Understanding Global Income Tax for Individuals Introduction
we will delve into the concept of global income tax, a crucial aspect of taxation for individuals with income earned through economic activities in a foreign country. We will explore the filing period, necessary forms, and required documents for tax returns.
What is Global Income Tax?
Global income tax refers to a tax levied on the total income earned by an individual through various sources during a specific year. This tax is applicable to foreign residents who have income. These individuals are required to file and pay global income tax in a manner similar to domestic taxpayers.
Filing Period for Global Income Tax Return
The period for filing a global income tax return is from May 1 to 31 of the following year. However, for individuals who have submitted a document certifying compliant filing, the filing period is extended until June 30. In cases where the last day of the filing period falls on a Saturday or a public holiday, the deadline is shifted to the following working day.
Exceptions to the standard filing period include:
- 1. In the event of a resident's death: The deadline for filing is six months from the last day of the month in which the first day of inheritance (date of death) falls.
- 2. When departing the country to move overseas: The tax return should be filed before the day of departure.
Global Income Tax Return Forms
Depending on the nature of an individual's income, different tax return forms should be used. The applicable forms are as follows:
- 1. Attached form no. 40 (1) of the Enforcement Rules of the Income Tax Act: This form is used for general cases
- 2. Attached form no. 40 (4) of the Enforcement Rules of the Income Tax Act: This form is used when an individual has only business income subject to a simplified expense rate, wage & salary income, pension income, and other income, or when there are two or more income sources falling under these categories.
- 3. Attached form no. 40 (5) of the Enforcement Rules of the Income Tax Act: This form is designed for individuals with only religious person's income or other income.
- 4. Attached form no. 40 (6) of the Enforcement Rules of the Income Tax Act: This form is used when an individual has income subject to separate taxation.
Documents of Proof for Tax Return Form
When filing a global income tax return, individuals are required to provide supporting documents, including:
- Documents certifying income deductions and tax credits.
- Documents necessary for calculating total income and essential expenses.
- For individuals with business income: Financial statements, balance sheets, compound trial balances, attached documents, and statements of adjustment.
- Any other documents that tax authorities may request in accordance with tax laws.
It's important to note that in most cases, these documents need not be submitted with the finalized tax return. However, individuals should keep these records for five years from the statutory due date for reporting (seven years for offshore transactions).
Calculation of Global Income Tax
Global Income Tax Rate (Attributable to 2022)
How to File a Return
How to Pay
Conclusion
Understanding global income tax is vital for foreign residents with income earned from economic activities. By adhering to the correct filing period, using the appropriate tax return forms, and providing the necessary supporting documents, individuals can ensure compliance with tax regulations and fulfill their tax obligations effectively.