

An SME’s notification arrangements can be fragile. The email address may belong to a former employee. An external accountant may have been the historical contact. A director may have changed. A notification may have gone to junk mail. None of those facts necessarily proves that no digital notice exists.

When an enforcement issue appears, establish the documentary position before taking one.

The Curious Case of the Nil Return

Now we reach the part that deserves particularly careful legal reading.

Section 68(2A) states, in remarkably direct language:

“It is not necessary to deliver nil returns under subsection (2).”

That is primary legislation.¹⁴

IRAS’ current user guide for the Submit Employment Income Records digital service, however, tells AIS employers that those with no employment-income records for the year are required to submit a nil return and directs them to select “Submit NIL Return”.¹⁵

At first glance, there is an apparent tension.

Imagine XYZ Pte. Ltd. is registered for AIS. During the relevant year nobody receives salary, directors’ fees, benefits, stock-option gains or any other reportable employment income. IRAS’ filing system says: submit nil. Section 68(2A) says: it is unnecessary to deliver nil returns under subsection (2).

How should the two propositions be reconciled?

I would resist the temptation to declare from an armchair that IRAS’ administrative position is unlawful. Tax legislation often operates through interlocking provisions, subsidiary instruments and administrative machinery, and there may be a construction that reconciles the two. But the question is legitimate. An administrative user guide cannot simply be presumed to have greater normative force than an express provision of the parent Act.

The proper question is therefore:

What is the precise legal basis for requiring a nil electronic AIS submission notwithstanding section 68(2A)?

Prudent businesses should be very cautious about deliberately refusing to make an electronic nil submission merely to manufacture a test case. There are cheaper hobbies. But practitioners should recognise the interpretive issue rather than pretend it does not exist.

AIS and the Ordinary IR8A Obligation Are Not the Same Thing

Paragraph 6 of the Gazette is important because it demonstrates that employer reporting obligations and compulsory AIS electronic filing are not identical concepts.

Employers outside paragraphs 4 and 5 are required to complete one copy of the prescribed form and give it to the relevant person. IRAS likewise states that employers are required by law under section 68(2) to prepare Form IR8A and the applicable appendices for employees employed in Singapore by 1 March of the following year.¹⁶

An employer should therefore avoid both extremes:

“I have fewer than five employees, therefore I have no employment-income reporting obligations.”

and

“I have a director, therefore every company automatically has to upload everything through AIS.”

Neither proposition accurately captures the statutory structure.

“But My Employees Already Declared Their Salaries”

This is perhaps the most understandable misconception among small businesses.

Imagine a company employing two people. Both receive their salaries, file their personal income tax returns and accurately disclose every dollar. IRAS knows the income and assesses them accordingly. The company nevertheless fails to make the separate AIS submission.

Does the employees’ personal filing automatically cure the employer’s omission? Generally, no. AIS is designed so that the employer transmits employment-income information directly to IRAS and the information can be auto-included in the employee’s tax return.¹⁷

But the fact that the income was fully disclosed can still matter in another sense.

There is an obvious difference between an employer that hides remuneration so income disappears from both employer reporting and personal returns, and an employer whose staff transparently declared every dollar but whose employer-side electronic filing was omitted.

Both situations may involve a reporting default. That does not mean their revenue consequences, culpability and appropriate enforcement response must necessarily be treated as morally or administratively identical.

A representation to IRAS should therefore distinguish between concealment of income and failure to comply with a parallel reporting mechanism where the underlying income was nevertheless transparently reported. The latter is not automatically a defence. It is, however, a fact worth putting squarely on the record.

When an AIS Default Acquires Teeth

The 2025 Gazette required the relevant returns to be furnished by 1 March 2026 and expressly warned of conviction and a fine not exceeding $5,000, with default imprisonment, under section 94 of the Income Tax Act.¹⁸

This is not merely theoretical. IRAS reported that more than 12,000 employers missed the AIS deadline in 2025, affecting more than 160,000 employees, and that 1,207 repeat offenders were prosecuted with penalties exceeding $1 million.¹⁹

Section 94 itself provides the general offence and penalty framework, permits the Comptroller to compound offences under that section, and contains an important service rule: except for a Gazette notice under section 68(2), prosecution for failure to comply with the terms of a notice generally requires personal or registered-post service.²⁰

That statutory exception is worth noticing. A taxpayer cannot simply say, “Nobody personally handed me the annual section 68 Gazette notice.” Parliament has expressly dealt with that proposition. Different questions may nevertheless arise where IRAS relies on an employer-specific notice as the factual route by which a sub-five employer was brought into paragraph 4.

For the SME owner, the correct response to an enforcement notice is neither panic nor indignation. It is reconstruction.

• What exactly was the obligation?
• How did the company become an AIS employer?
• Who were the relevant persons?
• What remuneration was paid?
• Was a specific AIS notice issued?
• Was it sitting in myTax Portal?
• Was the company already registered?
• What has already been reported by the individuals?
• What can be regularised immediately?

Then regularise whatever is properly outstanding as quickly as possible.

This is where ordinary corporate compliance begins to overlap with litigation discipline. If the matter later reaches an enforcement officer, prosecutor or court, the file should already contain a chronology showing what happened, when management became aware, what was done immediately afterwards and what obstacles, if any, prevented completion.

Screenshots matter. Acknowledgements matter. Copies of notices matter. Payment attempts matter. Dates matter.

A compliance file should be maintained as though one day somebody may have to explain it to a judge.

A Notice Is Not Necessarily a Summons

Once an administrative filing default starts producing references to court, another distinction becomes important.

The Income Tax Act contains a specific provision governing service of court summonses. For a company, section 102 permits service by delivering the summons to the secretary or like officer at its registered office or principal place of business, or by registered post addressed to the company there.²¹

Since 1 January 2024, section 102A also allows the Comptroller, for qualifying offences, to serve a written notice to attend court in lieu of applying to a court for a summons. Such a notice is served in the manner provided by section 102, and the Income Tax (Notice to Attend Court) Rules 2023 prescribe the information that the notice must contain.²²

The practical lesson is simple. If a company faces prosecution and management says, “We never received any summons,” do not argue from memory. Obtain the actual document and the service record. Determine whether the prosecution relies upon a court summons, a statutory notice to attend court or some other correspondence. Similar subject matter does not make every document legally interchangeable.

A Practical AIS Decision Tree for SMEs

Step 1: Did the company have five or more relevant persons?

Remember that the section 68 population may include directors and persons engaged in management, not merely conventional payroll employees.

Step 2: If fewer than five, did IRAS issue the specific “Notice to File Employment Income Of Employees Electronically”?

Do not answer merely by searching somebody’s email. Check myTax Portal directly.

Step 3: If no specific notice is found, was the company already registered for AIS?

Existing participation can continue despite headcount falling below five.

Step 4: If none of the above applies, examine the ordinary employer reporting regime.

Being outside compulsory AIS does not necessarily mean being free from IR8A obligations.

Step 5: If nobody received reportable remuneration, examine the nil-return issue carefully.

Section 68(2A) should not be ignored simply because the software contains a “Submit NIL Return” button.

When Should an SME Question IRAS?

There is a tendency to treat two propositions as opposites:

A responsible taxpayer complies.

and

A responsible taxpayer questions the Revenue Authority.

They are not opposites.

A company can comply promptly while still asking the authority to identify the statutory foundation of its demand. Legitimate questions may arise where the company falls below the apparent threshold, the employer-specific notice cannot be located, the company appears never to have been registered, IRAS’ headcount seems factually wrong, there was genuinely no reportable remuneration, administrative guidance appears difficult to reconcile with the Act, or enforcement has progressed despite immediate regularisation.

The appropriate opening salvo is usually not an angry cease-and-desist letter. It is something much more useful:

Please identify the statutory basis, relevant notice and factual basis upon which the company is regarded as subject to this requirement.

Sometimes IRAS will have a perfectly good answer. If so, comply.

Sometimes management will discover an old digital notice that everybody overlooked. If so, comply and improve the internal control.

And sometimes the answer may reveal that the factual or legal premise deserves another look.

That is why we ask.

The Bigger Policy Question: Digitalisation or Administrative Outsourcing?

AIS is part of a wider movement in Singapore tax administration. From September 2025, IRAS refreshed the employment-income digital services with year-round AIS registration, more data pre-filling, extended back-year filing, additional amendment methods and greater availability of notices and correspondence through the portal.²³

The same direction is visible in GST. The GST InvoiceNow Requirement began mandatory implementation for certain newly incorporated voluntary GST registrants from 1 November 2025, expanded to all new voluntary GST registrants from 1 April 2026 and is now scheduled to extend progressively to other GST-registered businesses.²⁴

From the State’s perspective, the logic is understandable. Better structured data can improve accuracy, facilitate pre-filling, reduce manual reconciliation and allow anomalies to be detected earlier.

But digitalisation also changes where administrative work sits.

For a multinational company, a new tax-reporting requirement may become an ERP integration project handled by finance, payroll, tax, IT and external advisers.

For a small SME, those departments may consist of one director, an accountant and whichever unfortunate soul still remembers the Corppass authorisations.

The policy question is therefore not whether digitalisation is good or bad. That is too crude. The better question is:

Does digitalisation reduce the total cost of compliance, or merely transfer administrative work from the State to businesses while making failures easier to detect and punish?

A mature enforcement system should also be capable of distinguishing between revenue leakage and administrative imperfection. An employer deliberately hiding substantial remuneration presents one problem. A tiny company whose employees transparently declared every dollar, but whose management failed to understand a parallel employer-side electronic filing obligation, presents another.

The law may regulate both. Proportionality should still be capable of seeing the difference.

Final Word: “IRAS Requires It” Is Not Legal Analysis

Nothing in this article should be read as encouragement to ignore AIS. If the law requires your company to file, file. Non-compliance can become a criminal enforcement matter.

But compliance should be informed rather than superstitious.

When confronted with an AIS issue, ask:

• What does section 68 require?
• What does the applicable Gazette require?
• Which category does the company fall into?
• Was a specific notice issued?
• Is the company already registered?
• Who counts as a relevant person?
• What remuneration was actually paid?
• What has already been reported?
• And what is sitting inside myTax Portal that nobody thought to check?

That last question may save an SME owner considerably more trouble than searching an email inbox for a letter that was never going to arrive there.

Tax compliance should not operate by incantation. “IRAS requires it” is a conclusion, not the legal analysis that produces the conclusion. A taxpayer is entitled to understand the law governing an obligation just as the Revenue Authority is entitled to expect compliance once that obligation is properly established.

Franklin was probably right that death and taxes are unavoidable.

But even certainty does not dispense with statutory authority.

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Footnotes and Sources

1. IRAS, Join the Auto-Inclusion Scheme (AIS) for Employment Income. IRAS states that from YA 2022 employers with five or more employees must register, and participation remains continuous after registration. ↩
2. IRAS, Key enhancements to myTax Portal, including employer-side changes available from 15 September 2025. ↩
3. Income Tax Act 1947, s 68(2), Singapore Statutes Online. ↩
4. Government Gazette No. 2365, Income Tax Act 1947, s 68(2), Notice to Employers, first published 20 June 2025, paras 1–3. ↩
5. Ibid, para 4. ↩
6. Ibid, paras 5–6. ↩
7. IRAS, Join the Auto-Inclusion Scheme (AIS) for Employment Income. ↩
8. Income Tax Act 1947, s 68(3), Singapore Statutes Online. ↩
9. Employment Act 1968, s 2, definitions of “contract of service” and “employee”, Singapore Statutes Online; Central Provident Fund Act 1953, s 2, definitions of “employed” and “employee”, Singapore Statutes Online. ↩
10. Income Tax Act 1947, s 2, definition of “employee”, which in relation to a company expressly includes a director and provides that “employer” and other cognate expressions are to be construed accordingly, Singapore Statutes Online. ↩
11. Government Gazette No. 2365, above n 4, para 9. ↩
12. Ibid, para 4. ↩
13. IRAS, Join the Auto-Inclusion Scheme (AIS) for Employment Income. The page states that employers identified by IRAS to join AIS will receive notification; the cited public page does not set out a detailed sub-five selection methodology. ↩
14. IRAS, IRAS Digital Notices; myTax Portal, digital notice information. ↩
15. IRAS, Key enhancements to myTax Portal, Employers section. ↩
16. Income Tax Act 1947, s 68(2A), Singapore Statutes Online. ↩
17. IRAS, Submit Employment Income Records Digital Service User Guide, stating that employers with no employment income records for the year are required to submit a nil return. ↩
18. Government Gazette No. 2365, above n 4, para 6 and para 11; IRAS, Reporting Employee Earnings (IR8A, Appendix 8A, Appendix 8B). ↩
19. IRAS, Auto-Inclusion Scheme for Employment Income; see also IRAS, Individuals required to file tax on auto-included employment income. ↩
20. Government Gazette No. 2365, above n 4, para 7. ↩
21. IRAS, 123,000 AIS Employers to Submit Employees’ Employment Income Data by 1 Mar 2026, 13 February 2026. ↩
22. Income Tax Act 1947, s 94, Singapore Statutes Online, especially ss 94(2), 94(3) and 94(6). ↩
23. Income Tax Act 1947, s 102, Singapore Statutes Online. ↩
24. Income Tax Act 1947, s 102A, Singapore Statutes Online; Income Tax (Notice to Attend Court) Rules 2023, r 2, Singapore Statutes Online. ↩
25. IRAS, Key enhancements to myTax Portal. ↩
26. IRAS, GST InvoiceNow Requirement. ↩

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This article is intended for general information and discussion only and does not constitute legal or tax advice. The applicable Gazette notice, AIS registration history, remuneration records and any notices issued by IRAS should be examined in each individual case. The law and IRAS administrative practices may change after publication.