Changes in interest rates on tax due and additional tax rate

Legal Notice 99 of 2022, published on the 4 March 2022, contains two parts. The first part is in relation to the Payment of Provisional Tax Rules, Subsidiary Legislation 372.18 (‘PT Rules’), and the second part is in relation to the Income Tax (Rate of Interest) Rules, Subsidiary Legislation 372.28 (‘Interest Rules’).

The PT Rules require companies and self-employed individuals to effect provisional tax payments by the 30 April, 31 August and 21 December. Article 44 of the Income Tax Management Act (‘ITMA’), sets out, inter alia, additional tax and interest rates resulting from the late payment of tax. Legal Notice 99 of 2022 introduces a new ‘proviso’ to Article 14(1) of the PT Rules, which increases the base rates set out in Article 44 ITMA, for any period, or part of a period, commencing on or after 1 June 2022. The additional tax for any such period will increase from 0.33% to 0.6% of the unpaid Provisional Tax for each calendar month of default.

Legal Notice 99 of 2022 also introduces a new proviso paragraph within Article 2 of the Interest Rules, which escalates the base rates set out under Article 44 of the ITMA, increasing the interest on unpaid tax due by a taxpayer to 0.6% for any period, or part of a period, commencing on or after 1 June 2022.