No.14001 Overview of delinquent tax and additional tax
Is there a penalty if I fail to file a return or pay tax by the due date?
In principle, delinquent tax or additional tax will be imposed on the principal amount of tax if a taxpayer files a tax return or pays tax after the due date.
The principal amount of tax means the amount payable of any kind of national tax by the due date.
Delinquent tax will be imposed if your payment of the principal amount of tax is overdue as follows:
(1) The full amount of tax finalized by filing a tax return has not been paid by the statutory due date for paying the tax.
(2) There is the amount of tax payable in the case of a tax return being filed after the statutory due date or an amended tax return being filed.
(3) There is the amount of tax payable in the case of a correction or a determination being made.
Additional tax will be imposed if a tax return filed by the statutory due date for filing tax return is understated or a tax return is filed after the statutory due date for filing tax return or if withholding income tax is not paid by the statutory due date for paying tax.
1 Delinquent tax
In principle, delinquent tax is calculated based on the number of days during a period from the day following the statutory due date for tax payment (Note 1) to the day on which the principal amount of tax is fully paid.
(Calculating formula)
Principal amount of tax × Delinquent tax rate × the number of elapsed days / 365 days
The certain period is to be excluded from the “elapsed days” as follows:
(Certain period excluded from “elapsed days”)
(1) In the case of a tax return being filed by the due date for filing
If a tax return is amended or corrected one year or more after it has originally been filed by the due date for filing, the period between the day following the day on which one year has passed from the statutory due date of tax payment and the day on which the amended tax return is filed or the tax correction is issued shall be excluded from the “elapsed days”.
(2) In the case of a tax return being filed after the due date for filing
If a tax return is amended or corrected one year or more after it has been originally filed after the due date for filing, the period between the day following the day on which one year has passed from the day of original filing and the day on which the amended tax return is filed or the tax correction is issued shall be excluded from the “elapsed days”.
However, these treatments mentioned above should not apply on the case in which heavy additional tax is imposed with regard to amendment or correction of tax returns.
(Delinquent tax rate)
(1) Until the day on which two months has passed since the following day of the specific due date for tax payment (Note 2)
In principle, 7.3% per annum is applied.
However, alternative rates are applied for the following periods:
(i) For the period from January 1, 2014 to December 31, 2020, 7.3% per annum or 1% added to the Special Standard Rate (Note 3), whichever is lower.
(ii) For the period from January 1, 2021, 7.3% per annum or 1% added to the Special Standard Rate of Delinquent Tax (Note 4), whichever is lower.
(2) After the day on which two months has passed since the following day of the specific due date of tax payment
In principle, 14.6% per annum is applied.
However, alternative rates are applied for the following periods:
(i) For the period from January 1, 2014 to December 31, 2020, 14.6% per annum or 7.3% added to the Special Standard Rate (Note 3), whichever is lower.
(ii) For the period from January 1, 2021, 14.6% per annum or 1% added to the Special Standard Rate of Delinquent Tax (Note 4), whichever is lower.
The table below gives specific rates according to (1) and (2) above.
For reference, calculated amount of delinquent tax should be rounded down to the nearest 100 yen.If the total amount is less than 1,000 yen, delinquent tax is not imposed.
| Computation period (year) | 2014 | 2015–2016 | 2017 | 2018–2020 | 2021 | 2022-2023 | |
| (1) | Until the day on which two months has passed since the following day of the specific due date for tax payment | 2.9% | 2.8% | 2.7% | 2.6% | 2.5% | 2.4% |
| (2) | After the day on which two months has passed since the following day of the specific due date of tax payment | 9.2% | 9.1% | 9.0% | 8.9% | 8.8% | 8.7% |
| (Note 1) | The statutory due date for tax payment means the due date on which national taxes must be paid pursuant to the national tax laws. |
| (Note 2) |
The specific due date for tax payment means variously depending on cases: − In the case where a taxpayer filed a tax return by the statutory due date of tax return, the statutory due date of tax return. − In the case where a taxpayer filed a tax return after the statutory due date of tax return or filed an amended return, the day on which the return was filed. − In the case of correction or determination, the day on which one month has passed since the day following the day on which a notification of correction or determination is issued. |
| (Note 3) | The Special Standard Rate is defined as the rate which equals to 1% added to the annual average contractual interest rate on new short-term bank loan for each month from the October of two years prior to the September of the previous year announced by the Minister of Finance before December 15 of the previous year. |
| (Note 4) | The Special Standard Rate for Delinquent Tax is defined as the rate which equals to 1% added to the annual average contractual interest rate on new short-term bank loan for each month from the September of two years prior to the August of the previous year announced by the Minister of Finance by November 30 of the previous year. |
2 Additional tax
There are following types of additional tax that varies in its tax rate:
| (1) |
Additional tax for failure to file If a tax return is filed after the statutory due date for filing tax return or a notice of determination is issued, it is generally supposed that an additional tax for failure to file is imposed at 15% of the principal amount of tax. In the case where the principal amount of tax exceeds 500,000 yen, 20% additional tax is applied to the excess amount (Note 1-1). Moreover, extra 10% is added on the rate of the foregoing if an additional tax for failure to file or a heavy additional tax has been imposed within 5 years with regard to the tax (Note 2). Notwithstanding the general rule as mentioned above, in the case where a taxpayer, before the commencement of tax audit being notified, files a tax return after the statutory due date without awareness of possible correction or determination, an additional tax for failure to file is applied at 5% of the principal amount of tax. In addition, in the cases where a taxpayer, on and after the commencement of the tax audit being notified, files a return without awareness of possible correction or determination based on the audit, an additional tax for failure to file is applied at 10% of the principal amount of tax (15% to the excess amount of the principal tax over 500,000 yen) (Note 1-2). If an amended tax return is filed or a correction is made, with regard to a tax return that was filed after the statutory due date for filing tax rerun or a determination, it is generally supposed that an additional tax for failure to file is imposed. |
| (2) |
Additional tax for understatement After a tax return is filed by the statutory due date for filing tax return or a tax return for tax refund is filed, if such a tax return is amended or corrected, it is generally supposed that an additional tax for understatement is imposed at 10% of the increase in the principal amount of tax by the amendment or correction. In the case where the increase in the principal amount of tax by the amendment or correction exceeds the principal amount of tax stated in the original tax return filed by the statutory due date or 500,000 yen, whichever is the greater, 15% additional tax is applied to the excess amount. Notwithstanding the general rules as mentioned above, in the case where a taxpayer, before the commencement of tax audit being notified, files an amended return without awareness of possible correction, no additional tax is imposed. However, in the case where a taxpayer, on and after the commencement of tax audit being notified, files an amended return without awareness of possible correction based on the audit, an additional tax for understatement is imposed at 5% of the increase in the principal amount of tax by the amendment. In this regard, if the increase in the principal amount of tax by the amendment exceeds the principal amount of tax stated in the original tax return filed by the statutory due date or 500,000 yen, whichever is the greater, 10% additional tax is applied to the excess amount. If an amended tax return is filed or a correction is made, with regard to a tax return that was filed after the statutory due date for filing tax rerun, it is generally supposed that an additional tax for failure to file is imposed instead of an additional tax for understatement. |
| (3) |
Additional tax for non-payment If withholding income tax is paid after the due date or if the notice of tax due regarding withholding income tax is issued, it is generally supposed that an additional tax for non-payment is imposed at 10% of the principal amount of withholding income tax. Notwithstanding the general rule as mentioned above, in the case where a taxpayer, after the statutory due date, pays withholding income tax without awareness of possible issuance of notice of tax due, an additional tax for non-payment is imposed at 5% of the principal amount of withholding income tax. |
| (4) |
Heavy additional tax If a taxpayer disguises or hides all or a part of the underlying facts for taxation, it is generally supposed that a heavy additional tax as a substitute for additional tax for understatement is imposed at 35% of the increase in the principal amount of tax by amendment or correction, or at 40% as a substitute for additional tax for failure to file. Moreover, extra 10% is added on rates of the foregoing if an additional tax for failure to file or a heavy additional tax has been imposed within 5 years with regard to the tax (Note 2). |
(Note 1-1) In addition, in the case where the principal amount of tax exceeds 3,000,000 yen, 30% additional tax is applied to the excess amount. (This reform will be applied in concern to national taxes for which the statutory filing due date arrives on or after January 1, 2024.)
(Note 1-2) In addition, in the case where the principal amount of tax exceeds 3,000,000 yen, 25% additional tax is applied to the excess amount. (This reform will be applied in concern to national taxes for which the statutory filing due date arrives on or after January 1, 2024.)
(Note 2) For taxpayers who are subject to additional taxes for failure to file or heavy additional taxes as a substitute for an additional tax for failure to file in relation to national taxes for the prior year and the year prior to that year, ｅｘｔｒａ 10% is added on rates of the foregoing concerning the current year’s additional tax or heavy additional tax as a substitute for an additional tax for failure to file. (This reform will be applied in concern to national taxes for which the statutory filing due date arrives on or after January 1, 2024.)
- Consultation service for national tax is available at the Phone Consultation Center of the Regional Taxation Bureaus. Please take a look at "IF YOU NEED FURTHER INFORMATION, PLEASE CONTACT" and try the phone consultation service.
