What is advance Tax?

Advance Tax is a prior payment of income tax obligation by a business or company before the end of the financial year. It is paid nine times during a tax year by Business and Companies. The advance tax is determined payable amount from the preceding years assessment of the business or company.

Types of Advance Tax

The two types of advance tax are as follows:

1. Advance Tax for Persons other than a Company (Sole-trader, Trustees, Partners, Directors etc.)
2. Company Advance Tax

Due Dates for Advance Tax Payment

The due dates for advance Tax Payments differs for Businesses and Companies hence it is important to note the difference. The due dates are as follows:

1. Advance Tax for persons other than a Company (Sole-trader, Trustee, Partners, Directors etc.)

• 30 April, 31 May, 30 June, 31 July, 31 August, 30 September, 31 October, 30 November and
• 31 December

2. Company Advance Tax

• Sixth month of Company’s financial YE
• Seventh month of Company’s financial YE
• Eighth month of Company’s financial YE
• Ninth month of Company’s financial YE
• Tenth month of Company’s financial YE
• Eleventh month of Company’s financial YE
• Twelfth month of Company’s financial YE
• First month of the following tax year
• Second month of the following tax year

Payment Installments Order for Advance Tax

1. Advance Tax for Persons other than a Company (Sole traders, Trustees, Partners, Directors etc.)

Advance tax is payable in the following manner:

Installment No.                        Due Date                                  Amount Due

       1                                         30^th April                                               11 1/9% x (A-B)

       2                                         31^st May                                                  11 1/9% x (A-B)

       3                                         30^th June                                                11 1/9% x (A-B)

       4                                         31^st July                                                  11 1/9% x (A-B)

       5                                         31^st August                                             11 1/9^th x (A-B)

       6                                         30^th September                                     11 1/9^th x (A-B)

       7                                         31^st October                                            11 1/9^th x (A-B)

      8                                          30^th November                                      11 1/9^th x (A-B)

      9                                          31^st December                                         1 1/9^th x (A-B)

      If advance tax payable is less than $120, it is due on 30^th September

Where;

‘A’ is the individual’s assessed income tax liability for the preceding (previous) tax year after reduction of any foreign tax credit allowed to the company for that year; and

‘B’ is the total allowable withholding tax credits such as provisional tax

2. Company Advance Tax

Advance tax installments computed by the following formula:

         11 1/9% X (A – B)

Summary of Company’s Year End and Advance Tax Payments Due dates: