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DBS partners taxman to digitalise stamp duty collection in Singapore
THE Inland Revenue Authority of Singapore (Iras) collected S$4.6 billion from stamp duties - a tax levied on property transactions - for the fiscal year ended March 31, with most taxpayers paying by cheque.
To smoothen the payments process for stamp duty collection, DBS on Tuesday said it will work with the taxman to take the process digital, thereby tackling a segment of taxes that made up 9 per cent of the total tax revenue collected by Iras for fiscal 2019.
From November, taxpayers will be able to set up a Giro account online to make payments for their stamp duty. With that, they will be able to receive a stamp certificate through Iras's e-Stamping Portal instantly.
The connection will be done through the use of an application programming interface that will permit transfers of as much as S$200,000 per transaction.
Iras introduced PayNow as an option for businesses to receive Wage Credit Scheme (WCS) payouts in March, resulting in a 20 per cent reduction in cheque volumes since then, DBS said. Before the implementation of PayNow, about half of WCS-eligible businesses, many of which are small and medium enterprises (SMEs), chose to receive their payouts via cheques.
In a statement issued by DBS, Ang Sor Tjing, director of Iras's Revenue and Payment Management Branch, said the recent initiatives are meant to encourage businesses - many of which are SMEs - to go cheque-less and make the transition to digital payments.
"As part of Iras's digitalisation drive, we are also working with DBS to expand the use of PayNow to more services for the convenience of businesses and individuals," she said.
"Besides stamp duty payments, with cashless payments gaining momentum in Singapore, taxpayers are encouraged to use cashless or electronic payment modes such as Giro and online banking to fulfil their other tax obligations," Ms Ang added.
DBS's corporate clients currently contribute to more than half of PayNow Corporate receipts in Singapore, with volumes from the bank's SME customers growing threefold since PayNow was launched to corporates in August 2018. DBS said the bank holds close to 40 per cent of the market share by PayNow Corporate registrations to date.
"To bring Singapore's digital agenda to fruition, it is critical to encourage SMEs to get on board the digital payments train as they represent 99 per cent of businesses locally," Raof Latiff, DBS's group head of digital, Institutional Banking Group, said in a statement.
"Partnering statutory boards like Iras is one of the key ways to encourage this shift, with them leading the way by digitalising payments and collections channels across their suite of services."
This comes as Singapore banks OCBC and DBS raised cheque fees for companies while offering promotional rates for electronic transactions.
From Tuesday, OCBC started charging S$0.75 per cheque to be processed. Previously, companies enjoyed free cheque processing for the first 30 cheques each month, with the S$0.75 fee kicking in only after that.
The bank is also offering to waive fees for their first 30 FAST transactions and PayNow transactions via FAST each month from Oct 1 until Dec 31. The fee will be S$0.50 for each transaction after that. FAST, short for Fast and Secure Transfers, is the real-time payment-settlement network in Singapore. Each outgoing transaction now costs S$0.50.
DBS was the first bank here to raise fees for cheques. It now charges S$0.75 per cheque, when previously, it was free for the first 30.
DBS's promotional rate for digital payments has given companies a waiver for the first 30 PayNow or FAST transactions a month since August; this offer lasts until January, after which each transaction will cost S$0.50. SMEs with an annual revenue of no more than S$200 million enjoy full fee waiver for all PayNow transactions until December 2021.