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

What are the cases in which late payment interest shall be charged in Vietnam? (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. What are the cases in which late payment interest shall be charged in Vietnam? 

According to Clause 1, Article 59 of the Law on Tax Administration 2019, late payment interest shall be charged in the following cases:

- 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 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 this Law;

- The cases in which administrative penalties are not imposed specified in Clause 3 and Clause 4 Article 142 of the 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 state budget in a timely manner shall pay an interest on such amount.

2. What are the cases in which late payment interest shall not be charged in Vietnam? 

Pursuant to Clause 5, Article 59 of the Law on Tax Administration 2019, late payment interest shall not be charged in the following cases:

- The taxpayer provides goods/services which are covered by state budget, including sub-contractors in the contract with the investor, and are directly paid for by the investor. If such goods/services are not yet to be paid for, late payment interest will not be charged.

The outstanding tax exempt from late payment interest is the tax on the amount that is yet to be paid by state budget;

- Cases where late payment interest shall not be charged pending the analysis result, official price, actual payment or additional customs value.

Goods that need to under analysis to determine tax payable, goods without official prices when the customs declaration is registered;

Goods for which the payment; goods for which payments and added amounts to the customs value are unknown when the customs declaration is registered.

when there is no official price yet;

During the period when the actual payment has not been determined, the adjustments are added to the customs value.

3. Calculation and rate of late payment interest in Vietnam

Calculation of late payment interest:

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

- 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 payment interest will be calculated as follows:

Rate of late payment interest = 0.03% x (overdue amount) x (Number of days of late payment)

Taxpayers determine the amount of late payment interest according to the above regulations and pay it into the state budget according to regulations.

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.

(Clause 2, 3, 4, Article 59 of the Law on Tax Administration 2019)

Nguyen Ngoc Que Anh

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