BIR sets 12% interest rate for delinquent, deficient tax payments

By: - Reporter / @bendeveraINQ
/ 05:28 AM September 18, 2018
The Bureau of Internal Revenue (BIR) has issued rules mandating a lower delinquency and deficiency interest rate of 12 percent under the Tax Reform for Acceleration and Inclusion (TRAIN) Act.

Revenue Regulations No. 21-2018 issued by Finance Secretary Carlos G. Dominguez III and Internal Revenue Commissioner Caesar R. Dulay on Sept. 14 noted that under Republic Act No. 10963 or the TRAIN law, unpaid taxes were to be slapped interest “double the effective legal interest rate for loans or forbearance of any money in the absence of an express stipulation as set by the Bangko Sentral ng Pilipinas from the date prescribed for payment until the amount is fully paid.”

The BSP set the interest rate at 6 percent, hence the rules doubled it at 12 percent.

BIR Deputy Commissioner Marissa O. Cabreros told reporters that prior to the TRAIN law, the interest on unpaid taxes was at 20 percent a year.

The BIR defined the deficiency interest as that “imposed on any deficiency tax due, which interest shall be assessed and collected from the date prescribed for its payment until: full payment thereof, or upon issuance of a notice and demand by the commissioner or his authorized representative, whichever comes first.”

Delinquency interest is that imposed on a taxpayer for failure to pay the amount of the tax due on any return to be filed, or for which no return is required.

Also, a delinquency interest is imposed on “a deficiency tax, or any surcharge or interest thereon on the due date appearing in the notice and demand of the [BIR] commissioner or his authorized representative until the amount is fully paid, which interest shall form part of the tax.”

Under the TRAIN law, there must be no double imposition of interest, the BIR said.

Cabreros said that while the TRAIN law kept both the deficiency and delinquency interests, they must be slapped separately and not simultaneously.



Revenue Regulations (RRs)
are issuances signed by the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, that specify, prescribe or define rules and regulations for the effective enforcement of the provisions of the National Internal Revenue Code (NIRC) and related statutes

Revenue Memorandum Orders (RMOs) are issuances that provide directives or instructions; prescribe guidelines; and outline processes, operations, activities, workflows, methods and procedures necessary in the implementation of stated policies, goals, objectives, plans and programs of the Bureau in all areas of operations, except auditing.

Revenue Memorandum Rulings (RMRs) are rulings, opinions and interpretations of the Commissioner of Internal Revenue with respect to the provisions of the Tax Code and other tax laws, as applied to a specific set of facts, with or without established precedents, and which the Commissioner may issue from time to time for the purpose of providing taxpayers guidance on the tax consequences in specific situations. BIR Rulings, therefore, cannot contravene duly issued RMRs; otherwise, the Rulings are null and void ab initio

Revenue Memorandum Circular (RMCs) are issuances that publish pertinent and applicable portions, as well as amplifications, of laws, rules, regulations and precedents issued by the BIR and other agencies/offices.

Revenue Bulletins (RB) refer to periodic issuances, notices and official announcements of the Commissioner of Internal Revenue that consolidate the Bureau of Internal Revenue's position on certain specific issues of law or administration in relation to the provisions of the Tax Code, relevant tax laws and other issuances for the guidance of the public.

BIR Rulings are official position of the Bureau to queries raised by taxpayers and other stakeholders relative to clarification and interpretation of tax laws.
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