From 29 August 2019 the interest rates IRD charge for unpaid or underpaid tax will increase from 8.22% to 8.35%, At the same time, the interest rate IRD will pay on overpaid tax will fall from 1.02% to 0.81%.
Given the current low-interest rate environment, it appears IRD intend to use the interest it charges as a punitive measure, as opposed to compensation for the cost of not having the tax available to it when it is due.
Interest charges for tax can be avoided by staying up to date with your filing and payment obligations. For income tax, in many cases interest costs can be minimalised by leveraging tax pooling.
If you want to stay on top of your tax obligations and plan so you can avoid punitive interest costs, then contact us at Insight Accounting today.