10.1 In general.—Under section 89 of the Act, a person who fails to file a return within the required due date, is liable to a penalty of $250. Under section 46(4) of the Act, a person who fails to pay the tax that is due and payable by the required due date, is liable to a penalty of 10 percent of the amount due. Under section 46(1) of the Act, a person who fails to pay tax payable under the Act by the date it is due and payable is liable for interest at a rate of 1.25 percent per month or part thereof, for the period during which the tax remains unpaid. For tax payable with the filing of a regular VAT return, this date is the due date of the return. For example, a VAT registered business is liable to pay $10,000 on 21 December, 2012. If the business fails file a return and fails to pay the VAT that is due on 21 December, 2012, (i.e. $10,000), then the business is liable to —
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(a) penalty of $250 (for failing to file the return – section 89 of the Act);
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(b) a penalty of 10 percent of the $10,000 (amounting to $1,000) (for failing to pay the tax that is due and payable as at the due date – section 46(4) of the Act); and
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(c) pay interest at a rate of 1.25 percent of the $10,000 ($125) per month or part of a month for which the tax remains unpaid (as interest on unpaid tax – section 33(1) of the Act).