The deadline to pay the withholding tax to IRAS will be the 15th of the second month from the date of payment to a non-resident or company in Singapore or on the 25th of the same month if you are on GIRO. In fact, it is essential to comply with the deadline of payment because late payment or non-payment of withholding tax results in penalties including pecuniary and recovery actions. Read information below to know the penalties for late or non-payment of withholding tax.
Confirmation of Payment (CP)
After IRAS has received the withholding tax payment of your business or when the GIRO deduction is successful, IRAS will send to you the Confirmation of Payment (CP) which is considered as a tax receipt. You may receive the CP from IRAS within 10 days after your payment is successful.
- The CP will be sent to you at the Singapore address which is registered with IRAS.
Note that you will only receive a payment of withholding tax of $10 and above, and the amount stated in the CP does not include any late payment penalty paid although you paid for the penalty for late or non-payment.
Penalties for Late or Non-Payment
Late Payment Penalty
As mentioned, the withholding tax must be paid to IRAS by the 15th of the second month from the date of payment to the non-resident. Late or non-payment of withholding tax results in penalties. If the withholding tax payment is not received by the due date, a 5% penalty and subsequently, an additional 1% penalty (not exceeding 15% of the tax outstanding) can will be imposed for each completed month that the tax remains unpaid.
- Late Payment Penalty Letter
IRAS will send you the letter which inform you the 5% of penalty and the due date for the late payment penalty. Hence, you must made payment by the stated due date to avoid additional penalty or further enforcement actions.
Imposition of Additional Penalty
Within 30 days from the due date, IRAS has not yet received the withholding tax payment from you, IRAS will impose an additional penalty of 1% for each completed month that the tax remain unpaid (maximum 15% equivalent to 15 months, amount to the highest percentage of penalty is 20%)
Note that IRAS may also take other recovery actions in particularly serious cases of late payment including directly instructing your bank to pay monies held in your bank account, as well as commencing legal action.
Therefore, it is important for making withholding tax payment timely. In case you need a professional corporate tax service to assist you in withholding tax, ACE Global Accountant has abilities to support you to determine and comply with the withholding tax requirements.