Profit-Seeking Enterprises Can List Interest from "Installment Tax Payments" as an Expense!
If a profit-seeking enterprise is unable to pay taxes in full within the statutory deadline due to financial difficulties, it may apply to the tax collection agency for installment payments in accordance with the provisions of the Tax Collection Act. The interest incurred from such installment payments can be classified as an operating cost and treated as an expense.
According to Article 97, Item 17 of the Regulations Governing Assessment of Profit-Seeking Enterprise Income Tax, interest payments in the following six situations may be classified as expenses:
- Interest incurred from the supplementary payment of provisional tax.
- Interest generated when additional tax is assessed due to expenses, costs, or losses exceeding the limit in the final tax return.
- Interest added when applying for installment tax payments.
- Interest incurred after an administrative remedy procedure confirms that additional tax must be paid.
- Interest arising from voluntarily reporting and paying omitted taxes.
- Late payment interest as prescribed by tax laws.
However, penalties such as late filing fees, non-filing fines, delinquency charges, and other tax-related sanctions are imposed for violations of tax laws, under Article 38 of the Income Tax Act, these penalties cannot be treated as expenses or losses. Profit-seeking enterprises should take note of these regulations when filing income tax returns to avoid errors that could result in additional tax payments.
