Although some countries may refer to a “penalty”, the same or similar imposition by another country may be classified as “interest”. Some countries’ “penalty” regimes may therefore include an “additional tax”, or “interest”, for understatements which result in late payments of tax beyond the due date. This is often designed to ensure the revenue recovers at least the real time value of money (taxes) lost.
TPG2022 Chapter IV paragraph 4.22
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By OECD
Category: OECD Transfer Pricing Guidelines (2022), TPG2022 Chapter IV: Administrative Dispute Resolution | Tag: Penalty vs interest vs additional tax, Penalty/Fine
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