Compensational tax repayments to come with proposed interest of 9.75% p.a.

It is proposed that in the future, whether it is the taxpayer or the government owing money to one another, an interest rate of 9.75% per annum would be levied atop the repayment.

The proposal has been made in the draft of the Taxation Code (the Bill), which is now being reviewed in the parliament’s Third Standing Committee. The Committee held a meeting to discuss the Bill yesterday, with officials from the finance sector sitting in.

After the meeting, Vong Hin Fai, president of the Committee, told the press that yesterday’s meeting covered the interest rate mentioned above.

Although the interest rate per annum is proposed to be 9.75%, interest will be calculated on a monthly basis, suggesting a compound manner of interest calculation. As per the proposal, a period shorter than a month will be considered one whole month.

As proposed in the Bill, in the future, if the government erroneously charges a taxpayer extra taxes, be they illegibly or excessively charged, the government should pay interest to the taxpayer on top of the portion of tax to be repaid to the taxpayer.

Committee members suggested the government expand this proposal to all types of tax, because currently only consumption tax is targeted. Government officials accepted the suggestion.

At the same time, in the future, if a taxpayer fails to pay taxes punctually, when they repay the government the sum of taxes and interest, they will also be required to pay a fine amounting to 3% of the taxes to be paid. 

The effective period for the calculation of interest will be shortened to three years, while the period for the recovery of unpaid taxes will be 15 years.

Proceeds from illicit activities will also be taxed when such illegalities are convicted by a court of law. AL