Business in Singapore: Late Payment or Non-Payment of Taxes

In Singapore, most taxpayers pay their taxes on time. However, to ensure that all businesses are in compliance with paying taxes, there are penalties for the businesses if their taxes amount is not paid on time.

Late Payment Penalty

You have one month from the date of receiving the Notice of Assessment (NOA) to pay your taxes.

You are still required to pay the tax assessed as shown on the NOA by the payment due date even if you have filed an objection and are awaiting the outcome. If the assessment is subsequently revised, any excess payment will be refunded.

If payment is not received by the due date, a 5% penalty and subsequently an additional 1% penalty will be imposed for every completed month (up to a maximum of 12% of the tax outstanding).

Late Payment Penalty Letter

In case you are not pay taxes on time, you will receive a letter that informed you of the 5% penalty. Payment must be made by the due date stated on the letter to avoid further enforcement actions from IRAS.

GIRO Cancellation or Termination

If the deduction through GIRO is unsuccessful due to reasons such as insufficient funds in the bank account, or the deduction amount is higher than the limit set, etc., IRAS will cancel the GIRO plan.

A late payment penalty letter and a GIRO cancellation letter will be issued to inform you that the GIRO plan has been cancelled.

Imposition of Additional Penalty

If the tax remain unpaid 60 days after the imposition of the 5% penalty, you will get additional penalties of 1% per month. The 1% penalty will be imposed for each completed month that the tax remains unpaid, up to a maximum of 12% of the tax outstanding (inclusive of the 5% late payment penalty).

Further Enforcement Actions

If the tax continues to remain unpaid, other actions to recover the taxes may include:

  • Appointing agents like your bank, employer, tenant or lawyer to pay the moneys to IRAS;
  • Issuing a Travel Restriction Order (TRO) to stop you from leaving Singapore; and/or
  • Taking legal action.

In addition to the recovery actions, IRAS may concurrently impose an additional 1% penalty on the overdue tax for each completed month that the tax remains unpaid, up to a maximum of 12% of the tax outstanding.

Releasing Appointed Agents

Agents will only be released from the appointment after the tax and penalties have been paid, or when payment has been arranged with IRAS.

Note:
For banks appointed as agents, requests for release cannot be processed on Saturdays, Sundays and Public Holidays. Any request for release of bank after 2pm on weekdays can only be processed on the next working day.

Travel Restrictions

If a Travel Restriction Order (TRO) is issued, you will be stopped from leaving Singapore at the Immigration exit checkpoints.

The TRO will be withdrawn upon full payment of the tax due. To do so, you are required to produce the proof of payment to the Immigration & Checkpoints Authority (ICA) officer. It is your responsibility to ensure that you have a valid pass to remain in Singapore. If extension of time is required to resolve your tax matters with IRAS, please approach the ICA to extend your stay in Singapore.

Please note that IRAS is unable to withdraw the TRO on weekends and Public Holidays.

Checking Tax Balance and Making Payment

Please log in to myTax Portal and select “View Account Summary” to check your current balance.

Please refer to Income Tax Payments for the various payment modes available.

Appeal for Late Payment Penalty Waiver

Appeals have to be made online via myTax Portal and will only be considered if the following conditions are met:

  1. You have paid the overdue tax in full, by the due date as stated in the late payment penalty letter;and
  2. This is your first appeal; or  
    b. You have paid on time for the past two years.

Source: Inland Revenue Authority of Singapore

CorpPass for businesses in Singapore

What is corpPass?

Singapore Corporate Access (or CorpPass) is a one-stop authentication and authorisation service, which is owned by the Ministry of Finance and managed by the Government Technology Agency. The purpose of CorpPass is allowing corporate users on behalf of their organizations to transact with government agencies online.

From 1 September 2018, CorpPass will be required for all entities to transact with the government. Singapore registered entities with a Unique Entity Number (UEN) that have not registered for CorpPass should do so as existing login methods, such as SingPass and EASY will cease by then.

Individuals who need to transact in a business capacity with the government are required to be UEN-registered and thus be eligible for CorpPass.

What are the types of CorpPass roles and accounts?

1/Registered Officer (RO)

Only Singapore registered entity having Unique Entity Number (UEN) is applicable to Registered Officer.

The RO is the person whose name is officially registered with ACRA or any of the other UEN-issuance agencies. Examples of RO(s) include: Owner, Partner, Director, Corporate Secretary.

Typically, the RO should be the person nominating and approving new CorpPass Administrators.

Of these five CorpPass roles, the RO does not require an account. To transact with government digital services, the RO may choose to obtain one of the following four account types:

2/CorpPass Administrator (Admin)

A person authorised to create CorpPass accounts and manage access to digital services for the entity. The appointed Admin may be a person who currently manages Government-to-Business (G2B) transactions on behalf of the company. Examples of who may fulfil this CorpPass role include: Director of Corporate Services (Admin / Finance / Human Resources) or any person(s) authorised by the RO.

For Singapore registered entities with UEN, Admin must be authorised by the Registered Officer (RO). For smaller organisations, the RO may assume the role of a CorpPass Admin.

*Note: Each entity can only have a maximum of 2 CorpPass Admins.

3/CorpPass Sub-Administrator (Sub-Admin)

A person authorised by the CorpPass Administrator (Admin) to help manage CorpPass accounts and digital service access on behalf of the entity. A Sub-Admin has full management rights to CorpPass users’ digital service access, unless restricted by the Admin.

Sub-Admin accounts can only be created by the Admin, and do not require approval. Similar to the Admin, the Sub-Admin can create other CorpPass accounts (i.e. CorpPass Enquiry User, CorpPass User) for users within the entity

4/CorpPass Enquiry User

The Enquiry User is an account created by the entity’s CorpPass Administrator or CorpPass Sub-Administrator. The Enquiry User account may be used to transact with Government digital services, and to view details of the entity’s CorpPass setup. For example, the Enquiry User may view the entity’s list of digital services, the details of CorpPass accounts under the entity, and the transaction history of these accounts.

5/CorpPass User

A person who is assigned by the CorpPass Administrator (Admin) to transact with Government agencies on behalf of the entity. Examples of who may fulfil this CorpPass role include: Corporate Services Personnel (e.g. Payroll Executive, Human Resources Manager).

Each User will have a unique CorpPass ID. There is currently no restriction on the number of Users that each entity may have.

For smaller organisations, the Admin may assume the role of a User

To get more information about how to registering CorpPass, please contact us!

Source: Singapore CorpPass Access

Overview of Certificate of Residence (COR)

What is a Certificate of Residence (COR)

A COR is a letter certifying that a company is a tax resident in Singapore for the purpose of claiming tax benefits under the Avoidance of Double Taxation Agreements (DTAs). A Singapore tax resident company applying for treaty benefits provided under the DTA with a tax treaty partner may be required to submit a tax reclaim form issued by the tax treaty partner.

Within Singapore, a COR is used to establish a company’s eligibility for exemption on taxation of profits remitted from foreign operations in the form of dividends, foreign branch profits, and foreign sourced service income. Outside of Singapore, a COR is used as a means of satisfying requirements under the various DTAs that Singapore has established with partner states.

Why Apply for a COR

Companies need this certificate to claim tax benefits under the DTAs or Limited Treaties that Singapore concluded with foreign jurisdictions. Jurisdictions that conclude DTAs or Limited Treaties with Singapore are referred to as “treaty partners”.

  • Income derived by a Singapore tax resident company from foreign persons or companies may be subject to tax in that foreign jurisdiction. Under DTAs, treaty partners may provide tax breaks (e.g. tax exemptions and lower withholding tax rates) to tax residents of Singapore on income derived from their jurisdictions. Non-residents do not enjoy these benefits.
  • For DTAs with Limitation of Relief provisions, the Singapore tax resident company must meet an additional condition to claim treaty benefits.
  • The COR is required by and must be submitted to the tax authority of the treaty partner to prove that the company is a Singapore tax resident.

If you are not claiming benefits under the DTA or Limited Treaty but wish to obtain a letter certifying that the company is a tax resident of Singapore, you may write to IRAS on the company’s letterhead with the following information:

  • Name and Unique Entity Number (UEN) of the company;
  • Reason(s) for requesting the letter of residence;
  • Confirmation that the control and management of the company is exercised in Singapore; and
  • Year of Assessment for which the letter is required.

Companies Eligible to Apply for COR

To obtain a COR, a company must be a tax resident of Singapore.

Nominee companies

Nominee companies are not eligible to apply for COR as they are not the beneficial owner of the income derived from the treaty partner. A nominee company is a company that acts as a custodian of shares on behalf of the beneficial owners.

Foreign-owned Investment-Holdings companies

Foreign-owned investment-holding companies with purely passive sources of income and receiving only foreign-sourced income are not eligible to apply for COR. A foreign-owned company is a company where 50% or more of its shares are held by foreign companies/shareholders.

However, IRAS may still issue a COR if these companies are able to satisfy IRAS that:

  1. The control and management of the company’s business is exercised in Singapore; and
  2. The company has valid reasons for setting up an office in Singapore.

To satisfy IRAS of the conditions listed above, such companies must demonstrate that decisions on strategic matters are made in Singapore, for example by showing IRAS that their Board of Directors’ meetings are held in Singapore. Besides this, the company must also:

  1. Have related companies in Singapore that are tax residents of Singapore or have business activities in Singapore; or
  2. Receive support or administrative services from a related company in Singapore; or
  3. Have at least 1 director based in Singapore who holds an executive position and is not a nominee director; or
  4. Have at least one key employee (e.g. CEO, CFO, COO) based in Singapore.

Non-Singapore incorporated companies

Non-Singapore incorporated companies and Singapore branches of foreign companies are not eligible to apply for COR, except for the exceptional scenarios stated below, as these companies are not controlled or managed in Singapore. For Singapore branches of foreign companies, they are controlled and managed by their overseas parent company.

However, IRAS may still issue a COR if these companies are able to satisfy IRAS that:

  1. The control and management of the company’s business is exercised in Singapore (i.e. the Singapore branch is exercising the full control and management of the company); and
  2. The company has valid reasons for not incorporating in Singapore.

IRAS reserves the right to request for additional information on the company.

Contact us today to get a free consultation!

Source: Inland Revenue Authority of Singapore

Filing Estimated Chargeable Income (ECI) and Paying Estimated Taxes

Corporate Income Tax (CIT) Rebate on ECI Filed for Years of Assessment (YAs) 2018 and 2019

According to Budget 2018, the Minister for Finance announced that the cap for the CIT Rebate for YA 2018 will be raised to 40% of the corporate tax payable subject to a cap of $15,000, an increase of 20% of the corporate tax payable in the previous notice subject to a cap of $10,000. In addition, the CIT Rebate will be extended to YA 2019 at 20% of the corporate tax payable, subject to a cap of $10,000.

Companies need not factor in the CIT Rebate when filing their ECI for YAs 2018 and 2019 as IRAS will compute and allow the Rebate automatically.

IRAS has started to revise the tax assessments of companies that filed their YAs 2018 and 2019 ECI previously and received Notices of Assessment (NOAs) that did not take into account the CIT Rebate changes. The affected companies can expect to receive the revised NOAs and refunds for the excess tax paid by April 2018. If the company is paying the tax on ECI by instalments, the revised instalment plan will be issued to the company with the revised NOAs.

Compulsory e-Filing for ECI

Based on announced in Budget 2016, in line with Government’s direction for more cost effective delivery of public services and the Smart Nation vision to harness technology to enhance productivity, e-Filing of Corporate Income Tax returns (including ECI, Form C and Form C-S) will be made compulsory in a phased approach from YAs 2018 to 2020 as follows:

However, smaller companies will be provided more time for implementing the phase to modify their processes and ease into e-Filing.

Methods of Filing ECI 

Companies have two ways to submit their ECI. Companies are strongly encouraged to start e-Filing early because of compulsory of e-Filling starting from YA 2018

1. e-File via mytax.iras.gov.sg

Before e-Filing, please ensure:

a. You have been authorised by the company as an “Approver” for Corporate Tax (Filing and Applications) in CorpPass; and

b. You have the company’s tax reference number, your CorpPass ID and CorpPass password

2. Paper file

The completed ECI Form can be submitted to IRAS by post:

Inland Revenue Authority of Singapore
55 Newton Road
Revenue House
Singapore 307987

NOTE: e-Filing of ECI is currently available for YA 2018 and YA 2019. For YA 2017 ECI, please paper file instead

Advantages of e-Filing

Companies that e-File their ECI enjoy:

  1. Instant acknowledgement upon successful e-Filing; and
  2. A greater number of instalments to pay your company’s estimated tax.

Only companies that are on GIRO qualify for instalment payment. Companies that do not have an existing GIRO arrangement for Corporate Tax are encouraged to apply for GIRO at least 14 days before e-filing their ECI.

Notes
1. The instalment plan is subject to a minimum monthly GIRO deduction amount of $50.
2. The first few instalments could be combined and deducted on the first GIRO deduction date, depending on the date of filing of ECI. Please see example 2 below.
3. IRAS reserves the right to vary the instalment plan for companies that file revised ECIs.

NOTE:

  • e-File by 26th of each qualifying month to enjoy the maximum number of instalments allowable for that month.
  • Paper file by 24th of each qualifying month to enjoy the maximum number of instalments allowable for that month.

Calculation of ECI

Companies need not factor in the Tax Exemption Scheme for New Start-Up Companies/ Partial Tax exemption and the YAs 2018 and 2019 Corporate Income Tax (CIT) rebate when filing their ECI. IRAS will compute these and allow the New Start-Up Companies/ Partial Tax exemption and CIT rebate automatically.

Getting Your Tax Notice and Paying Estimated Tax

After IRAS has processed the ECI form, your company will receive a Notice of Assessment (NOA), which is an official Notice that states the amount of tax to be paid. You can also view the NOA at mytax.iras.gov.sg. However, no NOA will be issued if your company filed a “Nil” ECI amount.

The tax must be paid within one month from the date of the NOA, unless you are paying via instalment (GIRO). The NOA will include information on the various ways to pay.

Ways to Pay

There are two ways to pay your taxes:

  1. Payment by GIRO
    Companies that wish to pay taxes by instalment must sign up for GIRO by submitting a GIRO application.
  2. Payment by other Electronic Modes
    You can also make payment via internet Banking, Phone Banking, NETS, etc.

 

GIRO Instalment Plans for Singapore-registered Companies

You may qualify for GIRO instalment plan as long as you are a Singapore-registered company.

 

For companies confuse how to fill Estimated Chargeable Income (ECI) and Pay Estimated Taxes, we have expertise to assist you, contact us for a quote!

GST Registration in Singapore

GST- Goods and Services Tax is a tax imposed on the import of goods, as well as almost all supplies of goods and services in Singapore. In some countries, GST is known as the Value Added Tax (VAT). Businesses’ liability for GST registration depends on the value of their taxable turnovers. This refers to the value of goods and services supplied by businesses which are deemed as taxable supplies for GST purposes.

 

Read more… “GST Registration in Singapore”