When is the time for calculating late payment interest in Vietnam? If a supplementary tax return increases the tax payable, is late payment interest required?

When is the time for calculating late payment interest in Vietnam?

Based on Article 21 of Circular 80/2021/TT-BTC on handling late payment interests, the following is stipulated:

- Determining the Late Payment

The determination of the late payment amount is based on the overdue tax amount, the number of days late, and the late payment rate as stipulated in Article 59 of the Law on Tax Administration 2019.

The late payment calculation period is continuous from the day following the occurrence of the overdue payment until the day before the taxpayer pays the overdue tax into the state budget.

- Notification of Late Payment

Monthly, the tax authority notifies the taxpayer of the late payment amount along with the tax debt notification (according to form No. 01/TTN issued with Appendix 1 of Circular 80/2021/TT-BTC) for those taxpayers whose tax debts have been overdue by 30 days or more.

For non-agricultural land use tax, the tax authority notifies the taxpayer, who is an individual or household, of the tax debt and late payment through the authorized collection organization.

To resolve administrative procedures for the taxpayer or at the request of competent state agencies, the tax authority determines and notifies the tax debt up to the point when the tax authority issues the notice (according to form No. 02/TTN issued with Appendix 1 of Circular 80/2021/TT-BTC).

- Adjusting the Reduction of Late Payment

+ If the taxpayer revises their tax declaration dossier, reducing the tax liability, they can self-determine the reduced late payment amount on the revised declaration. The tax authority will base on the taxpayer’s obligation management information to determine the reduced late payment and notify the taxpayer according to form No. 03/TTN issued with Appendix 1 of Circular 80/2021/TT-BTC.

+ In case the tax authority or competent state agency discovers during inspection or audit that the payable tax amount is reduced or issues a decision or notification of the reduced tax amount, the tax authority will adjust the late payment amount calculated corresponding to the reduced tax difference and notify the taxpayer according to form No. 03/TTN issued with Appendix 1 of Circular 80/2021/TT-BTC.

Thus, according to the regulation, the calculation period for late payment interests starts from the day following the occurrence of the overdue payment until the day before the taxpayer pays the overdue tax into the state budget.

When is the time for calculating late payment interest in Vietnam? If a supplementary tax return increases the tax payable, is late payment interest required? (Image from Internet)

f a supplementary tax return increases the tax payable, is late payment interest required in Vietnam?

According to Clause 1, Article 59 of the Law on Tax Administration 2019, cases requiring late payment interest include:

- The taxpayer pays the tax later than the stipulated deadline, extended deadline, deadline in the tax authority’s notification, or deadline in the tax determination or handling decision by the tax authority;

- If a taxpayer revises a tax declaration leading to increased taxes or the tax authority or competent state agency discovers underpayment during inspection or audit, the taxpayer must pay a late payment on the additional due taxes from the day following the final deadline of the tax period with the error or from the expiry date of the initial customs declaration;

- If the taxpayer revises a tax declaration reducing the refunded taxes or the tax authority or competent state agency discovers the refunded tax is less than what has been refunded, they must pay late payment on the refunded taxes to be recovered from the day of receipt from the state budget;

- Cases where installment payment of tax debts is allowed as per Clause 5, Article 124 of the Law on Tax Administration 2019;

- Cases exempt from administrative penalties for tax management due to the expiration of the penalty term but subject to tax recovery as per Clause 3, Article 137 of the Law on Tax Administration 2019;

- Cases exempt from administrative penalties for tax management for violations as per Clauses 3 and 4, Article 142 of the Law on Tax Administration 2019;

- Agencies or organizations assigned by the tax authority to collect taxes that delay transferring tax, late payment, or penalties to the state budget must pay late payment on the delayed amounts as per regulations.

Thus, according to the above regulation, a supplementary tax return that increases the tax payable is one of the cases requiring late payment interest.

Does late payment interest fall under state budget revenue managed by the tax authority in Vietnam?

According to Clause 2, Article 3 of the Law on Tax Administration 2019, it stipulates as follows:

Terminology Explanation

In this Law, the following terms are understood as follows:

1. Tax is a compulsory payment to the state budget by organizations, households, business households, individuals as stipulated by tax laws.

2. Other revenues under the state budget managed by the tax authority include:

a) Fees as defined by the Law on Fees and Charges;

b) Land use fees paid into the state budget;

c) Land and water surface rental fees;

d) Fees for the licensing of mineral exploitation;

đ) Fees for the licensing of water resource exploitation;

e) Payments to the state budget from the sale of assets on land, transfer of land use rights according to the Law on Management and Utilization of Public Property;

g) Revenues from administrative fines as stipulated by law on handling administrative violations in the field of tax and customs;

h) Late payments and other revenues as defined by law.

...

Thus, according to the above regulation, late payment interests fall under the revenues of the state budget managed by the tax authority.