Vietnam: What is the current rate of late tax payment interest? In case late tax payment interest paid by a taxpayer is greater than the amount payable, what is the handling of the overpaid amount?
What is the current rate of late tax payment interest in Vietnam?
Pursuant to Clause 2, Article 59 of the Law on Tax Administration 2019, the current rate of late tax payment interest in Vietnam is specified as follows:
Handling of late tax payment
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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.
Thus, the rate of late tax payment interest is 0,03% per day on the overdue amount.
Accordingly, the late payment interest per day is calculated as follows:
Rate of late payment interest per day = 0.03% x overdue amount
What are the cases in which late tax payment interest in Vietnam shall be charged?
Pursuant to Article 59 of the Law on Tax Administration 2019, late tax payment interest in Vietnam shall be charged in the following cases:
- The taxpayer pays tax behind the 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 the 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 Law on Tax Administration 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 Law on Tax Administration 2019;
- The cases in which administrative penalties are not imposed as specified in Clause 3 and Clause 4 Article 142 of Law on Tax Administration 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 the state budget in a timely manner shall pay an interest on such amount.
In case late tax payment interest paid by a taxpayer is greater than the amount payable, what is the handling of the overpaid amount?
Pursuant to Clause 3, Article 59 of the Law on Tax Administration 2019 as follows:
Handling of late tax payment
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3. Taxpayers shall calculate the late payment interest themselves in accordance with Clause 1 and Clause 2 of this Article and pay it to state budget as prescribed. Overpaid tax, late payment interest and fines shall be handled in accordance with Clause 1 Article 60 of this Law.
4. 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.
Referencing Clause 1, Article 60 of the Law on Tax Administration 2019 as follows:
Handling of overpaid tax, late payment interest and fines
1. 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.
According to regulations, since late tax payment interest is determined by the taxpayer, there will be cases where the taxpayer overpays the amount payable. At this time, the overpaid amount will be handled as follows:
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
- offset against the tax, late payment interest or fine payable next time
- or refunded if the taxpayer no longer has outstanding tax, late payment interest or fine.
Note: 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.
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