Are there set dates for payment of tax, provisionally or in arrears, and what happens with amounts of tax in dispute with the regulatory authority?
Tax (2nd Edition)
Taxes have their date of payment and a late payment is only allowed if there is an agreement with Tax Administration with or without the relevant warranties. If we incur in late payment, it shall be made as soon as possible in order to avoid an obligation surcharge and the accrual of interests.
When there is litigation with Tax Administration, the amounts payable of taxes accrue interests until the obligation to pay is whether fulfilled or annulled. And if during the lawsuit, we have not paid the debt to Tax Administration, we are obliged to warranty it (by means of an endorsement or a mortgage).
The dates for payment depend on the taxes involved and on the tax deed incorporating them (e.g., tax decision issued by the tax authorities as a result of a tax audit or tax return filed by the taxpayer). In case of tax decisions issued as a result of a tax audit performed by NAFA, the additional taxes imposed under the decision must be paid either until the 5th, or the 25th of the following month after the tax decision is communicated to the taxpayer, depending on the exact date of such communication. In case of disputes regarding the amounts imposed by NAFA, the taxes imposed under tax deeds are still owed, unless their enforcement is suspended as per the law.
However, under the current legislation, challenging the tax assessment does not imply also the suspension of its effects. Hence, in order to avoid immediate tax payment, the taxpayer could either obtain a court decision with that effect or provide the authorities with a payment guarantee (i.e., a letter of bank guarantee or an insurance policy).
By Government Ordinance no. 30/2017 an important amendment was brought in what regards the submission of the letter of bank guarantee. Specifically, the legal provisions now stipulate that the enforcement is suspended/does not start if the taxpayer notifies the tax authority, after receiving the tax assessment decision, that it will submit a letter bank of guarantee. In this regard, the enforcement will continue/will start in case the taxpayer does not submit the letter of bank guarantee within 45 days as of receiving the tax assessment decision.
We have limited the response to this question to dealing with income tax. Before income tax can become due and payable, the Commissioner must make an assessment of the taxpayer’s income tax liability. For full self-assessment taxpayers (including companies), the filing of the tax return is deemed to be the making of an assessment. The due date for lodgement of a tax return depends on certain criteria, though for most taxpayers with a standard income year ending 30 June, their return will be due by 31 October. For other taxpayers (such as individuals), the Commissioner must issue a formal assessment. For most taxpayers, any income tax payable will be due 21 days after lodgement of their tax return.
Certain taxpayers with income exceeding specified thresholds are required to pay their expected tax liabilities by way of monthly, quarterly or annual instalments. These are referred to as Pay as you go (PAYG) instalments. The instalments are credited against the actual tax liability incurred, as assessed for an income year. The rationale behind requiring taxpayers to pay tax in instalments is to mitigate risks associated with taxpayers failing to adequately provide for their tax liabilities throughout the year. The Commissioner also has the discretion to grant extensions for payment due dates.
If a taxpayer disputes an assessment, the due date for payment of the assessed amount does not change. The taxpayer may lodge an objection to the assessment, but they are still required to pay the outstanding amount. For disputed tax liabilities, the ATO may offer taxpayers the option to enter into a ‘50/50 arrangement,’ under which the Commissioner agrees to defer payment of 50% of the disputed tax debt and related amounts (including any penalties or interest) until 14 days after the dispute is determined. In order to be granted this deferral, the taxpayer must agree to pay 50% of the disputed tax debt, along with the full amount of any undisputed tax debt, and cooperate fully with the ATO in providing information the ATO requests. Under these arrangements, if the taxpayer is unsuccessful in the dispute proceedings, then the Commissioner also agrees to remit 50% of the general interest charge that would otherwise be incurred by the taxpayer.
Corporate income tax is paid through 4 instalments during the said financial year (15 March, 15 June, 15 September, 15 December Y) and the balance is due on 15 April of the next financial year. Personal income tax is currently paid through quarterly instalments and balance during the year after the one upon which the tax is due. A major reform had been voted in order to withhold the personal income tax on a monthly basis ('le prélèvement à la source') and should apply as from 2019.
VAT is repaid to the Treasury between the 15 and 20 of the month following the one upon which the tax is due.
Further to a tax reassessment, and once the taxpayer receives a 'Avis de mise en recouvrement' (tax collection notice), the latter must pay the whole amount of reassessed tax including penalties (5% or 10%) and interest for late payment (at a rate of 0.4% per month or 4.8% per year).
If the taxpayer decides to challenge the tax collection notice, via a tax claim and then to go to court, payment of the reassessed tax may be deferred until the end of the first level of the court proceedings provided that the taxpayer secures the payment and provides the FTA with financial guarantees.
If the court rules in favour of the taxpayer, the FTA will repay the amount paid initially by the taxpayer, increased by late interest, or will have to refund the cost of the guarantees the taxpayer put in place if he asked for a deferral of payment.
If the court rules in favour of the FTA, the payment of the reassessed tax including penalties and interest for late payment (same rate of 4.80% per year) becomes final and the taxpayer must proceed to payment if he asked for a deferral.
Individuals who have a balance owing for a taxation year must pay on their taxes in full or before April 30 of the following year in order to avoid incurring interest charges. Self-employed individuals are usually required to make pre-determined instalment payments each quarter, by the 15th of each of March, June, September and December (or, if the due date falls on a weekend or public holiday, the next business day), and any remaining balance must be paid by April 30 of the following year. Corporations are usually required to pay their taxes in quarterly or monthly instalments, and any balance owing after payment of the instalments must be paid within two or three months after the end of the fiscal year.
When a taxpayer disputes an assessment of tax, either by filing an objection or by initiating an appeal in the Tax Court of Canada, the CRA is usually barred from collecting the tax until the matter is resolved. However, where an objection is filed by a “large corporation,” as defined by the Income Tax Act, 50% of the amount in dispute is collectible while the dispute remains unresolved. (A corporation is classified as a “large corporation” for the year if, at the end of the year, the total taxable capital employed in Canada by it and its related corporations exceeds $10 million.)
Collection also is not suspended where the dispute pertains to the federal goods and services tax, as well as taxes that the CRA alleges should have been withheld at source from employees or non-residents. In addition, collection may proceed in certain rare cases where the CRA is able to establish that its ability to collect the disputed tax - if the assessment were upheld - would be jeopardized by the delay.
Corporate tax must be prepaid on a quarterly basis. The prepayments correspond to the estimated current year's income.
Non-deductible surcharges will be imposed if the prepayments are not done, or if they are insufficient.
A late payment interest ("LPI") at an annual rate of (currently) 7% is due on tax that is paid belatedly. If the taxpayer contests the tax assessment and leaves the tax unpaid, the LPI will eventually be due if he loses the tax dispute. Whenever possible in practice, the taxpayer will choose to pay the disputed tax, as this will allow him to avoid the LPI and will even generate a LPI of (currently) 7% in his favor if he wins the tax dispute.
Every different kind of tax has a set date for payment. If it is not paid on time it becomes enforceable. There are no provisionally dates for payment.
Amounts of tax in dispute are also enforceable unless the preliminary execution is not stopped by the court or by a competent body from the tax administration as a result of a special proceeding requested by the taxpayer.
Generally, taxpayers must pay all tax owing by the due date of the tax return. In many cases, taxes or estimated taxes must be paid quarterly. Payments received after the due date are subject to interest and penalties. Taxpayers do not need to pay disputed tax in advance of litigation in cases before the IRS Appeals or the Tax Court. Tax disputes before a federal district court or the Court of Federal Claims must be paid in advance.
The taxpayer is required to pay the amount of taxes specified in the filed tax return, within 10 calendar days following the last day of the relevant deadline provided for submission of the tax return.
If tax authorities discover any facts of breaching of the tax legislation, they are authorized to determine the amount of tax that shall be paid by the tax payer and send the respective tax notice decision to the taxpayer.
The taxpayer is obliged to pay the accrued amount of taxes stipulated in the tax notice decision within 10 calendar days following the day the tax notice decision is received, except in cases when during such a period, the taxpayer initiates a procedure of appeal against the decision of the tax authority.
According to Ukrainian legislation, during the period of the administrative appeal procedure and judicial proceeding, the amount of taxes to be payed shall be deemed as “not agreed”.
Taxes in dispute with the regulatory authority must be paid by a taxpayer only after the completion of the administrative appeal procedure, or if the taxpayer filed a lawsuit after the entry of court decision into legal force, and only in the event of losing the case.
The tax year in Cyprus for individuals and companies is the calendar year.
Both individuals and companies must submit a provisional estimate of profits and tax payable for the year by 31 July of the tax year, together with a remittance of half the estimated tax payable. The estimates may be revised at any time before 31 December of the tax year, and the balance of the estimated tax payable must be paid by then. A penalty may be imposed in the event of an excessive difference between the first and the final estimate.
Individuals who are exempt from the requirement to provide audited financial statements are required to submit their final tax return for the year, with a remittance for any tax payable, by 30 September following the end of the tax year. Tax returns must be submitted electronically via the official TAXISNET system.
Employers must submit their return of payments to employees and tax deducted for each tax year no later than 31 July of the following year.
Companies and individuals who are obliged to provide audited financial statements are required to pay the balance of tax due by 1 August following the end of the tax year. The final tax return must be submitted before 31 March of the following year (15 months after the end of the year in question).
For corporates with taxable profits of up to £1.5m, tax must be paid nine months and one day after the end of the accounting period. Where taxable profits exceed £1.5m, businesses must pay their tax in four equal instalments. If a company has a 12 month accounting period, instalments are due:
- 6 months and 13 days after the first day of the accounting period
- 3 months after the first instalment
- 3 months after the second instalment (14 days after the last day of the accounting period)
- 3 months and 14 days after the last day of the accounting period
The ultimate date for payment of self-assessed income tax is 31 January following the tax year ending in the previous April. There is also a system of advance payments, known as payments on account, which operates in some cases. However a year’s income tax liability must be settled by 31 January.
It is possible on application to defer paying tax where the amount is in dispute.
However, since 2014, in the case of tax avoidance schemes which are or should have been registered under the Disclosure of Tax Avoidance Schemes (DOTAS) rules HMRC has the power in certain circumstances to require payment of disputed tax in advance of ultimate resolution of the dispute. HMRC exercises the power to require prior payment by issuing an “Accelerated Payment Notice” or “Partner Payment Notice” (APN or PPN) depending on whether the scheme in question involved a partnership (sections 199-233 and Schedule 30-33 Finance Act 2014). The taxpayer has 90 days to object in writing, following which HMRC will confirm, withdraw or amend the notice. There is no right of appeal against the confirmation of an APN or PPN.
Similarly the Diverted Profits Tax incorporates an advance payment procedure, against which there are only very limited appeal rights.
Corporate Income tax is due in April of every year. Individual Income tax is due in March of every year. Due dates are based on the ninth digit of the tax ID number.
Tax liabilities in administrative proceedings are suspended until final resolution. Tax disputes at court suspend the tax liability but the taxpayer needs to secure 10% of the liability (bond, insurance or cash). Otherwise, the claim will be unadmitted.
For employees, collection of tax is through a ‘Pay-As-You-Earn’ system, which requires the employer to deduct the corresponding tax from salaries and pay this directly to the Income Tax Office. Payment is due by the 15th day of the month following the liability.
Self-employed individuals are required to make two payments on account of tax on 31st January and 30th June of each year.
Companies are required to make payments on account of tax on 28th February and 30th September in each calendar year.
Anybody appealing against the amounts charged can apply to the Commissioner to have postponed all or part of the taxation shown as payable on the assessment (other than that part of the taxation which is not in dispute).
Taxpayers are generally required to make monthly advance payments of corporate taxes (typically calculated as a percentage of the taxpayer’s turnover) throughout the tax year, on account of the annual tax liability, and to pay any balance shown on the tax return when submitted.
If a taxpayer appeals an assessment to the District Court and pending its ruling, tax amounts under dispute (including interest and indexing payments thereon) are suspended.
Payment of VAT is made on a periodic basis with submission of a periodic VAT return (filed on a monthly basis if a certain turnover threshold is exceeded, and if not, bi-monthly). Similar treatment with respect to payment of disputed VAT amounts applies.
Generally, taxpayers do not need to pay the amounts in dispute in advance of litigation in cases before the cantonal and federal courts, except for the Federal Supreme Court.
Income taxes are usually to be paid in three moments of the year: a first advance payment by the end of the sixth month of the relevant tax year; a second advance payment by the end of the eleventh month of the relevant tax year and the balance payment by the end of the sixth month following the end of the relevant tax year. The advance payments are computed on the basis of the tax payments of previous years. Such deadlines may be postponed. It is possible to pay the relevant amounts of taxes in instalments (in such a case, interest are due).
In the case of assessment notices issued by the tax authorities, additional taxes as well as penalties and interest are usually to be paid within 60 days from receipt of the notice. In the case the assessment notice is appealed, the taxpayer is required to make provisional partial payment of the tax in dispute. In certain instances, e.g., transfer pricing adjustments, the taxpayer can claim the suspension of collection.
Each of the existing taxes in Portugal has different dates and procedures for the respective payment.
As an example, the CIT is paid in installments. Three payments on account of the final tax due in July, September, and up to 15 December of the year in which taxable income arises corresponding to 95% of the previous year's corporate tax assessment (for taxpayers with a turnover above EUR 500,000.
Generally, for tax litigation pending before the Tax Authority or in judicial proceedings, instead of paying the amount of tax in dispute, taxpayers may provide bank guarantees.
This solution has two advantages, in case of success in the pending case:
- The taxpayer does not need a request for reimbursement to the Tax Authorities;
- The taxpayer may be reimbursed for expenses related to the provision of bank guarantee (including Stamp Duty), by means of a request to the Tax Authorities.
The payment dates vary depending on the specific tax in question, as set out below:
(a) Withholding tax – a taxpayer who makes certain types of specified payment (e.g. management and professional fees) is required to deduct withholding tax at the appropriate rate and remit the tax to the KRA on or before the 20th day of the month following the month in which the deduction is made. Failure to make a deduction or to remit the WHT deducted attracts a penalty equal to 10% of the amount of tax involved (subject to a maximum of KES 1 million) and accrues interest at 1% per month.
(b) Instalment tax – taxpayers earning business income are required to pay an instalment tax on a quarterly basis during the year, based on the lower of 110% of the previous year’s liability or an estimate of the current year’s liability. 25% of this estimated annual tax is payable on or before the 20th day of the fourth, sixth, ninth and twelfth month of the accounting period. For companies operating in the agricultural sector, they are required to pay two instalments of 75% in the ninth month and 25% in the twelfth month.
(c) With respect to employment income, Pay As You Earn (PAYE) deducted by the employer from emoluments paid to an employee on a monthly basis and should be remitted to the KRA before the 10th day following the end of every month.
(d) A taxpayer registered for value added tax (VAT) is required to remit the VAT due on or before the twentieth day of the month following the month in which the supply, to which the VAT relates, was made.
Amounts in dispute
A taxpayer who has lodged a notice of objection to the decision of the Commissioner of Domestic Taxes or filed an appeal to the Tax Appeals Tribunal is only required to pay the taxes that are not in dispute. There is no requirement to pay taxes in dispute prior to lodging an appeal at the Tax Appeals Tribunal. The same case applies to an appeal to the High Court.
Taxpayers of Corporate Income Tax are obliged to pay monthly tax advances by the 20th day of the month following the month for which the advance was due. This is calculated based on the income derived from the beginning of a given tax year and is decreased by the tax advances paid in the preceding months. In certain cases, taxpayers can use a simplified method in which the monthly tax advances are paid based on the income shown in the tax return filed in the preceding tax year.
VAT payments are made by the 25th day of the month following the month for which the tax is paid. This is calculated based on the VAT sales and purchases in a given month.
Other specific taxes have their own rules of payment. For example, the Real Estate Tax should be paid by legal persons by the 15th day of each month.
In the case of a tax dispute, the decision of the tax authority is not enforceable until it has been reviewed by the second instance tax authority (usually the Director of the Tax Chamber). After the second instance tax authority has resolved the appeal from the decision of the first instance authority (usually the Head of the Tax Office) the decision is enforceable unless the execution of the decision has been suspended by the tax authorities or the administrative court to which the decision has been appealed.
Yes. For example, for corporate taxpayers, corporation tax and consumption tax are due by the date of filing tax returns, i.e., two or three months after the close of the relevant fiscal year. In addition, corporate taxpayers make certain interim tax payments during the relevant fiscal year of corporation tax and consumption tax, which effectively are prepayments of the final tax that will be due by the tax returns for that fiscal year. In addition, withholding tax (which is imposed on certain prescribed types of payments such as remunerations of directors and employees, interest, dividends, etc.) is generally due to be paid by the 10th day of the month immediately following the month in which the subject payment was made.
Even if the taxpayer disputes a tax assessment, in prevailing practice, the taxpayer once pays the assessed tax in advance of the resolution of the dispute. This is because the taxpayer’s objection does not have an effect of suspending the enforceability of the assessment and accrual of delinquency tax; so taxpayers have to pay in advance in order to avoid attachments and other collection enforcement actions and paying delinquency tax. Technically there is a provision to postpone tax liabilities upon a petition to the tax authority, however, in practice, it is very rare that such postponement is granted. The exception to this rule is a transfer pricing assessment; that is, if a transfer pricing assessment is issued and if the taxpayer files an application for a mutual agreement procedure to resolve double taxation, the payment of the assessed tax will be suspended, upon an application by the taxpayer, until the resolution of the case through the mutual agreement proceeding, subject to provision of security to the government.
Most taxpayers that are subject to corporate income tax receive a preliminary assessment for the current year at the beginning of that year. The amount of this assessment is a provisional calculation based on data from previous years. Preliminary assessments can be paid in monthly instalments. Should the taxpayer have an dispute with the Dutch tax authorities, the payment of the disputed amount can be postponed until a final judgement is issued.
Depending on the tax at hand or the applicable tax regime, different set dates for payment could apply. For instance, income tax is generally paid by means of an annual tax return that must be filed within the first three months following the end of the fiscal year for which it is being filed. However, taxpayers are also required to file estimated monthly returns relating to income tax due. Concerning value added tax, taxpayers ought to file their corresponding returns on a monthly basis.
In pursuance of the Federal Tax Code, whenever the applicable law does not indicate the relevant tax’s date of payment, it ought to be paid by means of a tax return filed: (i) within the first seventeen days of the subsequent month for which the corresponding tax is being paid, in cases where the taxpayer is required to withhold; or (ii) within the next five days after the corresponding tax has been caused for all other cases.
In cases where taxpayers challenge a tax liability before the Tax Administration Service, the payment in dispute is postponed until the corresponding administrative resolution is issued and served to the taxpayer.
Notwithstanding the foregoing, whenever taxpayers challenge a tax liability before the Local or Federal Court of Administrative Justice or any court of the judicial branch, the disputed amount ought to be guaranteed by the taxpayer in order for it not be collected by tax authorities.
In any case, once the tax dispute has been resolved, the winning party is entitled to receive the disputed amount updated to present value as well as interests accrued in connection therewith (interests are accruable for up to five years).
Corporations are required to make advance payments of tax on 15 February and 15 April in the year after the income year. Any residual tax, which is the difference between the tax assessed and the preliminary tax levied, must be paid three weeks after the tax assessment has been announced.
For taxpayers under the petroleum tax regime, tax shall be paid in six instalments.
As the main rule, the corporation tax must be paid even if the tax assessment has been appealed or a court judgment is pending.
For a company there is also several other tax related deadlines such as payment of VAT, withholding tax for employees, employment tax etc.
There are set dates for the prepayment of income and corporate taxes on 10 March, 10 June, 10 September and 10 December each year, whereas trade tax prepayments are set on 15 February, 15 May, 15 August and 15 November. Wage tax has to be paid by way of withholding on a monthly, quarterly or yearly basis depending on the amount of wage tax due.
Tax assessed but appealed against is regularly still due and enforceable. In order for the tax not to be payable, the taxpayer has to apply for a suspension of enforcement by the competent tax authority or the Fiscal Court. A suspension of enforcement has to be granted if the legality of the underlying tax assessment raises serious doubts. However, payment suspension of enforcement gives rise to a monthly interest charge of 0.5% of the suspended tax payment which will only be due if the taxpayer finally has to pay the disputed tax amount.
Prepayments of income tax are due by the middle of each annual quarter. Prepayments of VAT are due by the 15th of the second month following the prepayment-period, which can be either the annual quarter or the calendar month (the latter for annual turnovers exceeding € 100.000). As regards annual tax returns, see above point 2.
Assessment decrees can be appealed against, in which case the tax still remains due and enforceable. A suspension of enforcement is usually granted upon request in case that the appeal has a chance of success and the taxpayer does not jeopardize the enforcement of taxes. However, suspension of enforcement gives rise to a monthly interest charge (of 2% above the base rate, currently 1.38%) of the suspended tax payment which will only be due if the taxpayer finally has to pay the disputed tax amount.