According to reporting by The Straits Times, the Inland Revenue Authority of Singapore (IRAS) has to date identified 279 high-income individuals who used contrived arrangements — typically routing personal earnings through private companies — to reduce their personal tax bill. Of these, 124 cases audited between 2021 and 2025 resulted in around S$49 million in additional tax being recovered.
The common pattern, as reported, involved professionals channelling the bulk of their income into a company (taxed at the 17% headline corporate rate, often lower after concessions) and then extracting the profits as tax-exempt dividends or as "shareholder loans" that never realistically got repaid. In one case cited by the newspaper, a doctor reported personal monthly salaries of S$5,000–S$6,000 while receiving over S$12 million in dividends and shareholder loans over six years. The High Court recently upheld IRAS' decision to look through such structures under Section 33 of the Income Tax Act.
It's worth being precise on the line the law draws. Tax evasion — hiding or falsifying income — is a criminal offence. Tax avoidance through artificial arrangements is not, by itself, a crime, but IRAS can disregard the structure and reassess the taxpayer as if the arrangement never existed. From Year of Assessment 2023, a 50% surcharge on the additional tax applies where a contrived scheme is found; a S$200,000 shortfall becomes S$300,000 payable. Please verify current thresholds and rules against IRAS guidance, as tax legislation and administrative practice can change.
For high-income professionals and owner-managers, the planning takeaway isn't "never incorporate". Real businesses with genuine commercial activity, staff, clients and reinvestment needs have legitimate reasons to operate through a company. The risk sits with structures that look like a business on paper but function primarily as a personal tax wrapper — no real operations, no employees, income sources unchanged from before incorporation, and profits mainly flowing back to the shareholder as "loans" or dividends.
A few reflection points we work through with clients: Does the entity have a genuine commercial purpose beyond tax? Are the fees it receives consistent with what an arm's-length party would pay for the same work? Are directors' fees, salaries and dividends set at defensible levels given actual duties performed? Are shareholder loans on real terms and actually being serviced? If several of these answers are uncomfortable, the structure is worth reviewing — ideally with a qualified tax adviser or accountant, and independently of the person who set it up, since IRAS has publicly noted that "my accountant suggested it" is not a defence and taxpayers remain responsible for their own filings.
From a broader wealth-planning angle, tax efficiency is one dimension, but it sits alongside cash flow, retirement adequacy, protection needs, business succession and estate planning. A structure that squeezes an extra few percent of tax savings but leaves the family exposed on insurance, CPF planning or succession is not a good trade — and neither is one that invites a 50% surcharge later. Financial and tax planning decisions carry trade-offs, and outcomes depend on individual circumstances.
At StickieMonies we don't provide tax or legal advice, but we do help self-employed professionals, business owners and their families join the dots between income structure, protection, retirement and legacy. If you'd like a second view on how your current setup fits into your overall plan — alongside your accountant and lawyer — we're happy to talk. The full Straits Times report is linked below.