When principal tax is not paid by its due date, the charge based on the number of overdue days isdelinquent tax interest. It is prescribed by Article 60 of the General Act of National Taxes, with special rate provisions in Article 94 of the Act on Special Measures Concerning Taxation.

This article helps taxpayers with overdue payments and their tax accountants check when calculation begins and which rate applies.

Different in nature from additional tax

While additional tax penalizes filing or payment conduct, delinquent tax isequivalent to interest for the overdue period.Article 2 defines delinquent tax, interest tax and four types of additional tax collectively as incidental taxes. Delinquent tax is paid with the principal and belongs to the same tax category.

Five cases in which it applies

Article 60(1) lists five cases requiring delinquent tax: failure to pay in full by the statutory due date after an on-time return; tax payable under Article 35(2) following a late or amended return, reassessment or determination; payment after the statutory due date following a payment notice; failure to pay estimated income tax in full; and failure to pay taxes collected by withholding or similar methods in full.

For the third case, the parentheses exclude “taxes prescribed in item (v), additional tax for nonpayment, heavy additional tax and negligence tax.”

The period runs from the day after the statutory due date through full payment

Article 60(2) calculates delinquent tax according to the days from the day after the statutory due date until full payment. It goes back to the original deadline, rather than starting on the amended-return date.

Some taxes use a substituted statutory due date; the provision states that, for “other national taxes prescribed by Cabinet Order,” the date is that prescribed by the Order.

Two rates: statutory annual rates of 14.6% and 7.3%

The statutory rate is 14.6% annually. Under the proviso,the period up to the payment deadlineandthe period through the date two months after the day following that deadlineuse an annual rate of 7.3%.

This payment deadline differs from the statutory due date: for an amended return, it is the filing date; for a reassessment, it is one month after the day following issuance of the notice (Article 35(2)). Payment within two months after an amended return keeps the lower rate applicable.

Special rules reduce the rates actually used

Article 94(1) of the Act on Special Measures Concerning Taxation provides the special rule. Where the year'sspecial benchmark rate for delinquent taxis below 7.3% annually, 14.6% becomes the benchmark plus 7.3 percentage points, while 7.3% becomes the benchmark plus 1 percentage point, capped at 7.3% annually.

The special benchmark is the average lending rate plus 1 percentage point annually. The Minister of Finance announces the average lending rate by November 30 of the preceding year, so rates change annually. Check the National Tax Agency's published rate for the relevant year.

If the resulting rate is below 0.1% annually, 0.1% applies (Article 96).

Periods beyond one year may be excluded

Article 61 provides special period rules. For tax covered by an on-time return, if an amended return is filed or a reassessment notice issuedafterthe date one year from the statutory filing deadline, the period from the following day until that filing or notice date is excluded. For late returns, a similar rule uses one year from the day following filing as the reference point.

There are exceptions. The provision excludes, among others, returns filed by taxpayers who evaded tax or obtained refunds through deceit or other fraudulent acts, anticipating reassessment because a tax audit had occurred.

Article 61(2) prescribes exclusions where an upward reassessment or similar action follows a downward reassessment; paragraph (3) does so for withholding and similar taxes.

Partial payment and deferral

Under Article 62, after part of the principal tax is paid, calculation from the following day uses the balance after deducting that payment. Where delinquent tax is also payable, payments are first allocated to principal tax.

Article 63 governs exemption. Deferral due to disaster or similar events, or suspension of delinquency enforcement, exempts the full amount corresponding to that period. Deferral due to business closure or similar reasons, or deferral of asset realization, exempts half the amount for the corresponding period, limited to periods after two months from the day following the payment deadline. Article 94(2) of the Special Measures Act replaces that half with a calculation using the special deferral benchmark rate.

When liability arises and the minimum amount charged

Delinquent tax is determined automatically when the tax obligation arises, without a special procedure (Article 15). No assessment determination notice is issued.

For rounding, the tax base is rounded down to the nearest ¥10,000 (Article 118); the resulting delinquent tax is rounded down to the nearest ¥100, and if the entire amount is below ¥1,000, it is discarded (Article 119). This differs from the ¥5,000 threshold for additional taxes.

Common practical questions

Common questions concern the order of installment payments and whether to use deferral. Because payments first reduce principal, reducing principal sooner slows delinquent tax accrual. Contact us while the tax remains overdue.

For the overall framework, see Overview of Ancillary Taxes summarizing in

Legal basis

• General Act of National Taxes, Article 2(iv) and (viii) (Definitions)
• General Act of National Taxes, Article 15(3)(vii) (Arising of tax obligations and determination of tax payable)
• General Act of National Taxes, Article 35(2) (Payment of self-assessed national taxes, etc.)
• General Act of National Taxes, Article 60(1)–(4) (Delinquent tax)
• General Act of National Taxes, Article 61(1)–(3) (Special periods for calculating delinquent tax)
• General Act of National Taxes, Article 62(1) and (2) (Calculation of delinquent tax after partial payment, etc.)
• General Act of National Taxes, Article 63(1) (Exemption from delinquent tax upon deferral, etc.)
• Article 118, Paragraph 3 of the Act on General Rules for National Taxes (Rounding of Fractional Numbers for Tax Bases of National Taxes, etc.)
• Article 119, Paragraph 4 of the Act on General Rules for National Taxes (Rounding of Fractional Amounts of Established National Tax, etc.)
• Act on Special Measures Concerning Taxation, Article 94(1) and (2) (Special delinquent tax rates)
• Act on Special Measures Concerning Taxation, Article 96(1) (Calculation of interest tax, etc.)

Article headings are verified using the statutory data from the e-Gov Law Search.