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THE Singapore taxman is putting his money where his mouth is, over a pledge to pay any refund due to taxpayers within 30 days.
If the Inland Revenue Authority of Singapore (Iras) fails to keep this commitment, it will pay interest to the taxpayer - on top of the refund amount.
Why 30 days? Because that is the same timeframe given to taxpayers by Iras to pay their taxes.
The self-imposed measure, designed to lift Iras' efficiency, was announced by Minister of State for Finance & Transport Lim Hwee Hua yesterday as she officially launched the myTax Portal.
The website, which started on a trial basis in 2004, enables taxpayers to submit tax returns and transact with Iras electronically. Various enhancements have now been added.
The pledge by Iras to pay interest on late refunds applies from Sunday and covers all types of tax. The goods and services tax is the only tax that now attracts interest on late refunds.
Last year Iras made refunds to about 522,000 taxpayers and returned almost $6.7 billion. Only a very small number of refunds is issued later than 30 days but Iras wants to improve on that.
Taxpayers become eligible for refunds in various ways. For personal income tax, refunds may be payable if, for example, a taxpayer has not claimed reliefs he is entitled to. He may not have claimed aged parent relief even though he is supporting his parents.
A company may be eligible for a refund if, after discussions with Iras, the taxman agrees that certain expenses are now deductible. This means its taxable profits are now lower and so the tax bill is lower. Businesses paying GST may also get a refund.
Iras said that in about 85 per cent of refunds, the payment is made within two weeks. But some payments may not be made for 30 days or more.
It says this is due to the huge volume of refunds and the time needed to verify and approve each case.
Iras chose the 30-day deadline as 'it is the same amount of time (given to) taxpayers to pay their taxes to Iras upon receiving their assessment', said Iras spokesman Lee Leng Kiong.
The interest on refunds will be based on the rate set by the Ministry of Finance for payment of interest. The interest rate is currently 5 per cent a year.
As an example, suppose a taxpayer's tax assessment is finalised on July 15 this year with a $5,000 refund payable to the taxpayer. The refund will be considered late if it is not issued by Aug 15. Suppose it is paid on Aug 30 - or 16 days later - the taxpayer would get an extra $10.96 on top of his refund, assuming the 5 per cent rate.
Overall, how much would Iras be paying out? Iras has tracked late cases for the past few months and estimates that in just 0.05 per cent of them, refunds are issued after 30 days. If this initiative had started then, the interest paid out would have been less than $100 a month. This may not be much but taxpayers welcomed the move.
Managing director of UOB Life Assurance Raymond Kwok said: 'This is a great new initiative by the Government. People worry about being penalised by Iras when they don't pay their taxes on time, but it is also Iras' responsibility to make its refunds to us on time. How much interest Iras ultimately pays will be a good indicator of just how efficient its service is.'
Mr Jafar Sadiq, director of finance at Mini Environment Service, which supplies temporary housing for building workers, said: 'This shows that Iras is not only interested in collecting our money on time, but when it comes to giving out money, it is also efficient and committed.'
While this service is new here, it has been implemented in places such as Australia and the United States.
The announcement was part of the launch of a slew of other new services aimed at making myTax Portal a one-stop website for taxpayers. Among the new services is the online application of a refund of property tax for owners of vacant properties.
chanckr@sph.com.sg
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