What are the cases of late payment interest exemption in Vietnam?

What are the cases of late payment interest exemption in Vietnam?

According to Clause 27, Article 3 of the Tax Administration Law 2019, Clause 8, Article 59 of the Tax Administration Law 2019, and Clause 1, Article 3 of Decree 126/2020/ND-CP, taxpayers who owe late payment interest are exempted from paying such interest in cases of force majeure events, including:

- Taxpayers suffering from physical damage caused by natural disasters, catastrophes, epidemics, fire, sudden accidents;

- Other force majeure situations as prescribed by the Government, including wars, riots, strikes and incidents for which the taxpayer is not responsible for and cause the taxpayer to be unable to pay tax.

What are the cases of late payment interest exemption in Vietnam? (Image from the Internet)

What is the formula for calculating late payment interest in Vietnam?

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

Handling of late tax payment

1. Late payment interest shall be charged in the following cases:

a) The taxpayer pays tax behind deadline, the extended deadline, the deadline written in the tax authority’s notice, tax liability imposition decision or handling decision;

b) If the supplementation of the tax declaration dossier leads to an increase in the amount of tax payable, or the tax authority or inspecting authority finds that tax is understated, late payment interest shall be charged on the increase in tax over the period from the day succeeding the initial deadline or the deadline for tax payment of the initial customs declaration;

c) If the supplementation of the tax declaration dossier leads to a decrease in the amount of refundable tax, or the tax authority or inspecting authority finds that refundable tax is smaller than the refunded tax, late payment interest shall be charged on the excessively refunded tax, which has to be paid back to state budget, over the period from the day on which tax is refunded;

d) The cases in which outstanding debt may be paid by installments as prescribed in Clause 5 Article 124 of this Law;

dd) The cases in which administrative penalties are not imposed due to expiration of the time limit for penalty imposition but outstanding tax has to be collected as prescribed in Clause 3 Article 137 of this Law;

e) The cases in which administrative penalties are not imposed specified in Clause 3 and Clause 4 Article 142 of this Law;

g) The organization that is authorized by the tax authority to collect tax but fails to transfer the tax, late payment interest and fines paid by taxpayers to state budget in a timely manner shall pay an interest on such amount.

2. Calculation of late payment interest:

a) The rate of late payment interest is 0,03% per day on the overdue amount;

b) The period over which late payment interest is charged is a continuous period from the day succeeding the day on which late payment interest is charged as specified in Clause 1 of this Article to the day preceding the date of payment of the outstanding tax, refunded tax, increase in tax, imposed tax.

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The formula for calculating late payment interest per day is as follows:

Late payment interest per day = 0.03% x Overdue tax amount

Can taxpayers in Vietnam apply for tax deferral?

Under Article 62 of Tax Administration Law 2019, the regulations are as follows:

Tax deferral

1. A taxpayer may apply for tax deferral in one of the following cases:

a) The taxpayer’s business suffers damage due to a force majeure events specified in Clause 27 Article 3 of this Law;

b) The taxpayer has to relocate the business location as requested by a competent authority and such relocation affects the business performance.

2. A taxpayer eligible for tax deferral mentioned in Clause 1 of this Article may have part or all of the tax deferred.

3. Tax may be deferred:

a) For up to 02 years in the cases specified in Point a Clause 1 of this Article;

b) For up to 01 year in the cases specified in Point b Clause 1 of this Article.

4. The taxpayer will not incur fines and late payment interest on the outstanding tax during the deferral period.

5. In consideration of the application for tax deferral, the head of the tax authority shall decide the amount of tax deferred and the deferral period.

Thus, tax may be deferred:

- For up to 02 years the taxpayer’s business suffers damage due to the following force majeure events:

+ Taxpayers suffering from physical damage caused by natural disasters, catastrophes, epidemics, fire, sudden accidents;

+ Other force majeure situations as prescribed by the Government.

-  For up to 01 year for the taxpayer has to relocate the business location as requested by a competent authority and such relocation affects the business performance.