DATE OF PAYMENT
Prior to the amendment, witholding tax is only levied on payment of interest when physical transaction is deemed to have been carried out. However, as of the effective date, section 37(7)(b) of the Income Tax Act (Cap 35) deems the interest as having been paid to the non-resident person on the date on which the interest is “reinvested, accumulated, capitalized, carried to any reserve or credited to any account however designated or otherwise dealt with on behalf of the non-resident person” although it is not actually paid over to that person.
With regards to the above paragraph, the taxpayer is required to notify and pay the tax withheld to the Collector of Income Tax within 14 days after the date of payment of income specified in section 9(4) or 9(5) of Income Tax Act (Cap 35).
Witholding Tax Form is required to be completely filled in and brought to the Collector when making payment.
PENALTIES FOR LATE PAYMENT (SECTION 37(4))
Any taxpayer who fails to deduct or pay withholding tax to the Collector of Income Tax within the specified period, shall be chargeable with penalties at the following rates:
(a) A penalty of 5% will be imposed on the tax withheld if it is not received by the Collector of Income Tax within 14 days after the date of payment of income to the non-resident person; and
(b) An additional penalty of 1% will be imposed for each completed month that the tax withheld remains unpaid, up to a maximum of 15% if the tax withheld is not paid over the Collector of Income Tax after 30 days from the date of payment of the income to the non-resident person.
CLAIM OF RELIEF OF WITHOLDING TAX UNDER AVOIDANCE OF DOUBLE TAXATION AGREEMENT (ADTA)
Guidance on relief/refund process can be downloaded here.