Extension of Time for Paying Tax

This Practice Note is issued in respect of Extension of time for Payment of Tax in accordance with section 47 of the Revenue Administration Act, 2016 (Act 915).

In this Practice Note the word "Act" means the Revenue Administration Act. Definitions and expressions used in this Practice Note have the same meaning as they have in the Act.

This Practice Note provides direction and guidance on the interpretation and application of Section 47 of the Act, which provides the processes of applying for extension of time for payment of tax liabilities, conditions for granting extension of time for payment of tax and circumstance under which installment agreement will be revoked. The practice note also addresses the following: Differences in the application of instalment payments agreements by various offices Non adherence to the levels of authority in granting instalment agreements (thresholds) III. What constitutes a good cause IV. Terms and conditions for granting instalment payment agreements V. Formats for application and notification

A person applying for extension of time for payment of tax liabilities should note the conditions below and comply accordingly. A. SHOW GOOD CAUSE In the context of extension of time for paying tax, the following factors must be considered in determining a good cause: I. Taxpayer's previous compliance status II. Weak cash flow position, resulting from indebtedness by third parties including Government

III. Disasters (fire, flood and the like) IV. Incapacitation due to ill health (applicable to sole proprietors) V. Burglary B. TERMS AND CONDITIONS FOR EXTENSION OF TIME FOR PAYING TAX I. Applicant must apply to the Commissioner- General by completion of application form for extension of time for payment (See Appendix 1 attached) II. Applicant must have registered for Taxpayer Identification Number (TIN) III. Applicant must Provide Evidence of lack of liquidity (eg bank statement, cash flow statement of debts,) IV. Applicant may be required to deposit security in line with Section 8 of the Act V. Taxpayer must file all tax returns up to date VI. The extension of time for payment of tax should not apply to currently maturing debt. VII. Further application for extension of time for paying a rescheduled debt should be made before the end of the extended period VIII. The extension of time granted to a taxpayer to pay a debt shall not exceed 12 months in aggregate. (see appendix 2 for limits) IX. Agreement to make timely payments X. Provision of accurate information XI. Interest on the overdue tax shall be calculated on the outstanding tax in line with Section 71 of the Act and added to the principal debt.

If application is approved, the taxpayer would be issued with Notification/Agreement and schedule of payment forms containing the details of the agreement and date of payments (See Appendix 2)

If a taxpayer defaults in the instalment agreement, the provisions of Section 47(4) shall apply. "Where an extension is granted and the taxpayer is permitted to pay by instalments and the taxpayer defaults in paying any of the instalments, the whole balance of the tax outstanding becomes payable immediately."