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

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

Under Clause 2, Article 59 of the Law on Tax Administration 2019, the method for calculation of late payment interest is stipulated as follows:

Handling late tax payment​s

...

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.

The late payment interest per day is calculated as follows:

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

What is the formula for calculating late payment interest per day in Vietnam? (Image from Internet)

What are the cases in which the late payment interest is charged in Vietnam?

According to Clause 1, Article 59 of the Tax Administration Law 2019, the cases in which taxpayers must pay late payment interest are specified as follows:

- 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;

- 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;

- 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;

- The cases in which outstanding debt may be paid by installments as prescribed in Clause 5, Article 124 of the Tax Administration Law 2019;

- 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 the Tax Administration Law 2019;

- The cases in which administrative penalties are not imposed specified in Clauses 3 and 4, Article 142 of the Tax Administration Law 2019;

- 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.

Note: Taxpayers may be exempted from late payment interest in cases of force majeure.

When will overpaid late payment interest in Vietnam be not refunded?

According to Clause 3, Article 60 of the Law on Tax Administration 2019, the overpaid tax, late payment interest or fine shall not be refunded in the following cases:

- In case the taxpayer fails to pay tax, late payment interest and fines within 30 days from the deadline for making such payment, the tax authority shall inform the taxpayer of the amount payable and the number of days behind schedule.

- The taxpayer no longer operates at the registered address, the overpaid amount has been announced through mass media and the taxpayer does not claim the refund within 01 years from the date of announcement.

- The overpaid amount has been paid for more than 10 years and the taxpayer does not request an offsetting or refund.

Additionally, if the tax, late payment interest or fine paid by a taxpayer is greater than the amount payable, the overpaid amount may be offset against the outstanding tax, late payment interest or fine, or against the tax, late payment interest or fine payable next time, or may be refunded if the taxpayer no longer has outstanding tax, late payment interest or fine.

In case the taxpayer wishes to have the overpaid amount be offset against the outstanding tax, late payment interest or fine, late payment interest shall not be charged over the period from the date on which the overpaid amount is paid to the day on which these amounts are offset by the tax authority.

2. In case the taxpayer claims a refund, the tax authority shall issue a refund decision or, if the claim is rejected, provide explanation within 05 working days from the receipt of the.