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 final 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, and additional tax will be imposed if you fail to file a final tax return by the due date or understated your tax declarations.
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 tax is fully paid.
(Calculating formula)
Principal amount of tax × Delinquent tax rate × the number of elapsed days * / 365 days
| * | If your tax return which has been originally filed within the due date, is amended or corrected after a period of one year or more, the period from the day on which one year has passed from the statutory due date of tax payment to the day on which the amended tax return is filed or tax correction is notified shall be excluded from the “elapsed days”. In addition, if your tax return which has been originally filed after the due date, is amended or corrected after a period of one year or more, the period from the day on which one year has passed from the day of original filing to the day on which the amended tax return is filed or tax correction is notified 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) |
Period within two months from the following day of the specific due date of tax payment (Note 2) In principle, 7.3% per annum is applied. However, alternative rates are applied for the following periods: 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. 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) |
Period after 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: 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. 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 and then 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 | |
| (1) | Period after the specific due date for tax payment + Period within two months after the specific due date for tax payment |
2.9% | 2.8% | 2.7% | 2.6% | 2.5% | 2.4% |
| (2) | Period over (1) | 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 case where a taxpayer filed a final tax return by the statutory due date of tax return, the same day. − In case where a taxpayer filed a final tax return after the statutory due date of tax return or filed an amended return, the day of that return filling. − In case of correction or determination, the day after a month of notification of correction or determination to be 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 is 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, is 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 final tax return is filed after the statutory due date, it is generally supposed to impose an additional tax that is 15% of the principal amount of tax. In the case where the principal amount to be delay exceeds 500,000 yen, 20% additional tax is applied to the excess amount. Moreover, extra 10% is added on the rate of the foregoing if either additional tax for failure to file or heavy additional tax has been imposed within 5 years with regard to the same item of tax. Notwithstanding the general rule as mentioned above, in the case where a taxpayer who has not been notified of the commencement of tax audit files a return voluntarily after the statutory due date, 5% additional tax is applied. In addition, in the cases where a taxpayer who has been notified of commencement of the tax audit files a return voluntarily without awareness of possible correction or determination based on the audit, 10% additional tax (15% to the excess amount of the principal tax over 500,000 yen) is applied. |
| (2) |
Additional tax for understatement If your tax return is amended or corrected because of deficient tax, it is generally supposed to impose an additional tax which is 10% of the tax amount of increase. In the case where the tax amount of increase exceeds the tax amount of the original tax return filed by the 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 who has not been notified of the commencement of tax audit files an amended return voluntarily, the additional tax is not applied. In addition, in the case of voluntary amendment return by a taxpayer who has been notified the commencement of tax audit without awareness of possible correction based on the audit, 5% additional tax is applied. In this regard, if the amount of tax increase exceeds the tax amount of the original tax return by the due date or 500,000 yen, whichever is the greater, 10% additional tax is applied to the excess amount. |
| (3) |
Additional tax for non-payment If withholding income tax is paid after the due date or the notice of tax due regarding withholding income tax is issued, it is generally supposed to impose an additional tax which is 10% of non-payment of the principal amount of withholding income tax. Notwithstanding the general rule as mentioned above, in the case where a taxpayer who has not been notified of the commencement of tax audit pays withholding income tax voluntarily after the statutory due date, 5% additional tax is applied. |
| (4) |
Heavy additional tax If a taxpayer disguises or hides all or a part of the underlying facts for taxation, it is supposed to impose heavy additional tax of 35% as a substitute for additional tax for understatement, or 40% as a substitute for additional tax for failure to file. Moreover, extra 10% is added on rates of the foregoing if either additional tax for failure to file or heavy additional tax has been imposed within 5 years with regard to the same item of tax. |
