Although the IRAS tax payment system is built to accept different forms of electronic remittances - such as internet banking, NETS, and phone banking - most Singapore-registered businesses prefer to pay their taxes via GIRO.
Find out all you need to know about GIRO and how to apply for one by reading the article below.
GIRO, for starters, is an abbreviation for General Interbank Recurring Order. And just as the name itself suggests, this is a cashless system for transferring recurring payments between banks in Singapore.
And yes, that applies to tax payments too. GIRO basically provides an automated electronic payment system that transfers your tax payments directly from the company’s bank account to the Inland Revenue Authority of Singapore (IRAS).
Make no mistake about it, though. GIRO isn’t open to all taxpayers in Singapore. You only get to use this tax payment system after making an application, and subsequently, setting up a GIRO arrangement before your company’s tax payment due date.
Otherwise, without the arrangement, you’ll be left to remit your company’s taxes via other electronic modes of payment.
While you could use other electronic means of payment, the fact of the matter is, none of them is as convenient as GIRO.
You see, once you set up a GIRO arrangement, the tax payments will be automatically deducted from your company’s bank account and then wired to the IRAS. It’s that simple and straightforward.
And while you’re at it, it turns out you don’t have to pay your entire tax bill at once. Singapore’s Budget 2020 announced that companies with a GIRO arrangement can go ahead and pay their corporate income taxes in installments.
Yes, that’s right - you just need to ensure that your company files its Estimated Chargeable Income (ECI) on time. The IRAS will then give you two additional months to pay the taxes in interest-free installments.
Another great thing about GIRO is, it won’t cost you anything to set it up. This whole tax payment system is completely free of charge. Some banks only impose charges for unsuccessful payment attempts - perhaps due to insufficient funds in your account.
The IRAS is the body mandated to process and approve your GIRO applications for tax payment. And if you choose to proceed, you’ll find six different types of application forms.
The IRAS website offers:
Well, of course, the Corporate Tax GIRO Form is the obvious option in this case. But, if you’d like to set up an all-inclusive GIRO arrangement for corporate tax, individual income tax, property tax, GST, and withholding tax, you should go for the Master GIRO Form. It’ll save you the trouble of reapplying over and over again whenever you need to pay other types of taxes.
That said, the application process is as follows:
Normally, it takes about three weeks for the IRAS to review and process GIRO applications. Hence, it’s always advisable to apply way before your tax payment deadline.
Thankfully, the GIRO payment system is pretty flexible in Singapore. Once you set up an arrangement, you can still change it to suit your company’s tax needs.
You could, for instance:
If you’re looking to link an existing GIRO arrangement to a different bank account, you should:
Should you choose to terminate your company’s GIRO arrangement, you ought to first clear any outstanding tax payment to avoid possible penalties and fines.
Once everything is settled, get in touch with your bank and request them to terminate the GIRO arrangement. Some banks even allow you to terminate directly from your banking app.
As soon as the request is received, the bank will proceed immediately to cancel the GIRO arrangement. It’s that simple.
If you’re seeking to change the type of tax payment plan - for instance, from one-time deduction to monthly installments - you should just get in touch with the IRAS.
A basic email should suffice, as long as it provides all the change request details.
Well, of course, you could manage your company’s GIRO by yourself. But then again, you’re probably too busy running the business.
As such, you might want to leave the heavy lifting to the tax experts. Get in touch with us today and we’ll come up with a convenient system for managing your corporate taxes.