New regulations that have been implemented to Tax ordinance as of 1 January 2016 implement 3 tiers of penalty interest. Regular interest (calculated on the same basis as in 2015 and earlier), increased interest (150% of the regular interest), which are applicable in certain conditions to tax arrears in VAT and lowered interest (50%% of the regular interest) applicable if tax arrears is disclosed and settled not later than after 6 months since the tax obligation was created.
It is worth to note that the preferential interest of 50% may also be applied to the tax arrears from previous years. However, such arrears shall be disclosed and settled before 1 July 2016 to allow the taxpayer to benefit from the lowered, 50% penalty interest. So, to certain taxpayers who realize to have tax arrears arisen on 2015 or earlier, it may be reasonable to consider a sort of “a coming out” to benefit from 50% interest.
