Questions about income tax
Dear Uncle Chung,
I would like to seek your kind advice on the below matter.
I worked for a Singapore construction company in Sri Lanka from 2005 to 2008. I leave the company after the project completion in 2008.
Currently the company sent me a lawyer letter and asked for the payment of PAYE tax and claimed that they have paid to Sri Lanka Department of Inland Revenue on behalf of me based on my employee contract as below:
“You will be solely responsible for the payment of income tax levied by the IRAS, Singapore or any competent authority in Singapore or Sri Lanka on the gross remuneration earned by you during period of employment with the company”
Based on Singapore income tax law I not need to pay tax to Singapore tax authority since I am full time overseas.
I have consulted tax consultant in Sri Lanka. They advised that issue is Company has not deducted PAYE Tax at the time they pay your remuneration. As per Sri lanka income tax law, deduction of PAYE Tax at the time of payment of remuneration is the responsibility of the Company. However, employee too has a responsibility to inform to the tax authority in Sri Lanka that Company has not deducted PAYE tax or not remitted the amount deducted by the company to Tax authority. However, Tax authority can recover this amount of PAYE tax with penalty either from Company or employee. But they may recover this amount from the company first. Amount of PAYE tax deducted and remitted to tax authority will be part of employee's income tax but not Company.
My questions are:
1. Do the company has right to claim the income tax from individual on behalf of Sri Lanka income tax authorities?
2. Do the company still can claim me after I have left the company for more than two years? During that period the company did not advise me anything about income tax.
3. Since the company also fail to fulfil their responsibility to pay my PAYE tax at the time they pay my remuneration. How can I take advantage of this to defend myself?
Thank you very much & look forward to your reply!
毛奇
Reply From Uncle Agony
If you are in Singapore for less than 181 days per year, you are not within the tax jurisdiction of the jurisdiction and hence all your income wherever it is denied are not taxable in Singapore.
However it seems that from your contract it is your duty to pay your Sri Lanka tax yourself. If your company had indeed paid the Sri Lanka Department of inland revenue on your behalf it is only right that your repay them but make sure you show proof before you part with your money.
Two years in-ordinate delay is not a time bar to them claiming from you.
However the terms of your agreement might have overridden any obligation on the part of your company to fulfill their responsibility to pay your PAYE tax at the time they pay your remunerator. So you might have to repay them.
To advise you fully one would require your employer’s handbook and the complete employment agreement.