1. The penalty interest arising from inter-enterprise loans is not subject to VAT;
2. Penalty interest arising from loans between individuals shall be subject to VAT;
3. Providing loan services free of charge in China, and exempting interest income obtained by overseas units or individuals from VAT;
4, personal lending business, in accordance with the "transfer of financial goods" tax collection of value-added tax;
5. The premium income obtained by insurance companies providing property insurance business shall be exempted from VAT;
6, reinsurance business, in accordance with the "transfer of financial goods" tax collection of value-added tax;
7, non-financial institutions to provide financial services to obtain income, in accordance with the "transfer of financial goods" tax items to collect value-added tax.
Processing flow of VAT:
1. Opening a VAT general taxpayer account: taxpayers need to apply to the local tax authorities to open a VAT general taxpayer account and submit relevant materials;
2. Payment of VAT deposit: Taxpayers need to pay a certain VAT deposit when applying for opening an account of VAT general taxpayers, so that the tax authorities can supervise the taxpayer's tax payment behavior;
3. Invoice management: VAT general taxpayers need to handle invoice management according to the regulations of State Taxation Administration of The People's Republic of China, People's Republic of China (PRC), including issuing invoices, receiving invoices, keeping invoices and reimbursing invoices;
4. Tax declaration: General VAT taxpayers need to make tax declaration in accordance with the regulations of State Taxation Administration of The People's Republic of China, People's Republic of China (PRC), including the time limit, method and content of tax declaration;
5. Tax payment: VAT general taxpayers need to pay taxes according to the regulations of State Taxation Administration of The People's Republic of China, People's Republic of China (PRC), including paying VAT, prepaying VAT, paying VAT, etc.
6. Tax inspection: The tax authorities will conduct tax inspection on general VAT taxpayers, including tax registration, invoice management, tax declaration and tax payment.
To sum up, whether to levy value-added tax on penalty interest depends on the specific situation. It is recommended to consult professionals to obtain more accurate information.
Legal basis:
Article 1 of the Provisional Regulations of People's Republic of China (PRC) Municipality on Value-added Tax
Units and individuals selling goods or processing, repair and replacement services (hereinafter referred to as services), services, intangible assets, real estate and imported goods within the territory of People's Republic of China (PRC) are taxpayers of value-added tax and shall pay value-added tax in accordance with these regulations.