How to handle overpaid late payment interest in Vietnam?

When shall late payment interest be charged in Vietnam?

According to the provisions of Clause 1, Article 59 of the Law on Tax Administration 2019, the specific circumstances in which late payment interest is required are as follows:

- The taxpayer is late in paying taxes compared to the prescribed deadline, the extended deadline for tax payment, the deadline stated in the notice of the tax administration authority, the deadline in the tax assessment decision, or the handling decision of the tax administration authority.

- The taxpayer supplements the tax declaration dossier, increasing the amount of tax payable, or the tax administration authority or a competent state authority discovers under-declared tax payable through inspection or audit, in which case the taxpayer must pay late payment interest on the additional tax amount from the day following the final day of the tax payment deadline of the tax period with the error or omission, or from the day following the deadline for submitting the original customs declaration.

- The taxpayer supplements the tax declaration dossier, reducing the refunded tax amount, or the tax administration authority or a competent state authority detects that the refunded tax amount is less than the refunded amount, in which case the taxpayer must pay late payment interest on the amount of refunded tax that needs to be reclaimed from the date of receiving the refund from the state budget.

- In cases where tax debt payment in installments as prescribed in Clause 5, Article 124 of the Law on Tax Administration 2019 is applicable.

- In cases where no administrative penalties for tax administration are imposed due to the expiration of the statute of limitations, but tax collection is required for the shortfall amount as prescribed in Clause 3, Article 137 of the Law on Tax Administration 2019.

- In cases where no administrative penalties for tax administration are imposed for violations specified in Clauses 3 and 4, Article 142 of the Law on Tax Administration 2019.

- Agencies or organizations authorized by the tax administration authority to collect taxes but delay transferring taxpayers' tax amounts, late payment interest, and fines to the state budget will be subject to late payment interest on the delayed transfer amount as prescribed.

How to handle overpaid late payment interest in Vietnam?

According to Clause 3, Article 59 of the Law on Tax Administration 2019, the regulation is as follows:

Handling late payment interest

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3. Taxpayers self-assess the late payment interest as prescribed in Clauses 1 and 2 of this Article and pay it into the state budget accordingly. If the taxpayer has an overpayment of tax, late payment interest, or fines, they shall follow the provisions of Clause 1, Article 60 of this Law.

4. If, after 30 days from the final date of the tax payment deadline, the taxpayer has not paid the tax, late payment interest, or fines, the tax administration authority will notify the taxpayer of the outstanding tax, fines, and days of delay.

Referring to Clause 1, Article 60 of the Law on Tax Administration 2019, the regulation is as follows:

Handling Tax Overpayment, Late Payment Interest, and Fine Overpayment

1. Taxpayers with overpaid tax, late payment interest, or fines that exceed the payable amounts are entitled to offset the overpaid amounts against their outstanding tax, late payment interest, and fines or the payable tax, late payment interest, and fines of the next tax payment, or receive a refund when they no longer owe tax, late payment interest, and fines.

If the taxpayer requests an offset of the overpaid tax, late payment interest, and fines against their outstanding tax, late payment interest, and fines, the late payment interest corresponding to the offset amount will not be calculated for the period from the occurrence of the overpayment to the date the tax administration authority executes the offset.

According to the provisions, the late payment interest is self-assessed by the taxpayer; accordingly, if an overpayment of late payment interest occurs, the handling is as follows:

- The overpaid tax, late payment interest, and fines exceeding the payable amounts can be used to offset outstanding amounts of tax, late payment interest, and fines.

- Or deduct it from the payable tax, late payment interest, and fines of the next tax payment.

- Or receive a refund of the overpaid tax, late payment interest, and fines when the taxpayer no longer owes any.

Note: If the taxpayer requests an offset of overpaid tax, late payment interest, and fines against their outstanding amounts, no late payment interest will be calculated on the offset amount for the period from the occurrence of the overpayment to the execution of the offset by the tax administration authority.

How long can the tax payment deadline be extended in Vietnam?

According to Article 62 of the Law on Tax Administration 2019, the regulation is as follows:

Extension of Tax Payment

1. Extensions of tax payments are considered based on the request of the taxpayer in the following cases:

a) Incurring material damage directly affecting production and business due to force majeure events as defined in Clause 27, Article 3 of this Law;

b) Having to suspend operations due to relocation of production and business premises as required by competent authorities affecting production and business results.

2. Taxpayers in the cases specified in Clause 1 of this Article may receive an extension of part or all of the payable tax amount.

3. The extension period is regulated as follows:

a) No more than 02 years from the end of the tax payment deadline for cases specified in Point a, Clause 1 of this Article;

b) No more than 01 year from the end of the tax payment deadline for cases specified in Point b, Clause 1 of this Article.

4. Taxpayers will not be fined and will not have to pay late payment interest on the tax debt during the extension period.

5. Head of the directly managing tax administration authority will issue decisions on the amount of tax extension and the extension period based on the tax extension dossiers.

Therefore, the taxpayer can receive a tax payment extension as follows:

- No more than 02 years from the end of the tax payment deadline for cases of material damage directly affecting production and business due to force majeure events such as:

+ Taxpayer incurring material damage due to natural disasters, disasters, epidemics, fires, or unexpected accidents;

+ Other force majeure cases as regulated by the Government of Vietnam.

- No more than 01 year from the end of the tax payment deadline for cases where operations must be suspended due to the relocation of production and business premises as required by competent authorities affecting their production and business results.