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14.5. Interest and Penalties

Different types of penalties apply depending on the infraction committed, as follows:

  • For late returns: penalty of 5% of the due tax for each month (or part thereof) of delay, capped at 100% of the tax due. In addition, late payment interest will be due.
  • For inaccurate filing: penalty equal to 160% of the difference found by the tax authority. The penalty can be reduced when the taxpayer accepts the official assessment issued by the tax authority. The reduction will depend upon the stage of the administrative proceeding.
  • For failure to declare: when the taxpayer has not file the income tax return, the penalty is the 20% of the higher of:
    • Bank deposits or gross income of the fiscal year in which the income tax return was not filed; or
    • The gross income as declared in the last income tax return.
  • For amendments voluntarily made by the taxpayer in order to either increase the tax payable or reduce the balance due in his favour: 10% or 20% of the higher payable tax or lower balance, as the case may be. The applicable penalty percentage depends on the stage of the administrative proceeding.