Designing Interest and Tax Penalty Regimes

Christophe Waerzeggers, Cory Hillier and Irving Aw

No 2019/001, IMF Tax Law Technical Note from International Monetary Fund

Abstract: Nearly all tax systems have some form of interest and tax penalty regimes. Interest payable on any late or underpayment of tax seeks to protect the present value of the tax amount to the government budget, whereas penalties are intended to deter taxpayers from defaulting on their tax obligations—and to punish them if they do—to achieve horizontal equity vis-à-vis compliant taxpayers. As interest and penalties serve very different objectives, they should not be applied in a mutually exclusive manner. This Tax Law IMF Technical Note focuses on the key issues that should be taken into consideration in designing interest and penalty regimes in tax legislations.

Keywords: TLT; tax authority; penalty regime; tax authorities; law framework; RegimesDesigning interest; tax administration; ability to pay; tax official; taxpayer compliance; incentive regime; tax authority exercise; Tax administration core functions; Interest payments; Legal support in revenue administration; Tax law; Interest tax; Africa (search for similar items in EconPapers)
Pages: 20
Date: 2019-03-18
New Economics Papers: this item is included in nep-pbe
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