How to Calculate Your Company’s Quarterly Income Tax Instalments (Y/A 2026/2027)

I’m not a qualified accountant or tax consultant. But as a company secretary, I come across circulars like this often, and I thought a simplified explanation would help anyone trying to get a general understanding of their tax compliance obligations. This is not tax or financial advice — for anything specific to your company, please sit down with your tax consultant or accountant to work through the details.

The Inland Revenue Department has issued a new circular (SEC/2026/E/06, dated 3 August 2026) setting out how companies should calculate their quarterly income tax instalments for the Year of Assessment 2026/2027 onwards. Here’s a quick breakdown of what it means for your business.

The Due Dates

• 1st Instalment: 15 August
• 2nd Instalment: 15 November
• 3rd Instalment: 15 February
• 4th Instalment: 15 May (following year)

The Formula

Each instalment is calculated as:

(A − C) ÷ B

• A = tax payable on the company’s taxable income for the immediately preceding year of assessment
• B = number of instalments remaining (4, 3, 2, or 1)
• C = tax already paid this year (prior instalments, WHT/AIT credits, foreign tax credits)

In short: last year’s tax bill is spread across the remaining instalments for the current year, minus anything already credited.

A Quick Example

A company had a taxable income of Rs. 1,653 million last year, resulting in gross tax of Rs. 742.95 million. If it has Rs. 880,000 in AIT credits available this year, its first instalment (due 15 August) works out to roughly Rs. 185.5 million — a quarter of last year’s liability, less the credit.

When the Standard Method Doesn’t Apply

Companies can use an alternative basis only if they had no taxable income last year, or genuinely expect lower income this year (e.g. expiring losses, an expiring BOI exemption, or a documented drop in revenue). These routes require a formal declaration to IRD before using them — you can’t simply estimate a lower figure on your own.

Why This Matters

Under-paying, late payment, or non-payment attracts interest and penalties calculated against the standard formula — regardless of what your actual current-year profits turn out to be. Getting the opening instalment right, based on last year’s numbers, is the safest starting point unless you have solid grounds (and paperwork) for an alternative estimate.

This covers the core mechanics — the circular also sets out additional details we haven’t gone into here, including exemptions for employment income already under APIT, foreign tax credit treatment, mid-year revision requests, and the declaration forms and deadlines for each alternative method.

---

Want the full circular, including the alternative-method declaration forms?