Penalties and Interest

Value Added Tax violations

• The following administrative fines are imposed to persons who do not comply with provisions of Value Added Tax:
• 1° in the event of operation without VAT registration where VAT registration is required, fifty percent (50%) of the amount of VAT payable for the entire period of operation without VAT registration;
• 2° in the event of the incorrect issuance of a VAT invoice resulting in a decrease in the amount of VAT payable or in an increase of the VAT input credit or in the event of the failure to issue a VAT invoice, one hundred percent (100%) of the amount of VAT for the invoice or on the transaction;
• 3° for issuing of a VAT invoice by a person who is not registered for VAT is assessed a penalty of one hundred fifty percent (150%) of the VAT which is indicated in that VAT invoice and is due to pay the VAT as indicated on that VAT invoice.

Late payment fine

• If the amount of tax shown on a tax declaration or the amount of tax which is the result of an adjusted assessment by the Tax Administration is not paid in time, the taxpayer is subject to a fine of ten percent (10%) of the tax payable.
• The taxpayer is not subject to this fine if the Commissioner General provided an extension for filing the tax declaration according to article sixteen (16) of this law.
• The late payment fine does not apply to interest or administrative fines referred to in articles 60, 62, 63, 64 and 65 of this law.

Understatement of tax fine

• f the amount of tax shown on a tax declaration understates the amount of tax required to be shown as a consequence of an audit or investigation by the Tax Administration, the taxpayer is subject to the following fine:
• 1° ten percent (10%) of the amount of the understatement if the understatement is equal to or more than five percent (5%) but less than twenty percent (20 %) of the tax liability he or she ought to have paid;
• 2° fifty percent (50%) of the amount of the understatement if the understatement is twenty percent (20%) or more but less than fifty percent (50%) of the tax liability he or she ought to have paid;
• 3° one hundred percent (100%) of the amount of the understatement if the understatement is fifty percent (50%) or more of the tax liability he or she ought to have paid;

Tax fraud

• A taxpayer who commits fraud is subject to an administrative fine of two hundred percent (200%) of the evaded tax. With exception to that penalty, the Tax Administration refers the case to the Prosecution service if the taxpayer voluntarily evaded such tax, like use of false accounts, falsified documents or any other act punishable by law. In case of conviction, the taxpayer can be imprisoned for a period between six (6) months and two (2) years.
• The Minister’s order determines an award given to any person who denounces a taxpayer who engages in tax fraud.