Tax interest - everything you want to know
Entrepreneurs running a business must remember about the dates of payment of advances for income tax, VAT or ZUS. However, it happens that in some cases these obligations are not paid in a timely manner. As a result, tax arrears and late payment interest arise. Read the article below and find out what the tax interest rates are and in what cases they are not charged.
Tax interest and the obligation to pay
If the tax office has not registered the payment of taxes, the obligation to pay tax interest can be avoided if the delay was not too long and the amount due was not too high. Pursuant to the Tax Ordinance Act, and more specifically Art. 54 par. 1 point 5, the late payment interest shall not be charged if it does not exceed three times the fee charged by the post office for treating a letter-post item as a registered item. This amount is currently PLN 8.70 (3 x PLN 2.90).
Interest rate from 2016
From 2016, new regulations were introduced regarding the rate of interest for late payment of tax arrears, i.e. a reduced rate and an increased rate.
Reduced rate of tax interest
In a situation where the entrepreneur himself (without the participation of the tax authority) submits a correction of the declaration within 6 months from the date of expiry of the deadline for submitting the declaration and pays the arrears within 7 days (from the date of submission of the correction), then he may apply a reduced rate in the amount of half the basic rate, ie 4%.
It should be emphasized that the reduced rate of tax interest may be applied regardless of the amount of the disclosed arrears!
If the taxpayer submits an amendment to the declaration after June 30, 2016, which reveals the tax arrears arising before January 1, 2016, the tax interest should be paid at the reduced tax interest rate. This rate is equal to ¾ of the basic rate, ie 6%. The above provisions were also confirmed in the individual interpretation of the Director of the Tax Chamber in Warsaw, ref. No. IPPP2 / 4518-1 / 16-2 / AO, June 27, 2016.
On the other hand, when the correction of the declaration revealing tax arrears arising before January 1, 2016 was submitted between January 1 and June 30, 2016, the taxpayer had the right to apply a reduced rate of late payment interest in the amount of 50% of the basic rate.
The taxpayer made a mistake in the VAT-7 return for October 2015. The result of the corrections is to submit the correction of a given declaration by yourself and to pay the arrears within 7 days from the date of submitting the correction.
The taxpayer could apply a reduced rate of interest for late payment in the amount of 50% of the basic rate, if he submitted a correction of the declaration within the period from 1 January to 30 June 2016.
The taxpayer should apply the tax interest rate amounting to ¾ of the basic rate - 6% if the correction of the tax return was submitted after June 30, 2016.
Increased tax interest rate
With regard to arrears in value added tax, excise duty and customs duties, the currently increased tax interest rate is 150% of the standard rate, i.e. 12%. It applies when the tax authority detects, e.g. during tax audits or tax proceedings, an understatement of the tax liability in an amount exceeding 25% of the amount due and more than PLN 10,000 (five times the basic salary, which in 2017 amounts to PLN 2,000) or in the absence of declaration and payment of tax.
Tax interest - how to determine its amount?
When determining the amount of tax interest, multiply the amount of tax arrears by the number of days of delay and the interest rate applicable in that period. Next, the obtained result should be divided by 365 days and the obtained value should be rounded off.
Amounts with endings of 50 groszy and more are rounded to full zlotys. On the other hand, less than 50 groszy are omitted!
It should be added that a tax interest calculator is very often helpful in practice.
To sum up, taxpayers should remember to pay their liabilities to the tax office on time. In the event of failure to comply with it, late payment interest is charged, which, depending on the given situation, may be charged at a reduced or increased rate.