What are the penalties?

You are required to pay the withholding tax by the due dates. If the tax is not paid or is paid late, the following penalties will be imposed:

• 5% penalty
• 1% additional penalty 

5% penalty

If the withholding tax payment is not submitted and paid by the due date, a Demand Note will be issued to inform you of the 5% penalty.

You are advised to pay the withholding tax and penalty by the due date stated in the demand note. If not, enforcements action(s) will be taken to recover the tax and penalties.

Example 1 (For payment due and payable to the non-resident before 01 July 2012):

Payer X made royalty payment of $10,000 (Gross) to Non - resident A on 02 Feb 2012. The filing and payment due date is 15 Mar 2012 but the withholding tax payment of $1,000 was paid to IRAS on 20 Mar 2012. Hence, a 5% penalty of $50 will be imposed.

Example 2 (For payment due and payable to non-resident from 01 July 2012 NEW!):

Payer X made royalty payment of $10,000 (Gross) to Non-resident A on 02 Aug 2012. The filing and payment due date is 15 Oct 2012 but the withholding tax payment of $1,000 was paid to IRAS on 20 Oct 2012. Hence, a 5% penalty of $50 will be imposed.

1% additional penalty

If we do not receive the withholding tax payment within 30 days from the due date, an additional penalty of 1% will be imposed on the withholding tax for each completed month (subject to maximum of 15 months i.e. 15 %) that the tax remains outstanding.

Example 1 (For payment due and payable to the non-resident before 01 July 2012):

Payer X made royalty payment of $10,000 (Gross) to Non-resident A on 02 Jan 2012 but remitted the withholding tax payment of $1,000 on 25 Aug 2012. In this instance, the payment is overdue by five completed months. Hence, there will be a 5% penalty and the 1% additional penalty of $50 for five completed months. (5% penalty on $1000 -$50 and 1% additional penalty for 5 completed months on $1,000 - $50). Therefore, the total penalty imposed will be $100.

Example 2 (For payment due and payable to non-resident from 01 July 2012 NEW!):

Payer X made royalty payment of $10,000 (Gross) to Non-resident A on 02 Aug 2012 but remitted the withholding tax payment of $1,000 on 25 Apr 2013. In this instance, the payment is overdue by five completed months. Hence, there will be a 5% penalty and the 1% additional penalty of $50 for five completed months. (5% penalty on $1000 - $50 and 1% additional penalty for 5 completed months on $1,000 - $50). Therefore, the total penalty imposed will be $100.

Why you should inform IRAS voluntarily

Instead of imposing maximum penalties of up to 20% of withholding tax unpaid due to negligence or without reasonable excuse, IRAS is prepared to waive the penalty or accord a reduced penalty of 5% for first-time voluntary disclosures which meet the qualifying conditions under the IRAS Voluntary Disclosure Program. 

Actions that can be taken to recover the tax outstanding from your bank, tenant and any other third parties…

If the withholding tax/penalty is not paid on time, we will take the following recovery action(s):

• Instruct your bank, tenant or any third parties to pay to the Comptroller if they hold money for you, or due to you. Instruction will be withdrawn after you have paid the  tax outstanding; or
• Sue you in court for the tax outstanding.

How to avoid late payment penalty

• File the relevant form(s) and pay the withholding tax amount to IRAS three working days before the due date.
• Ensure there is ample time for delivery of mail via post
• Ensure that all cheques sent to us are good for clearance.

FAQs