PAYMENT OF TAXES

Dr Lee Tsao Yuan asked the Minister for Finance whether, in light of the current economic slowdown, measures will be taken to extend the payment of income, property and other taxes over a longer time frame in order to help the Small and Medium-sized Enterprises (SMEs), which are facing economic difficulties, tide over this period.

Dr Richard Hu Tsu Tau: Income tax and property tax are payable by reference to a tax year. Income tax is calculated based on the income earned in the preceding year while property tax is based on the rentable value of the property for the same year. Payment of income tax is due one month after the issue of the notice of assessment while property tax is payable in advance in January and July of each year.

To help taxpayers, the Government has administratively allowed property tax and income tax to be paid in instalments over the tax year instead of the due dates. Basically, any person willing to commence instalment payment from the beginning of a tax year is allowed to pay the year's tax in equal instalments over the whole year. By allowing instalment payments over the year for which the tax is payable and not beyond, it helps taxpayers to plan their finances and prevents them from getting into huge tax arrears. Taxpayers who have temporary cashflow problems can, nevertheless, apply to IRAS for payment of the tax beyond the 12-months instalment period, with appropriate late payment penalty for the extended period.

From the experience of IRAS, there is as yet no serious problem of taxpayers being unable to meet tax payments which fall due with the current instalment facilities. IRAS is monitoring the situation and Government will introduce relief measures if necessary. In the meantime, taxpayers should make optimum use of the instalment payment arrangements offered by IRAS.