- Release Date:2025-07-15 08:00:18
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In daily tax consultation work, taxpayers often raise a key question: Can the tax late payment penalty exceed the principal amount of the tax? There are different understandings of this issue in practice. This article will conduct a professional analysis from the perspectives of legal provisions, judicial practice and tax enforcement.
Background of the Issue and Focus of Dispute
According to Article 32 of the "Law of the People's Republic of China on the Administration of Tax Collection", "If a taxpayer fails to pay taxes within the prescribed time limit or a withholding agent fails to remit taxes within the prescribed time limit, the tax authority, in addition to ordering the payment within a time limit, shall impose a late payment surcharge of 0.05% of the overdue tax per day from the date of the overdue tax payment."
However, when the period of late payment is long enough, the late payment penalty may exceed the principal amount of the tax. At this point, should the late payment penalty continue to accumulate? At present, there are two main viewpoints:
Comparison of the Two Viewpoints
Analysis of the Viewpoint that "It can Exceed the Principal
The view that late payment penalties can exceed the principal amount of tax is mainly based on the following reasons:
Legal basis
Article 32 of the "Law on the Administration of Tax Collection" clearly stipulates that the calculation method of late payment surcharges is to add them on a daily basis, without setting an upper limit. Article 75 of the Detailed Rules for the Implementation of the Law on the Administration of Tax Collection further clarifies the calculation method of late payment penalties and does not set an upper limit either.
Theoretical basis
This view holds that tax late payment penalties are essentially economic compensation for the occupation of state tax revenue, similar in nature to interest. Since it is to compensate for the state's losses, there should be no upper limit set; otherwise, it will be impossible to fully compensate for the state's financial losses.
Guangdong case reference: A tax treatment case of a trading company in Guangzhou
In a case handled by the Guangzhou Taxation Bureau in 2023, a certain trading company had accumulated a total of 820,000 yuan in arrears of value-added tax and additional taxes from 2016 to 2019. As of the time of processing in 2023, the accumulated late payment penalties have reached 1.03 million yuan, exceeding the principal amount of the tax.
Tax handling result: The tax authority ultimately recovered 820,000 yuan in taxes and 1.03 million yuan in late payment penalties, totaling 1.85 million yuan. The company filed an administrative lawsuit. The relevant court in Guangzhou ruled in support of the decision of the tax authority, holding that the tax late payment penalty is different from the fine, and its compensatory nature determines that there should be no upper limit set.
Analysis of the Viewpoint of "Not Exceeding the Principal"
The view that late payment penalties should not exceed the principal amount of tax is mainly based on the following reasons:
Legal basis
Article 45 of the Administrative Compulsory Law stipulates: "The amount of additional fines or late payment surcharges shall not exceed the amount of the monetary payment obligation." As the basic law of administrative procedures, this law should be applicable to the field of taxation.
Theoretical basis
This view holds that late payment penalties have a punitive nature and should follow the principle of proportionality in administrative law. When the late payment penalty exceeds the principal amount, the degree of punishment is unbalanced with the severity of the illegal act, violating the principle of proportionality between the offense and the penalty.
Guangdong case reference: A tax administrative lawsuit case of a certain technology company in Shenzhen
A certain technology company in Shenzhen failed to pay 1.5 million yuan in enterprise income tax for the year 2018. By the time it was pursued for payment in 2022, the late payment penalty had reached 1.6 million yuan. The company filed a lawsuit. The relevant court in Shenzhen ruled that:
Tax late payment penalties are administrative compulsory measures and should comply with the provisions of Article 45 of the Administrative Compulsory Law, that is, the total amount of late payment penalties shall not exceed the principal amount of the outstanding tax. The final judgment was that the tax authority should recalculate the late payment penalty, with the upper limit being 1.5 million yuan of the principal.
Current Situation and Suggestions of Practice
In current tax practice, different regions or even different cases within the same region may be handled differently:
In tax inspection cases within Guangdong Province, the majority are still handled in accordance with the "Tax Collection and Administration Law", and the late payment penalties can exceed the principal
During the administrative litigation stage, some courts have begun to invoke the Administrative Compulsory Law to limit late payment penalties to no more than the principal
The "Reply on Issues Concerning Late Payment Penalties in Tax and Fee Collection" issued by the State Taxation Administration in 2024 pointed out: "Tax authorities at all levels should accurately understand and apply relevant laws and regulations, and effectively safeguard the legitimate rights and interests of taxpayers."
Professional Advice and Conclusions
The core conclusion: Given the current conflicts in legal provisions and the differences in implementation across regions, whether the late payment penalty can exceed the principal amount of the tax should be subject to the final response of the competent tax authority. It is suggested that taxpayers, when facing such problems:
1.Consult the local tax authority in charge in a timely manner to obtain authoritative explanations
2. Written responses to applications for major tax matters
3. Pay attention to the latest judicial interpretation updates of the Supreme People's Court
The ultimate advice: Regardless of whether the late payment penalty exceeds the principal or not, paying taxes in accordance with the law and operating within the law are the fundamental ways for enterprises to achieve long-term stability and prosperity. Suggested enterprises
Establish a complete tax compliance management system
Conduct tax health checks on schedule
Make good tax planning with the help of professional tax advisors
Communicate with the tax authorities in advance regarding special tax matters
Tax security is the lifeline of business operations. One must not lose the big picture for small gains and cross the red line of tax laws.