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If a taxpayer has financial difficulties in paying tax on time, what should he/she do?



If a taxpayer encounters any financial difficulties in paying his/her tax on time, he/she may apply to Collection Enforcement Section of this Department for payment of tax by instalments. Please note that a surcharge of 5% will initially be imposed on the balance of total tax payable not paid by the due date and a further 10% surcharge will be added to the amount remaining unpaid (including tax and 5% surcharge unpaid) six months after the due date.

Before the Department approves the application, taxpayer can make payment in accordance with his/her payment proposal first.

Instalment payments over long period will not normally be approved, unless justified. Even if such instalment arrangement is approved, legal proceedings may be instituted and taxpayer will be liable to pay the legal costs and interests on the judgment debt from the date of Writ of Summons up to the date of full settlement of the debt. [Present interest rate is 8.875%]

To support the application, the taxpayer is requested to provide the following documents:-

a. copies of all his/her bank passbooks, bank statements, approval letters from banks or financial institutions showing the banking facilities granted (where applicable) for the latest three months;
b. an income and expenditure statement with supporting evidence showing the current financial position for the past three months;
c. The latest 3-month management accounts (including profits and loss account and balance sheet), the cash flow position and forecast of his/her business (where applicable);
d. a concrete payment proposal; and
e. daytime contact telephone number.

The taxpayer is advised to submit the instalment application well before the due date. Otherwise, recovery actions will be taken on the tax overdue and these may cause inconvenience to the taxpayer.

For further information about recovering tax in default, please see Recovering Tax In Default.

For information about payment methods, please see Payment Methods.