Late Payment or Non-Payment of Taxes

Most employers pay the taxes stated in the Directive to Pay Tax on time. There are penalties if tax is not paid on time.

Late Payment Penalty

Employers are given 10 days from the date of the Directive To Pay Tax to make full payment.

An employer is required to pay the tax assessed as shown in the Directive before the payment due date even if it has filed an objection and is awaiting the outcome. If the Directive  is subsequently revised, any excess payment will be refunded to the employer.

If payment is not received before the due date, a 5% late payment penalty will be imposed.

Additional penalties of 1% per month may be imposed if tax remains unpaid  60 days after the imposition of the 5% penalty.

The 1% additional penalty will be imposed for each completed month that the tax remains unpaid, up to a maximum  of 12% of the unpaid tax.

 

Late Payment Penalty Notice

Employers will be informed of the 5% penalty via a late payment penalty notice. Payment must be made before the due date stated on the notice to avoid further enforcement actions.

Further Enforcement Actions

If the tax continues to remain unpaid, other actions to recover the tax may include:
1. Appointing agents like your bank, tenant or lawyer to pay the monies to IRAS; and/or

 2. Issuing a Travel Restriction Order (TRO) to disallow your travel out of Singapore (applicable to sole proprietors and/or partners); and/or

3. Taking legal action.

You will experience inconveniences in using your bank accounts should your bank be appointed as an agent to recover tax. In some instances, you may not be able to access your bank accounts until the full payment for your tax has been received.

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 overdue.  

    Releasing Appointed Agents

    Agents will only be released from the appointment after the tax and penalties have been paid.

    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 (applicable to sole proprietors and/or partners), you will not be allowed to travel out of Singapore until you pay the tax in full.

    The Notification for Release of TRO will be available at myTax Portal two working days after your payment has been received and can be retrieved to facilitate your travel at the immigration checkpoints when you leave Singapore. We will also mail the certificate to you within 10 days.

    For non-NRIC holders, please note that it is your responsibility to ensure that you have a valid pass to remain in Singapore. Please approach the Immigration & Checkpoints Authority (ICA) to extend your stay in Singapore if you require more time to resolve your tax matters with IRAS. It is an offence to overstay in Singapore without a valid pass.

    Making Payment

    Please quote the payment slip number when making payment for the Directive using the preferred payment modes. GIRO payment mode is not applicable for payment of the Directive amount.

    Appeal for Late Payment Penalty Waiver

    Appeals have to be made online via myTax Portal

    • How is the 5% and 1% additional late payment penalty computed?

      Example 1: Calculation of 5% Penalty for Late Payment

      Date of the Directive To Pay Tax is 2 Jan 2020 and the Directive amount is $5,000. 5% penalty of $250 (i.e. 5% x $5,000) is added when the tax is not paid before 13 Jan 2020.

       

       Date of Directive

       Directive Due Date

       Tax Payable

       5% Penalty Imposed

       2 Jan 2020

       13 Jan 2020

       $5,000

       $250

       

      Example 2: 1% Additional Penalty

      An employer did not pay the tax payable of $5,000 before the due date on the Directive and received a late payment penalty notice dated 14 Jan 2020 with 5% penalty added to the overdue tax. The due date for payment of tax and penalty of $5,250 on the late payment penalty notice was 14 Feb 2020 (one month from the date of late payment penalty notice). The employer eventually paid the tax and penalty on 20 Apr 2020.

      The payment was overdue by more than two months after the late payment penalty notice due date (i.e. Mar and Apr).  The 1% additional penalty of $50 per month was imposed for 2 months. The total penalty imposed was $350 (5% penalty x $5,000 plus 1% additional penalty x $5,000 x 2 months).

       

      Late Payment Penalty

      Notice Due Date

       Payment Date 

       5% Penalty Imposed 

      Additional 1%

      Penalty Imposed  

       14 Feb 2020

       

      20 Apr 2020 

       

      $250 

      $100 

       ($5,000 x 5%)

       ($5,000 x 1% x 2 months)

       

       

    • When do I need to pay the amount as stated in your directive? Is there a grace period given?

      If payment is not received before the due date, a 5% late payment penalty will be imposed.

      If you fail to withhold monies due to your employee and do not give valid reasons for your failure to withhold monies, you may be held liable for the tax that is owed by your employee.

    • 'I have filed both original and amended/additional Form IR21. I have received Directive To Pay Tax for the original Form IR21. Should I proceed to pay first or wait for the second directive?

      You should make payment as per the first Directive to avoid late payment penalty.