Tax penalties are imposed for violations of the LOT and its regulations. The level of the penalty depends upon the nature of the violation, and is determined as follows:
- Where a taxpayer or withholding agent is considered negligent (the amount of deficient tax paid is 10% or less than the amount of taxes due) the penalty is 10% of the unpaid tax;
- Where a taxpayer or withholding agent is considered seriously negligent (the amount of deficient tax is more than 10% of taxes due) or the taxpayer has failed to settle tax liabilities by the due date as stated in a tax notification on late payments issued by the GDT, the penalty will be 25% of the unpaid tax; and
- Where a tax audit conducted by the GDT exposes an underpayment of taxes, the penalty will be 40% of the unpaid tax.
In addition, penalties are imposed for late payment of taxes and late lodgment of returns, together with interest charged at 1.5% per month.