IRAS Focus 2026: The New Penalties for GST Non-Compliance in Insolvency

GST compliance does not stop when a company runs into financial difficulty.

If a GST-registered company enters liquidation, both the company and the liquidator continue to have filing, payment, cancellation and record-keeping obligations.

IRAS has dedicated guidance for GST-registered companies under liquidation, including who must file returns before and after the liquidation date and what the liquidator must do before the company is dissolved.

There is also no separate “2026 insolvency penalty regime” that replaces the ordinary GST framework.

Instead, existing rules on late filing, late payment, incorrect returns, voluntary disclosure and tax evasion continue to apply.

For companies already under financial pressure, that distinction matters. A missed GST return, unpaid tax or historical reporting error can create additional liabilities at a time when available cash is already limited.

Are There New GST Penalties Specifically for Insolvent Companies in 2026?

Current IRAS guidance does not establish a separate GST penalty framework that applies only because a company is insolvent or in liquidation.

Instead, different consequences arise depending on the type of non-compliance:

• late filing of GST returns;
• late or non-payment of GST;
• incorrect GST returns;
• historical errors that are voluntarily corrected; or
• deliberate tax evasion or fraud.

The company’s insolvency does not remove these obligations.

Once liquidation begins, the liquidator also takes on specific GST responsibilities for accounting periods from the liquidation date onward.

Four GST Compliance Risks to Keep Separate

1. Late Filing

A GST-registered business must continue filing its required returns even if:

• business activity has slowed;
• no GST is payable;
• operations have ceased temporarily; or
• the company is experiencing financial distress.

Where a return is not filed, IRAS may issue an estimated assessment and impose penalties.

Even businesses with no activity must file a nil return unless GST registration has been cancelled.

IRAS provides separate guidance on late filing or non-filing of GST returns.

2. Late Payment

GST is generally payable within one month after the end of the accounting period covered by the return.

If payment is late, IRAS imposes a 5% late-payment penalty.

If the tax remains unpaid 60 days after the 5% penalty is imposed, an additional 2% per month may be imposed for each month the tax remains unpaid, subject to a maximum additional penalty of 50% of the unpaid tax.

3. Incorrect GST Returns

A return may have been filed on time but still be incorrect.

Examples can include:

• under-declared output tax;
• excessive input tax claims;
• incorrect treatment of taxable supplies;
• omitted transactions; or
• errors carried forward across several accounting periods.

IRAS states that businesses submitting incorrect GST returns may face penalties of up to 200% of the tax undercharged or over-claimed, depending on the circumstances.

4. Deliberate Evasion or Fraud

Deliberate tax evasion is treated much more seriously than an ordinary reporting error.

For offences involving wilful intent to evade tax, penalties can reach up to 400% of the tax undercharged, together with possible fines and imprisonment.

GST Penalties at a Glance

The important point is that these are different compliance failures with different consequences.

A company should therefore identify whether its issue is filing, payment, reporting accuracy or deliberate conduct before assessing the exposure.

What Happens to GST When a Company Enters Liquidation?

IRAS divides GST responsibilities between the company and the liquidator.

Before the Liquidation Date

The company is responsible for filing GST returns covering accounting periods up to one day before the date of liquidation.

IRAS requires these return(s) to be filed within one month of the liquidation date.

From the Liquidation Date Onward

The liquidator becomes responsible for filing GST returns for accounting periods beginning from the liquidation date.

Those returns are generally due within one month after the end of each relevant accounting period.

The liquidator must also ensure the company’s tax affairs are properly administered throughout the winding-up process.

What Are the Liquidator’s GST Responsibilities?

IRAS specifically requires a liquidator to deal with a number of GST-related matters during the winding up.

These include:

• filing the notice of appointment with ACRA;
• establishing the required Corppass access;
• filing GST returns after the liquidation date;
• paying tax arising from the liquidation period;
• applying for GST deregistration after business cessation; and
• retaining the required records after dissolution.

The ACRA filing also updates IRAS once the liquidator’s appointment has been lodged.

Who Pays GST That Arose Before Liquidation?

Pre-Liquidation GST

The company is required to deal with GST liabilities arising before liquidation.

If a GIRO arrangement is already in place, IRAS instructs the company to terminate it with the bank.

GST Arising During Liquidation

The liquidator is responsible for settling GST arising from the date of liquidation onward.

The liquidator may establish a new GIRO arrangement or use other available payment methods.

This timing distinction should be documented carefully because it determines which liabilities belong to the pre-liquidation period and which arise during the liquidation itself.

GST on Asset Sales During Liquidation

Liquidation often involves selling:

• equipment;
• machinery;
• stock;
• furniture;
• commercial property; or
• other business assets.

Those transactions can still create GST consequences.

Where GST is chargeable on an asset disposal, the liquidator must account for it in the relevant GST return.

This is especially important because asset sales are often one of the main sources of cash available during a winding up.

Can the Liquidator Claim Input Tax on Winding-Up Expenses?

Potentially, yes.

IRAS states that input tax may be claimed on winding-up expenses such as:

• legal fees;
• liquidation fees;
• office rental; and
• utilities,

where those expenses are directly attributable to taxable supplies.

Where an expense relates partly to taxable and partly to exempt supplies, input tax may need to be apportioned.

When Must GST Registration Be Cancelled?

The liquidator must apply to cancel the company’s GST registration within 30 days after the business has ceased.

After IRAS approves the cancellation, the liquidator must:

• file the final GST F8;
• file any other outstanding GST returns;
• make the required final payments; and
• account for GST on relevant business assets where input tax was previously claimed.

GST deregistration should therefore be treated as part of the formal winding-up process rather than an administrative afterthought.

Can Historical GST Errors Still Be Corrected?

Yes, subject to the applicable time limits.

IRAS states that errors in previously filed GST F5, F7 or F8 returns should generally be corrected using GST F7.

Businesses should correct errors as soon as they are identified.

IRAS currently states that errors must generally be corrected within five years from the end of the relevant GST accounting period.

A GST F7 requested through myTax Portal must generally be filed within 14 days from the date of request.

For a company approaching restructuring or liquidation, a historical GST review can therefore be important before the company’s records and responsibilities pass fully into the insolvency process.

How Does the Voluntary Disclosure Programme Work?

IRAS’s Voluntary Disclosure Programme (VDP) encourages taxpayers to come forward and correct earlier errors.

For GST, a disclosure is generally made by requesting GST F7 electronically through myTax Portal and filing the form within the required timeframe.

Where the qualifying conditions are satisfied, reduced penalty treatment may apply.

For example, certain qualifying GST errors voluntarily corrected within the applicable grace period may receive more favourable penalty treatment.

Timing Matters

The disclosure must genuinely qualify as voluntary.

A company should therefore not assume that it can wait until an IRAS audit or investigation has begun and still receive the same treatment.

Where errors are discovered during an internal review before restructuring or liquidation, they should be assessed promptly.

Does Insolvency Protect a Company From GST Penalties?

No.

Financial distress does not automatically excuse:

• late filing;
• late payment;
• incorrect returns; or
• previous GST errors.

Likewise, entering liquidation does not erase historical GST liabilities.

Instead, the tax position becomes part of the company’s wider insolvency administration.

That is why directors considering Corporate Restructuring should include tax compliance in the financial review rather than treating it as a separate issue to be dealt with later.

How Do Tax Claims Rank in a Liquidation?

Tax liabilities should not be described simply as “paid first.”

Singapore’s Insolvency, Restructuring and Dissolution Act sets a detailed statutory priority of debts in liquidation.

Section 203 gives priority to specified categories of unsecured debt in a defined order.

Winding-up costs and expenses rank ahead of several employee-related claims and other preferential debts.

The practical point is that management and liquidators should not choose to pay IRAS ahead of other creditors merely because a tax debt exists.

Distributions must follow the statutory insolvency priority framework.

Secured creditor rights may also operate separately depending on the security held.

GST Filing vs. GST Payment During Financial Distress

A company that cannot pay GST should still distinguish between:

• filing the return correctly and on time; and
• being unable to make the payment.

Failing to file can create additional problems such as estimated assessments.

IRAS may raise an estimated Notice of Assessment where a GST return is not filed.

This means a cash-flow problem should not automatically become a filing-compliance problem as well.

Does Filing an Objection Stop GST From Being Payable?

Generally, taxpayers should not assume that challenging an assessment automatically suspends payment obligations.

Where a company disputes an IRAS assessment, it should review the specific assessment, payment deadline and available objection procedures rather than simply withholding payment.

For a company already facing creditor pressure, this should be incorporated into its broader cash-flow planning.

What Records Must Be Preserved During Liquidation?

Accurate records are especially important once a company enters liquidation.

The liquidator needs enough information to:

• prepare GST returns;
• substantiate output tax;
• support input tax claims;
• review historical transactions;
• account for asset sales;
• respond to IRAS queries; and
• complete GST deregistration.

IRAS requires the liquidator to retain company records for five years from dissolution.

Relevant records may include:

• tax invoices;
• sales records;
• purchase invoices;
• bank statements;
• contracts;
• asset registers;
• GST workings;
• prior GST returns; and
• documentation supporting input tax claims.

Practical GST Checklist Before and During Liquidation

Before Liquidation

• Are all GST F5 returns filed?
• Are any filing periods outstanding?
• Are there unpaid GST liabilities?
• Are there estimated assessments?
• Have historical GST errors been identified?
• Does any error qualify for voluntary disclosure?
• Are records complete and accessible?
• Are asset disposals planned?
• Is the company still making taxable supplies?

At the Liquidation Date

• Confirm the exact liquidation date.
• Confirm the final accounting period ending one day before liquidation.
• Confirm responsibility for filing that return.
• Identify outstanding pre-liquidation GST.
• Review existing GIRO arrangements.
• Confirm Corppass access requirements.

During Liquidation

• Monitor post-liquidation GST returns.
• Account for GST on asset sales.
• Review input tax on winding-up expenses.
• Respond to outstanding IRAS correspondence.
• Monitor payment obligations.
• Preserve records required for audit or review.
• Track the timing of GST deregistration.

Before Dissolution

• Confirm all GST returns have been filed.
• Confirm outstanding tax has been addressed.
• Submit GST cancellation.
• File the final GST F8.
• Account correctly for relevant business assets.
• Preserve records for the required period.

When Should a Company Seek GST Advice During Insolvency?

Directors or liquidators should consider obtaining specialised advice where:

• several GST periods remain outstanding;
• IRAS has issued estimated assessments;
• historical reporting errors are identified;
• significant input tax claims may be incorrect;
• major asset disposals are planned;
• the company is under audit or investigation;
• a voluntary disclosure is being considered;
• fraud or deliberate conduct may be involved; or
• it is unclear whether liabilities arose before or after liquidation.

The aim is not simply to minimise penalties.

It is to establish the correct GST position before limited company assets are distributed.

Frequently Asked Questions