Penalty for late payment of value added tax (VAT)

Value added tax (VAT) is a tax calculated on the added value of goods and services arising during the process of production, circulation, and consumption. So when paying tax late, what kind of penalty will the subjects obliged to pay value-added tax pay? In this article, Viet An Law Firm – Tax Agent will summarize the regulations on the penalty for late payment of value added tax (VAT) according to current Vietnamese law.

Legal basis

• Law on Tax Administration 2019;
• Value Added Tax Law 2008 amended and supplemented 2013, 2014, 2016;
• Decree 126/2020/ND-CP detailing several articles of the Law on Tax Administration, amended and supplemented by Decree 91/2022/ND-CP ;
• Decree 125/2020/ND-CP regulating penalties for administrative violations of taxes and invoices, amended and supplemented by Decree 102/2021/ND-CP;
• Circular 80/2021/TT-BTC guiding the implementation of several articles of the Law on Tax Administration and Decree No. 126/2020/ND-CP detailing several articles of the Law on Tax Administration, amended and supplemented by Circular 13/2023/TT-BTC and Circular 43/2023/TT-BTC.

Regulations on the VAT payment deadline

Article 44, 55 Law on Tax Administration 2019 (on tax payment deadline), Article 8 of Decree 126/2020/ND-CP (on taxes divided by tax declaration period), the current VAT payment deadline is prescribed as follows:

Penalty for late payment of value added tax (VAT)

The rate for calculating late payment of VAT and the time for calculating the fine for late payment of VAT are specified in Article 59 of the Law on Tax Administration 2019 as follows:

• The late payment interest rate is 0.03%/day calculated on the late payment tax amount;
• The time for calculating late payment interest is calculated continuously from the day following the date on which the prescribed late payment interest arises until the day immediately preceding the date of the tax debt amount, tax refund recovery, increased tax, or assessed tax, Lately transferred taxes have been paid into the state budget.

Formula to calculate the penalty for late payment of VAT:

Amount of late payment of VAT = Amount of late payment of VAT x 0.03% x Number of days of late payment

For example: Company A’s late payment of VAT is 100 million VND, the delay in payment is 150 days, then the amount of late payment of VAT is determined as follows: Amount of late payment of VAT = 100 million VND x 0.03% x 150 days = 4.5 million. Therefore, the fine for late payment of VAT according to the provisions of the Law on Tax Administration is 4.5 million VND.

Administrative penalties for late payment of VAT

Administrative fine

Normally, when businesses submit tax declarations, they will also pay taxes to the state budget. Therefore, late tax payment is often a consequence of late submission of tax returns. In case late submission of tax declaration documents leads to late tax payment, Article 13 of Decree 125/2020/ND-CP stipulates the administrative penalties as follows:

Note:

• The above fine applies to individuals, and double the penalty to legal entities that commit similar acts.
• Accompanying remedial measures: Forced to pay the full amount of late tax payment and late tax declaration dossiers.

Late payment of administrative fine

In addition to the fine for late payment of VAT as above, in case of late payment of administrative fines according to the administrative penalty decision issued by the tax authority, the violator must also pay an additional late payment fee according to Clause 1, Article 42 of Decree 125/2020/ND-CP regulating penalties for administrative violations of taxes and invoices, amended and supplemented by Decree 102/2021/ND-CP stipulates as follows:

• Organizations and individuals who are late in paying fines for administrative violations of taxes and invoices will be charged a late payment fine at the rate of 0.05%/day calculated on the late payment fine.
• The number of days late in paying fines includes holidays and days off according to regulations and is calculated from the day following the expiration date of the fine payment deadline to the day immediately preceding the date the organization or individual pays the fine into the state budget.

The formula for calculating late payment interest and late payment VAT fine:

Amount of late payment fine = Amount of late payment fine x 0.05 x Number of days of late payment

Procedures for state agencies to handle late payment of Value Added Tax (VAT)

Article 21 of Circular 80/2021/TT-BTC, as amended and supplemented by Circular 13/2023/TT-BTC and Circular 43/2023/TT-BTC stipulates the handling of late payment of Value Added Tax increase as follows:

Determine late payment interest

Determining the amount of late payment interest is based on the amount of late payment tax, the number of days of late payment, and the late payment interest rate specified in Article 59 of the Law on Tax Administration. The time for calculating late payment interest is calculated continuously from the day following the date of late payment interest to the day immediately preceding the date the taxpayer pays the tax debt to the state budget.

Notice of late payment interest

Every month, the tax authority notifies about the VAT amount of late payment along with a notice of tax debt (according to form No. 01/TTN issued with Appendix I of Circular 80/2021/TT–BTC) for taxpayers with the tax debt is 30 days or more past the payment deadline.

To handle administrative procedures for taxpayers or at the request of a competent state agency, the tax agency determines and notifies the tax debt up to the time the tax agency issues the notice (according to form no. 02/TTN issued with Appendix I Circular 80/2021/TT-BTC amended and supplemented by Circular 13/2023/TT-BTC and Circular 43/2023/TT-BTC).

Can VAT payment be extended?

Currently, the law stipulates several cases where tax payment and VAT declaration can be extended, including cases prescribed in Article 62 of the Law on Tax Administration 2019 or extended from time to time according to Government regulations to implement monetary policy, security, and order, and promote the economy (such as Decree 12/2023/ND-CP on extending tax payment deadlines). the added value applied in 2023 ).

For cases of extension according to law, Article 62 of the Law on Tax Administration 2019 has the following two cases:

Tax accounting services of Viet An Law Firm – Tax Agent

• Review and re-check all VAT declaration documents of the enterprise;
• Complete tax accounting records and books for businesses;
• Consulting on implementing corporate tax obligations;
• Representative to carry out tax declaration procedures and pay VAT and CIT for businesses;
• Calculate the penalty for late payment of VAT for businesses (if any);
• On behalf of businesses, work directly with tax authorities, explain VAT declaration documents, finalization, and tax inspection;
• Consulting on tax obligations upon dissolution or termination of operations;
• Regular tax legal advice for businesses.

Thus, in case of late tax payment, businesses may be subject to: (i) Fine for late payment of tax, (ii) Administrative fine for late payment, (iii) Penalty for late payment of administrative fine. To avoid the risk of violating VAT regulations, clients should use tax accounting service, please contact Viet An Law Firm – Viet Tax Agent for the fastest support!