Vietnam Needs to Drop Tax Penalty Rate
September 21, 2015 Taxation in Vietnam
HANOI – Unpaid taxes in Vietnam are charged a penalty of as high as 18.25 percent, a rate that is too high for some taxpayers to keep up with.
In a media report issued late last week the Ministry of Finance in Vietnam called on the government to change the regulations regarding the rate of interest applied to unpaid taxes, as currently the rate is effectively 18.25 percent.
Currently the rate applied to unpaid taxes is approximately 0.05 percent per day, equating to an annual rate of 18.25 percent.
Until January 1st 2015 the rate was previously set at 0.05 percent over the first 90 days when the tax is unpaid, rising to a rate of 0.07 percent per day, equating to a rate of 25.5 percent.
The Ministry has called for the rate to be occasionally revised in order to ensure that the effective annual rate matches the rate charged by commercial banks, which is currently approximately 9.5 percent to 10.5 percent.
It was suggested that reducing the rate may improve compliance, as overly onerous penalty rates discourage businesses from making any payments at all.
Photo By: Karl Baron