Tax Payments

  1. What is the due date for payment of VAT & income tax?
    VAT – The VAT payment is due on the same date the VAT return lodgement is due. For example where a person is required to lodge on a monthly basis, the payment is due with the return on a monthly basis. Where a person is required to lodge on a three monthly basis, then the payment is due when the three monthly return is due.

    Income Tax – The income tax payment is due within one (1) month from the date of Notice of Assessment.

  2. What is a Time-To-Pay (TTP) arrangement?
    A Time-To-Pay arrangement is an arrangement where the taxpayer requests to make instalment payments to FRCS, when they cannot make the full payment due to financial constraints. This only applies for income tax debts. Our Debt Management Service (DMS) is the only Section that handles TTP arrangements. Arrangements are done on a case by case basis subject to certain requirements.
  3. What are the requirements that a taxpayer should meet to qualify for TTP?
    put forward a proposal for payment of their debt in full within six (6) months or the shortest possible timeframe.

    • taxpayer has put down reasons as to why he/she cannot pay the debt in full amount.
    • forward a payment (1/2 of the amount owing or in discretionary cases, whatever amount the taxpayer can pay provided evidence is submitted) at the time of the proposal to demonstrate a commitment to pay.
    • all outstanding returns have to be lodged prior to TTP arrangements.
  4. Am I entitled to a reduction or full waiver of penalties?
    Only the late payment penalties (LPP) can be reduced or fully waived unless & until the real tax is paid up front at the Chief Executive Officer’s discretion. In certain cases full penalties have to be paid if the Chief Executive Officer so decides.
  5. Can the Chief Executive Officer recover tax debts from third parties owing money to or holding money for the taxpayer?
    Chief Executive Officer has the power to garnishee these individuals’ bank accounts and/or rental income. Garnishee is the procedure whereby the Chief Executive Officer attaches debts due or accruing to the taxpayer from a third party (the garnishee) in order to satisfy the debt.
  6. What is the difference between Provisional Tax and Withholding Tax and when should these be deducted and paid?
    Provisional Tax: Under the terms of Legal Notice No. 70 of 1976, where a payment arises under any contract for services, including progress payments under a contract, the payer is required to withhold 15% of the payment and remit the amount to FRCS within thirty (30) days after the end of the month in which the deduction was made.

    Any such deduction will be allowed as a credit against any tax assessed on the payee. Legal Notice No. 70 facilitates the payment of provisional tax payable by taxpayers, who are in receipt of commission income or income from the performance of contracts for services, by means of deductions at source from gross payments due to them from such commissions or contract payments.

    Withholding tax: It is tax deducted for income such as dividend, interest, royalty that is received by a taxpayer whether a resident or non-resident. It also applies to payments received for the hire or rent of films or the use whether by way of purchase or long-term hire.

  7. Current Withholding tax rates

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