Payment of Tax in Dispute and Interest on Tax Held Over

When you lodge an objection or appeal against an assessment, you may have to pay tax before having the result and subsequently pay the interest on the tax held over. This article will tell you about different situations for payment of tax in dispute and interest on tax held over pending the result of the objection or appeal.

Payment of Tax in Dispute

Notwithstanding any notice of objection or appeal lodged by you, tax shall be paid on or before the date(s) specified in the notice of assessment, unless the Commissioner orders that the payment of tax or any part of it be held over pending the result of such objection or appeal.

The Commissioner may order the holdover of payment of tax, or any part thereof, conditional upon the person who or on whose behalf the objection or appeal is made providing security for the payment of the tax, or any part thereof, the payment of which is held over either:

• by purchasing a certificate issued under the Tax Reserve Certificates Ordinance (Cap. 289); or
• by furnishing a banker’s undertaking,

as the Commissioner may require.

Interest on Tax Held Over

If payment of tax was held over unconditionally or conditionally upon the provision of a banker's undertaking pending the result of objection or appeal, interest shall be payable on so much of the tax held over which, upon the withdrawal or final determination of the objection or appeal, is found to be payable, at the rate specified in section 71(11) of the Inland Revenue Ordinance.

The rate is fixed from time to time by the Chief Justice by notice in the Gazette under section 50 of the District Court Ordinance (Cap. 336). Interest accrues from the due date for payment of the tax specified in the notice of assessment or the date of the order for holdover of payment of tax, whichever is the later, up to the date of withdrawal or final determination of the objection or appeal.