Viewpoint................................................................................................
Published:
2023-06-01
In recent years, the number of corporate bankruptcy cases has increased year by year. From accepting bankruptcy applications to declaring corporate bankruptcy, to corporate tax registration cancellation, a series of tax issues will be involved, which is easy to cause tax-related disputes. This paper discusses whether the tax late fees involved in the bankruptcy business of enterprises can exceed the principal amount of tax. According to Article 32 of the the People's Republic of China Tax Collection and Administration Law, if a taxpayer fails to pay the tax within the prescribed time limit, and if the withholding agent fails to pay the tax within the prescribed time limit, the tax authority shall, in addition to ordering the payment within a time limit, from the date of payment of the tax, a late fee of five ten thousandths of the overdue tax shall be charged on a daily basis. The provision does not limit the upper limit of late payment fees, which will be calculated as long as the taxpayer owes tax until the tax is paid. According to the Announcement of the State Administration of Taxation on Certain Matters Concerning Tax Administration (State Administration of Taxation Announcement No. 48 of 2019), taxes owed by enterprises, late fees, fines, and interest arising from special tax adjustments shall be calculated and determined on the date on which the people's court decides to accept the bankruptcy application. The "the People's Republic of China Administrative Compulsory Law" stipulates that if an administrative agency makes an administrative decision on the obligation to pay money in accordance with the law, if the party fails to perform within the time limit, the administrative agency may impose a fine or late fee in accordance with the law. The standards for imposing additional fines or late fees shall be notified to the parties concerned. The amount of the additional fine or late fee shall not exceed the amount of the obligation to pay money. On August 22, 2012, the Tax Service Department of the State Administration of Taxation replied to the taxpayer's question on whether the tax late fee can exceed the principal: "The tax late fee increase shall be implemented in accordance with the collection and management law, and the administrative enforcement law shall not apply, and there is no question of whether the tax principal can be exceeded. If the late fee increase data exceeds the principal, it shall be increased in accordance with the provisions of the collection and management law." In judicial proceedings, some courts held that tax late fees could not exceed the principal amount. For example, in the case of the dispute over the confirmation of bankruptcy claims between the Huaiyin District Taxation Bureau of the State Administration of Taxation and Shandong Building Materials Corporation [case No.:(2019) Lu 01 Min Zhong No. 4926], the judgment of the Jinan Intermediate people's Court is that the additional late fee is a punishment measure for taxpayers not paying taxes within the time limit prescribed by law, and a way of administrative enforcement. The second paragraph of Article 45 of the "the People's Republic of China Administrative Enforcement Law" stipulates that "the amount of a fine or late fee shall not exceed the amount of the obligation to pay money". The amount of late fees determined by the manager of the building materials company is in accordance with the law. The Huaiyin District Taxation Bureau requires the manager of the building materials company to confirm the late payment of the tax exceeding the principal, which does not comply with the law and should not be supported. In addition, in the case of Pingshan County Jingye Smelting Co., Ltd. and Nandian Taxation Branch of Pingshan County Taxation Bureau of the State Administration of Taxation and the Tax Administration (Taxation) of Pingshan County Taxation Bureau of the State Administration of Taxation [Case No.:(2020) Ji 0131 Xingchu No. 7], the judgment of the People's Court of Pingshan County of Hebei Province is that the overdue fine for this case far exceeds the tax, with reference to Article 45 of the the People's Republic of China Administrative Enforcement Law: "If the administrative organ makes an administrative decision on the obligation to pay money according to law, and the party concerned fails to perform it within the time limit, the administrative organ may impose a fine or late fee according to law. The standards for imposing additional fines or late fees shall be notified to the parties concerned. The amount of the additional fine or late fee shall not exceed the amount of the obligation to pay money." In this case, the Nandian Taxation Branch of Pingshan County Taxation Bureau of the State Administration of Taxation and the Pingshan County Taxation Bureau of the State Administration of Taxation actually charged Pingshan County Jingye Smelting Co., Ltd. a late fee of 14397072.96 yuan from November 1, 1997 to November 30, 1997. The late fee is obviously improperly calculated and should be corrected. The amount of late fee should not exceed the amount of late tax, 2439975.08 yuan, except for the tax payable of 2439975.08 yuan and late fee of 2439975.08 yuan, the State Administration of Taxation Pingshan County Taxation Bureau Nandian Taxation Branch and the State Administration of Taxation Pingshan County Taxation Bureau collected more than 11957097.88 yuan in late fees from Pingshan County Jingye Smelting Co., Ltd. and should be refunded. As a tax late fee, which law is applicable? It is argued that the the People's Republic of China Tax Collection and Management Law is a special law, the the People's Republic of China Administrative Enforcement Law is a common law, and according to the provisions of the the People's Republic of China Legislation Law, the special law is superior to the common law, and the the People's Republic of China Tax Collection and Management Law should be applied when calculating the tax late fee. There is also a view that the tax authority is also an administrative agency, and its enforcement measures against taxpayers are also subject to the "the People's Republic of China Administrative Enforcement Law". Therefore, the tax principal cannot be exceeded when calculating the tax late fee. In short, in the current tax environment, the legal environment, tax late fees can exceed the amount of tax principal is still a controversial topic. In the bankruptcy business, it is recommended that the administrator should actively communicate and coordinate with the competent tax authorities on whether the tax late fees involved in the bankruptcy business can exceed the principal amount of the tax, so as to avoid tax-related disputes or other liability disputes as far as possible. Deal with tax issues in bankruptcy proceedings in compliance with the law, effectively avoid the risk of practice, and promote the smooth progress of bankruptcy business.
In recent years, the number of corporate bankruptcy cases has increased year by year. From accepting bankruptcy applications to declaring corporate bankruptcy, to corporate tax registration cancellation, a series of tax issues will be involved, which is easy to cause tax-related disputes. This paper discusses whether the tax late fees involved in the bankruptcy business of enterprises can exceed the principal amount of tax.
According to Article 32 of the the People's Republic of China Tax Collection and Administration Law, if a taxpayer fails to pay the tax within the prescribed time limit, and if the withholding agent fails to pay the tax within the prescribed time limit, the tax authority shall, in addition to ordering the payment within a time limit, from the date of payment of the tax, a late fee of five ten thousandths of the overdue tax shall be charged on a daily basis. The provision does not limit the upper limit of late payment fees, which will be calculated as long as the taxpayer owes tax until the tax is paid.
According to the Announcement of the State Administration of Taxation on Certain Matters Concerning Tax Administration (State Administration of Taxation Announcement No. 48 of 2019), taxes owed by enterprises, late fees, fines, and interest arising from special tax adjustments shall be calculated and determined on the date on which the people's court decides to accept the bankruptcy application. The "the People's Republic of China Administrative Compulsory Law" stipulates that if an administrative agency makes an administrative decision on the obligation to pay money in accordance with the law, if the party fails to perform within the time limit, the administrative agency may impose a fine or late fee in accordance with the law. The standards for imposing additional fines or late fees shall be notified to the parties concerned. The amount of the additional fine or late fee shall not exceed the amount of the obligation to pay money.
On August 22, 2012, the Tax Service Department of the State Administration of Taxation replied to the taxpayer's question on whether the tax late fee can exceed the principal: "The tax late fee increase shall be implemented in accordance with the collection and management law, and the administrative enforcement law shall not apply, and there is no question of whether the tax principal can be exceeded. If the late fee increase data exceeds the principal, it shall be increased in accordance with the provisions of the collection and management law."
In judicial proceedings, some courts held that tax late fees could not exceed the principal amount. For example, in the case of the dispute over the confirmation of bankruptcy claims between the Huaiyin District Taxation Bureau of the State Administration of Taxation and Shandong Building Materials Corporation [case No.:(2019) Lu 01 Min Zhong No. 4926], the judgment of the Jinan Intermediate people's Court is that the additional late fee is a punishment measure for taxpayers not paying taxes within the time limit prescribed by law, and a way of administrative enforcement. The second paragraph of Article 45 of the "the People's Republic of China Administrative Enforcement Law" stipulates that "the amount of a fine or late fee shall not exceed the amount of the obligation to pay money". The amount of late fees determined by the manager of the building materials company is in accordance with the law. The Huaiyin District Taxation Bureau requires the manager of the building materials company to confirm the late payment of the tax exceeding the principal, which does not comply with the law and should not be supported.
In addition, in the case of Pingshan County Jingye Smelting Co., Ltd. and Nandian Taxation Branch of Pingshan County Taxation Bureau of the State Administration of Taxation and the Tax Administration (Taxation) of Pingshan County Taxation Bureau of the State Administration of Taxation [Case No.:(2020) Ji 0131 Xingchu No. 7], the judgment of the People's Court of Pingshan County of Hebei Province is that the overdue fine for this case far exceeds the tax, with reference to Article 45 of the the People's Republic of China Administrative Enforcement Law: "If the administrative organ makes an administrative decision on the obligation to pay money according to law, and the party concerned fails to perform it within the time limit, the administrative organ may impose a fine or late fee according to law. The standards for imposing additional fines or late fees shall be notified to the parties concerned. The amount of the additional fine or late fee shall not exceed the amount of the obligation to pay money." In this case, the Nandian Taxation Branch of Pingshan County Taxation Bureau of the State Administration of Taxation and the Pingshan County Taxation Bureau of the State Administration of Taxation actually charged Pingshan County Jingye Smelting Co., Ltd. a late fee of 14397072.96 yuan from November 1, 1997 to November 30, 1997. The late fee is obviously improperly calculated and should be corrected. The amount of late fee should not exceed the amount of late tax, 2439975.08 yuan, except for the tax payable of 2439975.08 yuan and late fee of 2439975.08 yuan, the State Administration of Taxation Pingshan County Taxation Bureau Nandian Taxation Branch and the State Administration of Taxation Pingshan County Taxation Bureau collected more than 11957097.88 yuan in late fees from Pingshan County Jingye Smelting Co., Ltd. and should be refunded.
As a tax late fee, which law is applicable? It is argued that the the People's Republic of China Tax Collection and Management Law is a special law, the the People's Republic of China Administrative Enforcement Law is a common law, and according to the provisions of the the People's Republic of China Legislation Law, the special law is superior to the common law, and the the People's Republic of China Tax Collection and Management Law should be applied when calculating the tax late fee. There is also a view that the tax authority is also an administrative agency, and its enforcement measures against taxpayers are also subject to the "the People's Republic of China Administrative Enforcement Law". Therefore, the tax principal cannot be exceeded when calculating the tax late fee. In short, in the current tax environment, the legal environment, tax late fees can exceed the amount of tax principal is still a controversial topic.
In the bankruptcy business, it is recommended that the administrator should actively communicate and coordinate with the competent tax authorities on whether the tax late fees involved in the bankruptcy business can exceed the principal amount of the tax, so as to avoid tax-related disputes or other liability disputes as far as possible. Deal with tax issues in bankruptcy proceedings in compliance with the law, effectively avoid the risk of practice, and promote the smooth progress of bankruptcy business.
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