INTERNATIONAL – In the past five years, the Inland Revenue Authority of Singapore (IRAS) has recovered more than S$3 million (US$2.2 million equivalent) in unpaid taxes and fines from 49 companies in the funeral sector. The investigation into the industry, including related services such as religious ceremonies, embalming and food catering, began in 2019.
To date, IRAS has conducted audits and investigations of 65 businesses with suspicious tax reporting and prosecuted three businesses. One of the most recent cases occurred in September, where Roland Tay, a well-known businessman from Direct Singapore Funeral Services & Embalming, was fined S$12,000 and required to pay penalties of more than S$529,000 for tax offences.
Challenges in the Funeral Industry
According to Ameera Koh, deputy director of IRAS’ investigations and forensics division, businesses in the funeral sector are often family-run and involve a lot of cash transactions. This practice, coupled with poor record-keeping and weak internal controls, can potentially lead to inaccurate tax reporting.
For example, family members who also act as accountants may result in sales and expenses not being properly recorded. In addition, payments from clients, which are often cash donations from family and friends, may not be documented.
IRAS also found that some religious service providers failed to declare income from ‘hongbao’ (respect money), which should have been recognised as employment income. Since 2019, IRAS has processed one offence case in this regard.
Digitalisation for Transparency
IRAS encourages companies in the funeral sector to switch to digital systems to improve transparency and prevent violations of the law. One successful example is Ang Yew Seng Funeral Parlour, which now uses online bank transfers and QR code payments. The company also utilises digital software to automatically generate invoices, which improves operational efficiency.
According to funeral director Ang Jia Jia, the company has also worked with a third-party accounting firm to ensure compliance with the latest financial and tax standards. ‘We want to maintain a positive business reputation in order to keep a good relationship with customers and suppliers,’ he says.
Digitalisation in the funeral industry has also been accelerated by the COVID-19 pandemic, which has forced many companies to reduce face-to-face interactions and switch to digital payment methods.
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Efforts to Increase Professionalism
The executive director of the Funeral Directors Association, Hoo Hung Chye, said that more and more companies have started to reduce the use of cash payments, following the trend of families collecting donations digitally.
While there are some unscrupulous individuals among the approximately 400 registered funeral service providers, Hoo emphasised that they do not reflect the overall service quality of the sector.
The association continues to endeavour to support funeral companies to be more professional and comply with regulatory obligations. ‘With the help of various agencies, we hope the entire industry can transform to better serve families,’ said Hoo.
With these efforts, the funeral industry in Singapore is expected to improve transparency, efficiency and professionalism in providing services to the public.
