If COVID-19 has affected the business you set up, you might find it hard to pay tax. At this particular period, many businesses are finding it hard to pay their taxes due to how the pandemic affected the economy negatively.
If you are part of those struggling to pay their taxes, we are glad to inform you that the Inland Revenue Authority of Singapore (IRAS) is ready to support you during this period of hardship. IRAS is supporting both businesses and individuals through various measures that aim to alleviate cash flow problems.
Consequences of Delaying or Ignoring Your Tax Payment
Penalties can be charged to your company if you fail to pay tax at the appropriate time. You are expected to pay your taxes before the due date stated by IRAS. If you fail to pay before the due date, the following penalties could be charged to your company:
- 5% penalty can be imposed on the overdue tax.
- If the tax is still unpaid 60 days after the 5% penalty was imposed, an additional 1% penalty per month will be imposed up to a maximum of 12% of the unpaid tax.
IRAS might take the following actions to recover the taxes if they remain unpaid after imposing the aforementioned penalties:
- Appoint agents like the company’s layer, bank, or tenant to pay the unpaid amount to IRAS.
- Take legal action.
What can I Do if I am Unable to Pay My Tax on Time?
Individuals and business owners should still file returns to provide the right information to the government. Ensure that you do not ignore any payment demand or tax bills even if certain circumstances have affected you. Instead, you should contact IRAS to arrange a payment method and period that is financial comfortable for you.
You can work out a convenient payment arrangement together with IRAS. A longer instalment plan could be part of the payment arrangement if the difficult circumstances around you are justifiable. Difficult situations for businesses may include poor revenue or financial distress.
How to Arrange for a Longer Instalment Plan
Note that IRAS will only grant plans via GIRO and not via any other means. If you want to request for a longer payment plan, you need to access the e-Service on myTax Portal. From there, you should go to ‘Apply for Payment Plan’ using your SingPass, CorpPass or IRAS Unique Account (IUA).
If you have an existing GIRO account, you can easily customise your arrangement. Here is how you can customise an existing GIRO account:
- Cancel your current payment plan
- Arrange for a fresh payment plan
For those who do not have an existing GIRO account for Individual Income Tax and Property Tax, here is how you can customise the payment plan:
- Apply for GIRO payment (using DBS/POSB or OCBC) on myTax Portal
- Arrange for a fresh payment plan
For those who do not have an existing GIRO account for Corporate Income Tax and Goods and Services Tax, here are the steps to take:
- Fill the hardcopy Master GIRO form then send the form to IRAS
- Submit your payment proposal on the same day you sent the completed GIRO form to IRAS
Note that IRAS do not accept soft copy forms with e-signatures.
IRAS will review your request and give you the approval or rejection within 15 working days. Depending on the case, IRAS may ask you for more information in order to fully understand your situation.
You are expected to adhere to your new payment plan if IRAS approves it. If you do not comply to it, IRAS, may cancel the payment plan and even recoup the tax.
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